What Nigeria can learn from Tinubu’s market policy, Atiku’s production proposal and international experience
By Suleyman A. Ndanusa, PhD, OON
When petrol becomes more expensive, the pain does not stop at the filling station. Bus fares rise. Food costs more to move. Small businesses pay more to run generators. Even families without a car feel the increase in the price of nearly everything that travels by road.
That is why Nigeria’s fuel subsidy debate has returned with such force. President Bola Tinubu’s policy lets petrol prices respond to market conditions. Former Vice-President Atiku Abubakar proposes a different kind of support, help local refineries obtain crude more cheaply, so that petrol made in Nigeria can cost less.
The two policies answer different questions. Tinubu’s approach asks, how can government stop carrying the open-ended bill for cheap petrol? Atiku’s asks, can government help Nigerians feel less of the price shock while building local refining? Both questions matter. But the public deserves more than a slogan from either side. We need to know what each policy costs, who benefits and whether the relief reaches ordinary people.
The difference between the two approaches is easiest to see in who carries the shock. Under Tinubu’s market policy, petrol prices respond to changes in crude prices, the naira and the cost of distribution. Government no longer promises to pay the gap between the market cost and a fixed pump price, so households and businesses feel more of the increase directly. The policy aims to end a large and opaque public bill, reduce arbitrage and encourage investment and competition. Its weakness is that the savings may not become visible relief or better services.
Atiku’s proposal would shift part of that burden back to the public. Government would support eligible local refineries, for example by supplying crude on preferential terms, so locally made petrol could cost less. The intended benefits are lower living costs, local refining, jobs and energy security. But unless consumers receive a lower price, the support could end up as a transfer to refiners. And unless it is capped, the public bill could grow without limit.
Atiku’s idea is not necessarily the old subsidy wearing a new name. The old arrangement mainly made imported petrol cheaper at the pump; his proposal is to lower the cost of producing fuel here. That difference could matter. But cheaper crude is not automatically cheaper petrol, and a new label does not make a public obligation affordable. The details will decide whether this is useful industrial support or another large promise with no clear bill attached.
The former system was expensive. NNPC reported a petrol subsidy bill of about ₦4.39 trillion in 2022. The World Bank estimated that more than ₦8.6 trillion was spent between 2019 and 2022. Before the policy changed in 2023, the Federal Government said a full year of subsidy could cost about ₦6.7 trillion. These figures cover different periods and use different accounting bases, so they should not be added together as if they were one audited bill. [3][10][14]
The old system also came with hidden costs, disputed claims, uncertainty about how much petrol Nigerians actually used, smuggling, arrears and lost opportunities to spend on roads, schools, health or power. The World Bank found that the benefits were poorly targeted. Much of the support went to firms, transport operators and people who used more fuel, rather than being concentrated on the poorest households. [14]
The latest official estimate says subsidy removal mobilised ₦15.8 trillion for the Federation between June 2023 and December 2025. The Federal Government’s estimated share was ₦5.43 trillion; states received about ₦6.52 trillion and local governments about ₦3.88 trillion. In other words, ₦15.8 trillion was not a pot of cash sitting with the Federal Government. It was an estimate of resources across the three tiers, shared through the Federation. [3]
The Federal Government also reported ₦20.4 trillion in additional resources over the period, but that broader figure includes ₦11.85 trillion in additional borrowing and ₦3.12 trillion in other revenue. It reported ₦30.64 trillion in extra spending pressures. So the figures tell a complicated story, the reform created fiscal room, but the Government’s wider spending needs were greater than the extra resources it reported. [2][3]
The figures do not, by themselves, tell us whether ordinary Nigerians are better off. The IMF says recent reforms improved macroeconomic stability, while living conditions remain difficult. Its 2026 assessment found that 9.2 million households had enrolled in the cash transfer system against a target of 15 million, and that households had received at most three payments since 2023. Fiscal gains are important; so is whether relief arrives where and when it is needed. [5]
The appeal of Atiku’s proposal is easy to understand. Many Nigerians have borne higher transport and living costs, while the benefits of reform have been harder to see. People are not necessarily asking government to bring back every feature of the old subsidy. They are asking why the adjustment fell so heavily on households before dependable alternatives were ready.
Before removing support on this scale, government needed a reliable way to identify vulnerable households and get assistance to them quickly. It needed affordable public transport, a plan to ease the cost of moving food and goods, and a clear promise about how the savings would be shared and spent. Cash transfers were introduced, but later assessments show that coverage and payments fell short of the stated ambition. The World Bank had called for large scale compensation alongside reform. [5][13]
There was also a supply question. Local refining and dependable crude access could have reduced the country’s reliance on imported petrol and foreign exchange. But the domestic refining system was not yet operating at a scale that could shield households when prices changed. The Petroleum Industry Act requires crude supply to the domestic market to be on a willing supplier, willing buyer basis. It does not guarantee every refinery the right grade, quantity, timing or price it needs. [6]
After removal, government needed to report regularly on the savings, the support reaching households and the services being built with the money released. The detailed ₦15.8 trillion accounting did not appear until August 2026. Publishing it was useful, but the long wait left Nigerians asking whether the savings had disappeared, gone to debt and spending, or improved life outside government offices.
No country offers a perfect template, and Nigeria should not copy another country’s policy without asking whether its institutions and infrastructure are comparable. But the experience elsewhere makes one point clear: governments can combine price changes with targeted support, or protect people by making alternatives to private fuel use more available.
When Indonesia raised subsidised fuel prices in 2022, it announced cash, wage and social assistance worth about Rp24.2 trillion, including support for roughly 20.65 million lower income families. That is a useful lesson in timing, to announce and fund the cushion with the price change. Indonesia did not, however, leave subsidies behind for good; its experience also shows how quickly support can return when prices and politics turn difficult. [1][12]
Malaysia has kept a more targeted petrol subsidy for citizens, with rules on who qualifies and how much subsidised fuel can be bought. When global prices rose, it restored a higher monthly quota. The lesson is that targeted subsidies can preserve relief, but they still need good data, clear limits and an honest account of their cost. [9]
India offers a different lesson. Under its PAHAL scheme, eligible households buying cooking gas receive the applicable subsidy directly in their bank accounts. That is easier to track than a subsidy on petrol sold through a vast retail network, but it shows how household support can be separated from the price of the product. [4]
Singapore puts public money into keeping buses and trains affordable and reliable. This is not a petrol subsidy model, and Nigeria cannot simply import Singapore’s urban design or tax base. But the principle is useful, a dependable bus or train gives people a way to travel without being exposed to every swing in petrol prices. [11]
These examples point to a wider answer. A subsidy can soften a price shock, but public transport, reliable electricity, safer roads, efficient food logistics and direct support to vulnerable households can reduce the shock at its source. The two approaches belong in the same conversation.
It is both, but the deeper weakness is the shortage of buffers that help people cope when prices move. A fuel subsidy lowers the price of every eligible litre, whether the buyer is poor or rich, whether the fuel moves food or powers a luxury vehicle. It is a blunt instrument. Yet where buses are unreliable, roads are poor, electricity is uncertain and businesses depend on generators, higher fuel prices quickly spread through the whole economy. The pain reaches people who may never own a car.
That is why subsidy removal can be economically sensible and still be badly cushioned. The absence of public and social infrastructure does not make a universal subsidy efficient; it makes the consequences of removing it harsher. A low income commuter, a farmer transporting produce and a trader running a generator face different problems. A single pump price discount treats them all the same.
Tinubu’s approach has a strong fiscal case, but its promise to households depends on savings being accounted for and converted into visible help and useful services. Atiku’s proposal speaks to the hardship and to the desire to build local refining, but it will fail if it lowers refinery costs without lowering the price Nigerians pay. And even if it succeeds at the pump, it cannot fix poor transport, unreliable electricity or weak social protection by itself.
A careful, temporary production subsidy might be one bridge through this transition. It cannot be the destination. The destination should be an economy where a global oil price increase does not decide whether a family can get to work, a farmer can reach the market or a small business can keep the lights on.
Before Nigerians can judge the proposal, Atiku should publish its price formula, the number of litres it would cover, its annual cost, the source of the money and the pump price reduction consumers should expect. The public should know whether the support applies to each verified litre of petrol sold in Nigeria or to a much larger volume of crude. A discount on a whole barrel can cost far more than a carefully capped payment for petrol actually produced and sold at home.
The support should be open to every refinery that meets clear standards, not negotiated privately with one company. Regulators should trace the crude from supply to refinery, check how much petrol is produced and sold in Nigeria, and publish the benefit passed through to consumers. Any loss of oil revenue should be counted alongside direct budget payments. The scheme should have a firm annual ceiling, an independent audit and an end date, perhaps after a 12 to 24 month trial, unless Parliament renews it after a public review.
There is also a legal question. The Petroleum Industry Act provides for market based wholesale and retail prices. If the proposal cannot operate under the current law, the necessary amendment should be made openly before the scheme begins. [6][7]
The possible bill varies sharply with the size of the support and the number of litres covered. If government paid ₦50 for each eligible litre, and refineries produced and sold 25 million litres a day in Nigeria, the annual cost would be about ₦456 billion. At ₦100 per litre, the same volume would cost about ₦913 billion a year; at ₦150, about ₦1.37 trillion. If the eligible volume were 35 million litres a day, the annual costs would be about ₦639 billion, ₦1.28 trillion and ₦1.92 trillion respectively. These are illustrations, not forecasts of domestic production or of Atiku’s actual plan. The final bill would depend on the support rate and the verified volume covered.
The APC campaign council has suggested that a crude based version could cost ₦17 to N21 trillion a year. That is a political estimate whose assumptions have not been independently verified, but it underlines why Nigerians need the actual formula before they can assess the proposal. [8]
The same demand for evidence applies to the current government. It should keep showing how subsidy related resources are estimated, how much each tier receives, what the Federal Government retains, and what reaches people through cash support, transport, electricity and other services. States and local governments should explain their own shares too.
The old subsidy cost too much and too often benefited people who needed it least. Removing it addressed a genuine fiscal and governance problem. The Government’s ₦15.8 trillion estimate is substantial, but it is shared across the Federation and measured against a counterfactual. It does not, by itself, show that households received enough relief or that public services improved.
Atiku’s production subsidy could support local industry and give consumers some relief if it is limited, transparent, legally sound and designed so the benefit reaches the pump. Without those safeguards, the country could once again pay heavily while citizens wonder who actually benefited.
The most useful question for both candidates is simple, how many naira of public money will be spent, and how much real benefit will Nigerians receive for it? And beyond the pump price, what will government build so that the next rise in fuel prices does not once again become a national emergency?
Suleyman A. Ndanusa, PhD, OON, is an economist, lawyer, strategic studies scholar, and public policy thinker and practitioner with extensive experience in financial markets, regulation, governance, national Security and development.
References
[1] Cabinet Secretariat of the Republic of Indonesia. “Govt to Provide Additional Social Assistance as Prices of Global Commodities Soar,” 29 August 2022. https://setkab.go.id/en/govt-to-provide-additional-social-assistance-as-prices-of-global-commodities-soar/
[2] Channels Television. “Petrol Subsidy Removal: Where Did Nigeria’s ₦15.8trn Savings Go?” 19 August 2026. https://www.channelstv.com/2026/08/19/explainer-petrol-subsidy-removal-saved-%E2%82%A615-8tn-where-did-nigerias-savings-go/
[3] Federal Ministry of Finance. “Nigeria’s Economic Reforms — By the Numbers,” August 2026. https://finance.gov.ng/?post_type=faq
[4] Government of India, Press Information Bureau. “PAHAL and Ujjwala Beneficiary Authentication,” 25 July 2024. https://www.pib.gov.in/Pressreleaseshare.aspx?PRID=2036865&lang=2®=48
[5] International Monetary Fund. Nigeria: 2026 Article IV Consultation, June 2026. https://www.imf.org/en/news/articles/2026/06/09/pr26190-nigeria-imf-executive-board-concludes-2026-article-iv-consultation-with-nigeria
[6] Petroleum Industry Act 2021, sections 109 and 205. https://pia.gov.ng/wp-content/uploads/2022/08/PIA-2021_compressed-1.pdf
[7] Premium Times. “Atiku Govt Will Seek PIA Amendment If Law Blocks Production Subsidy,” 3 October 2026. https://www.premiumtimesng.com/news/top-news/914217-atiku-govt-will-seek-pia-amendment-if-law-blocks-production-subsidy-amaechi.html
[8] Premium Times. “APC Challenges Atiku to Explain Legal, Fiscal Basis of Petrol Subsidy Proposal,” September 2026. The ₦17–₦21 trillion estimate is attributed to the APC campaign council and is not independently verified here. https://www.premiumtimesng.com/news/top-news/911044-apc-challenges-atiku-to-explain-legal-fiscal-basis-of-petrol-subsidy-proposal.html
[9] Reuters. “Malaysia to Reinstate 300-Litre Monthly Limit per Citizen on RON95,” 30 August 2026. https://www.reuters.com/business/energy/malaysia-reinstate-300-litre-monthly-limit-per-citizen-ron95-transport-fuel-pm-2026-08-30/
[10] Reuters. “Nigeria’s NNPC Spent $10 Billion on Fuel Subsidy in 2022,” 20 January 2023. https://www.reuters.com/world/africa/nigerias-nnpc-spent-10-billion-fuel-subsidy-2022-2023-01-20/
[11] Singapore Ministry of Transport. “Keeping Public Transport Fares Affordable Beyond Vouchers and Concession Passes for Commuters,” 2026. https://www.mot.gov.sg/news-resources/newsroom/keeping-public-transport-fares-affordable-beyond-vouchers-and-concession-passes-for-commuters/
[12] World Bank. “Indonesia’s Fuel Subsidies Reforms,” 2024. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099748505212431959
[13] World Bank. Nigeria Development Update, June 2023. https://www.worldbank.org/en/news/press-release/2023/06/27/nigeria-can-seize-the-opportunity-to-realize-its-growth-potential
[14] World Bank. “Turning the Corner: Nigeria’s Ongoing Path of Economic Reforms,” 13 June 2024. https://www.worldbank.org/en/news/feature/2024/06/13/turning-the-corner-nigeria-ongoing-path-of-economic-reforms
