FUEL SUBSIDY PROPOSAL MAY SCARE INVESTORS, IMPI WARNS

The Independent Media and Policy Initiative has warned that former Vice President Atiku Abubakar’s proposal to restore fuel subsidies could discourage foreign investment and weaken confidence in Nigeria’s regulatory environment.

The policy think-tank raised the concern in a statement issued by its Chairman, Omoniyi Akinsiju, amid renewed debate over the future of petrol pricing in Nigeria.

Atiku has proposed replacing the existing consumption subsidy model with a production-focused approach under which local refineries would receive crude oil at discounted prices and pass the savings on to consumers.

However, IMPI argued that the proposal could create uncertainty for investors if refineries and other operators were required to work with politically determined petrol prices.

The group said such an arrangement could undermine the Petroleum Industry Act, which established a commercially driven framework for Nigeria’s downstream petroleum sector.

IMPI also argued that discounted crude allocations could function as a hidden subsidy by reducing the oil revenue available for distribution to the Federal Government, states, and local governments.

The group warned that price controls could discourage marketers from supplying remote areas, potentially resulting in shortages and encouraging black-market activities.

It urged the government to focus instead on measures that improve productivity, increase crude oil production, strengthen infrastructure, and reduce the cost of doing business.

The subsidy debate comes more than three years after President Bola Tinubu announced the removal of petrol subsidy in May 2023.

While critics have highlighted the impact of higher fuel prices on households and businesses, the Federal Government has maintained that subsidy removal has increased resources available to the three tiers of government.

Other economists and energy experts have expressed differing views, with some supporting targeted interventions for vulnerable Nigerians rather than a full return to the previous subsidy regime.

IMPI maintained that Nigeria should prioritise long-term economic reforms and productive investment rather than policies that provide short-term relief at the expense of fiscal stability and investor confidence.