The Independent Media and Policy Initiative (IMPI) has warned that former Vice President Atiku Abubakar’s proposal to restore fuel subsidy if elected President could worsen Nigeria’s economic challenges and undermine investor confidence.
The policy think tank described the proposal as a “dangerous step backwards,” arguing that while subsidised petrol could provide temporary relief through lower pump prices, it would create serious long-term fiscal consequences.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, IMPI said returning to regulated fuel prices could reverse economic gains recorded over the past three years and expose the country to renewed financial pressures.
The organisation described the proposal as “a populist proposal” that could create the appearance of cheap petrol while shifting the financial burden to taxpayers and future generations.
“This reckless, populist proposal represents a dangerous step backwards and a financial trap that would bankrupt Nigeria, destroy the country’s sovereign credit ratings, and wipe out the economic progress made over the past three years,” IMPI said.
The group argued that regulating petrol prices could also conflict with the principles of the Petroleum Industry Act (PIA) 2021 and distort the downstream petroleum market.
It warned that price controls could discourage marketers from supplying remote and less profitable locations, potentially creating shortages outside major cities.
According to IMPI, cities such as Lagos, Abuja, Kano and Port Harcourt could receive preferential supplies, while rural filling stations could experience shortages, forcing farmers and transport operators to seek products through black-market channels.
The organisation projected that such distortions could increase transportation costs in affected areas by as much as 40 per cent above current deregulated market rates, potentially worsening food inflation and reducing farmers’ profits.
IMPI also warned that a return to fuel price regulation could send a negative signal to international investors by suggesting that Nigeria was returning to unpredictable and politically influenced pricing policies.
“This policy shift would scare away international capital and freeze modern Public-Private Partnerships (PPPs), with repercussions for funding critical legacy infrastructure projects and a damning effect on production and productivity,” it said.
The group argued that Nigeria’s infrastructure deficit could not be effectively addressed by returning to policies that, in its view, contributed to previous economic difficulties.
It also criticised Atiku’s proposed “Follow-the-Barrel” approach, describing it as a potential replacement of conventional cash subsidy with a discount on crude oil revenue.
According to IMPI, the policy could once again prioritise short-term relief at petrol stations over investment in roads, hospitals, schools and energy infrastructure.
The think tank further raised concerns about how international credit-rating agencies could respond to a reversal of the current deregulation policy.
“Reintroducing price controls, even under a production model, signals that Nigeria’s long-term investment rules are volatile,” it said.
IMPI warned that the policy could trigger sell-offs in Nigeria’s Eurobonds, increase sovereign borrowing costs and make access to international capital more difficult.
It also expressed concern about the impact on domestic refineries, including the Dangote Refinery.
The group said price controls could squeeze refinery margins and increase regulatory and financial risks for major refining investments.
“Private mega-facilities like the Dangote Refinery rely on global pricing logic to service their multi-billion-dollar commercial bank loans. Forcing refineries into complex pricing formulas increases regulatory risk, endangers their cash flows and threatens a rise in Non-Performing Loans (NPLs) across the banking sector,” IMPI said.
The think tank further claimed that renewed fuel price intervention could affect Nigeria’s access to concessional international financing.
It argued that institutions such as the World Bank and International Monetary Fund assess actual market distortions rather than merely the accounting description used for subsidy programmes.
“Because the model artificially lowers local energy prices through state intervention, it would breach the policy conditions tied to outstanding World Bank Development Policy Financing,” IMPI said.
The organisation warned that this could potentially affect concessional loan disbursements and increase the Federal Government’s dependence on more expensive domestic borrowing.
IMPI therefore urged Nigerians to consider the wider fiscal, investment and economic implications of returning to fuel subsidy rather than focusing solely on the prospect of cheaper petrol
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