The Presidency has challenged former Vice President Atiku Abubakar to disclose how a proposed return to petrol subsidy would be financed, warning that selling petrol below its actual cost could reopen pressure on public finances, reduce funds available to governments and raise borrowing.
Presidential spokesman Bayo Onanuga, in a press release issued on Thursday, 20 August 2026, said Nigeria’s petroleum market had changed since the subsidy regime ended, with domestic refining capacity now supplying locally produced petrol.
Onanuga said Atiku was free to propose a different economic policy ahead of the election but should provide clear answers on the annual cost of restoring subsidy, the source of funding and whether borrowing would be required.
He also raised questions over the legal basis for bringing back the arrangement, noting that the Petroleum Industry Act had provided for the end of subsidy by the close of June 2023.
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The Presidency put the economic cost of petrol at about N1,200 to N1,300 per litre, saying any lower selling price would leave a funding gap that government or another public institution would have to cover.
It said such a burden could lead to reduced money for infrastructure and social services, lower allocations to states and the 774 local government councils, more public debt or a combination of those outcomes.
Questions over funding
Onanuga said the former subsidy system involved public institutions carrying the difference between the regulated pump price and the actual cost of obtaining and supplying petrol.
He said subsidy liabilities running into trillions of naira were still recorded in the books of the Nigerian National Petroleum Company Limited, while crude oil had at different periods been pledged against loans used to finance the scheme.
The press release also said the NNPC faced severe financial pressure in 2024, owing suppliers billions of dollars.
The Presidency rejected Atiku’s claim of a N30 trillion windfall or savings from subsidy removal, maintaining that no such money was sitting idle for distribution.
It said about N15 trillion that could have gone into financing discounted petrol had instead gone into the coffers of the federal, state and local governments.
The three tiers shared about N3 trillion from the Federation Account in July, a record distribution, the release said.
Onanuga said the subsidy discussion should also take account of changes in how petrol is supplied in Nigeria.
The country previously depended heavily on imported refined products, with government carrying the cost gap created by regulated pump prices. The release said substantial domestic refining capacity had altered that arrangement.
Dangote Refinery is now a major supplier of locally refined petrol, while smaller refineries, including Aradel’s, also operate in the sector.
The Presidency warned that restoring subsidy could affect local refining economics and place smaller operators under financial strain, with possible implications for jobs and foreign exchange.
It also said Nigeria now exports refined products to Europe, Asia and the United States, contrasting that situation with the period when refined petroleum products were among the country’s biggest imports.
Legal and market hurdles
The release said restoring subsidy would involve more than fixing a new pump price.
Government would need to establish a legal, fiscal and administrative system for financing and managing the programme under the present petroleum-market arrangement, it said.
The Presidency asked whether the National Assembly would need to amend existing Petroleum Industry Act provisions and petroleum-sector rules.
It also questioned how subsidy payments would be checked and protected from abuse.
Onanuga said Nigerians should also know what component of petrol pricing would receive government support now that much of the product is refined locally.
The administration acknowledged that higher petrol and transport costs had placed heavy pressure on households and businesses.
It said the Federal Government was promoting compressed natural gas as a cheaper fuel option, putting its cost at about 70 per cent below that of petrol.
Taxis, cars and distribution trucks can run on CNG, while Dangote and BUA have CNG vehicles in their fleets, the release said.
The Presidency said commercial transport operators would need to pass lower energy costs to passengers and consumers for such savings to be felt more widely.
Onanuga said the administration supported public discussion on the cost of living and economic policy but insisted that proposals to revive subsidy should come with full fiscal and legal details.
“We believe sustainable relief is different from recreating a fiscal arrangement that will again cripple our country,” he said.
The Presidency asked Atiku to state clearly how much a new subsidy programme would cost each year, where the money would come from and how the scheme would operate in Nigeria’s present refining and petroleum market.
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