Former Attorney General and Commissioner for Justice, Benue State, Dr Alex Adum, has backed Atiku Abubakar’s proposed fuel subsidy plan, arguing that shifting government support towards domestic refining would help make locally refined petrol cheaper for Nigerians.
Recall that Atiku Abubakar, the 2027 presidential candidate of the African Democratic Congress (ADC), said that if elected president, his administration would restore fuel subsidy under a new model focused on domestic refining. He said the policy would shift subsidy from imported petrol to local refineries, with qualifying operators receiving crude at preferential prices to help lower petrol costs for consumers while boosting domestic production.
Speaking with ARISE NEWS on Friday, Dr Adum said Atiku’s proposal represents a shift from subsidising imported petrol to supporting domestic refining, arguing that the approach would make locally refined petrol more affordable for Nigerians.
“I think Atiku’s policy pronouncements are based on the fact of someone who is reading and studying economics even in old age. Atiku is saying, ‘Look, I am going to move away from import subsidy—which is where the distortions are located—to domestic production and refining subsidy.’ And that means I will only allow crude allocation to refineries that are local on a discounted, differential price rate, to allow them to be able to undertake local refining at a cheaper rate and make domestic supply of petrol cheaper to all Nigerians,” he explained.
He added that Nigeria’s refining landscape has changed significantly since 2023, with the Dangote Refinery and other refineries increasing local refining capacity. Dr Adum said the country could have close to one million barrels per day of refining capacity by the second quarter of 2027, making the implementation of the Petroleum Industry Act’s Domestic Crude Supply Obligation critical to ensuring adequate crude supply for local refineries.
“There were no private refineries functional as of 2023. Fast forward to 2027: the Dangote Refinery alone is refining 700,000 barrels of crude in a day. Then you have other modular refineries that are doing 10,000, 5,000, 20,000. Then you have the BUA Refinery that is due to come on stream in the first or second quarter of 2027. So cumulatively, Nigeria’s local refining capacity by the second quarter of 2027, when the new president is due to assume power, will be in the region of 1 million barrels per day.
“Is ceteris paribus applicable here? Yes. 2023: no local refining capacity. 2027: almost 1 million local refining capacity. So what does the Petroleum Industry Act say? Section 109 of the Petroleum Industry Act imposes an obligation on upstream operators in pursuit of Nigeria’s internal energy security—what you call a Domestic Crude Supply Obligation (DCSO) in the industry. That Domestic Crude Supply Obligation requires that all upstream operators within the Nigerian petroleum ecosystem have an obligation to release a certain quantity of their production for local refining.”
Maintaining that Atiku’s proposal is not a return to the previous import subsidy regime, Dr Adum said the policy would instead focus on subsidising domestic refining. He said that, if elected in 2027, Atiku would enforce Section 109 of the PIA by ensuring that part of Nigeria’s crude production is supplied to local refineries at subsidised rates, helping them refine petrol more cheaply for domestic consumption.
“He has admitted that the challenge of local refining is that the government is not implementing the obligations of Section 109 of the PIA. And Atiku is saying, ‘The day you elect me president, I will make the government that I head implement the obligations encapsulated in Section 109 of the PIA by ensuring that a portion of our domestic crude production is refined for local consumption.’ And Atiku is not saying this in isolation of international best practice,.
“We want the commercial viability of those local refineries, so government is saying when we implement Section 109 under Atiku, by ensuring that a portion of domestic crude production is surrendered commercially, but at a subsidized rate supported by the government headed by Atiku. He’s not asking Bola Ahmed Tinubu to implement that policy now; he is saying, ‘When I become president in 2027, this is exactly what I will do.’ And that is a different policy alternative, because this is a campaign season. What we are required to tell Nigerians is what can we do differently from what this extant government is doing. Atiku is elevating the policy conversation beyond the bidding of charlatans,” he assured.
Addressing concerns over the potential abuse and opacity of subsidy, Dr Adum argued that the key was to relocate the subsidy from petrol imports to domestic production. He said this would make the process more transparent by limiting government support to a small number of local refiners, ensuring the subsidy reaches the producers who need it most.
“Subsidy removal will always be opaque depending on where subsidy is located. If you locate subsidy at the import level, which is consumption, then subsidy will be opaque because there are too many people operating in that environment who are not honest. But if you shift it away to production, you locate it directly to only those who are entitled to receive it, who are the producers. So this is just like when we talk about why do we export our raw materials outside the country and export the jobs—subsidize the subsidy where it matters most,” he argued.
He further argued that directing subsidy to the refining stage would enable local refineries to produce petrol at a lower cost than imported fuel. According to him, this would ultimately translate into cheaper petrol at the pump for Nigerians.
“When you locate the subsidy where it is strongest, which is at the refining link, not at the consumption or importation link, you are going to have petrol produced cheaper than imported petrol,” he concluded.
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