The heated debate over the fuel subsidy return proposal continued yesterday as President Bola Tinubu and former vice president, Atiku Abubakar, disagreed over the position of Dangote Refinery on the reintroduction of fuel subsidy.
Dangote refinery on Thursday warned that changes in government policies on fuel pricing controls and the reintroduction of subsidies could hurt its refining margins and make financial forecasting more difficult.
The warning, contained in the company’s prospectus for its proposed initial public offering (IPO) read “Any reintroduction of fuel subsidies, price controls or other forms of intervention in the downstream petroleum sector could affect domestic pricing dynamics and the relationship between international crude oil prices and domestic refined product prices, which may, in turn, affect refining margins on products sold within Nigeria,” the company said.
Reacting, however, President Tinubu’s spokesman, Bayo Onanuga, on his X handle on Friday posted thus: “Dangote refinery warned that changes to government fuel price controls and subsidy reintroduction could hurt its refining margins and make financial forecasting harder.
“Not only will Dangote Refinery be imperilled, but the entire economy will also go into ruin. Let Atiku Abubakar, the political chameleon, know this.”
In a reaction, Atiku accused the Tinubu Presidency of deliberately distorting concerns raised by Dangote Refinery in a desperate attempt to discredit his production subsidy proposal, saying the refinery’s warning against arbitrary pump-price controls actually exposes the dishonesty of the government’s argument.
Atiku, in a statement by his Senior Special Assistant on Public Communication, Phrank Shaibu, said the Dangote Refinery was right to insist that a private refinery cannot be forced to bear losses caused by government-imposed prices, but added that the Presidency was being deliberately dishonest by pretending that this was what his plan proposed.
“Dangote raised a legitimate business concern. The Presidency turned it into a campaign of fear.
“A refinery that has invested billions of dollars cannot be commanded to sell indefinitely below cost and absorb the losses. That would be reckless, economically destructive and unfair to any private investor.
“But that is precisely why our proposal is different. We are restoring subsidies through a production subsidy model, not an import subsidy model.
“The difference is simple enough for every Nigerian to understand. Import subsidy spending public money to support petrol refined abroad and brought into Nigeria. A production subsidy supports crude oil refining here in Nigeria, enabling Nigerian refineries to produce fuel more cheaply and Nigerians to pay less.
“Think of it like rice. If the government wants rice to become cheaper, it has two choices: spend money making imported rice cheaper, or help Nigerian farmers reduce the cost of producing rice at home. The second option lowers prices while also creating jobs, strengthening local businesses and keeping economic activity in Nigeria.
“That is exactly what we are proposing for fuel. We are restoring the subsidy, but moving it from importation to production. The subsidy follows the barrel refined in Nigeria.”
Atiku said his proposal would reduce the cost of crude feedstock supplied to qualifying domestic refineries through a transparent, capped and independently verified mechanism.
“If the crude entering a refinery becomes cheaper, the cost of producing petrol should also come down. That reduction should then reach the average Nigerian while preserving legitimate refining costs and a reasonable commercial margin.
“There is a clear difference between helping a producer reduce costs and forcing that producer to sell at a loss.
“The Tinubu Presidency knows this. If it pretends otherwise, then it is not confused. It is deliberately misleading Nigerians.”
Atiku said the government’s attempt to equate every subsidy with import dependence was a brazen, dishonest and crude distortion designed to mislead Nigerians in the policy debate.
“Under our plan, support will be tied strictly to crude refined in Nigeria. Nigerian refineries will benefit. Nigerian workers will benefit. Nigerian businesses will benefit. Nigerian consumers will benefit.
“If you do not refine in Nigeria, you do not qualify. This is not a subsidy for foreign refineries. It is not a subsidy for importers. It is not a subsidy for middlemen. It is a subsidy for Nigerian production.”
