Atiku’s ‘Production Subsidy’ Proposal: A New Name for an Old Oil Policy?

By Kunle Wizeman Ajayi

In February 2026, former Vice President and African Democratic Congress (ADC) presidential candidate Atiku Abubakar renewed his call for the privatisation of Nigeria’s state owned refineries.

Atiku argued that Nigeria would have been better served by selling the refineries before rehabilitation rather than continuing to spend public money on facilities he considers economically unsustainable.

“Nigeria would have been better served by selling the refineries pre-rehabilitation to avoid ballooning debt and the steady depreciation of what have effectively become liabilities.”

That position is important in understanding Atiku’s current proposal for what he calls a “production subsidy” for locally refined petroleum.

With the 2027 elections fast approaching and the cost of petrol remaining a major public concern, Atiku and his media team have sought to distinguish this proposal from the traditional fuel subsidy model.

But what exactly does “production subsidy” mean, and who ultimately benefits from it?

What Atiku Is Proposing

In September 2026, Atiku said a future government under his leadership would introduce a production subsidy for crude supplied to Nigerian refineries.

His media aide, Phrank Shaibu, explained that the proposal would involve government funding relief on the production side rather than subsidising imported petrol.

The proposal, as presented, is that government would make the cost of locally refined petroleum lower by subsidising the crude supplied to domestic refineries rather than directly paying to reduce the retail price of imported fuel.

Shaibu has argued that if government wants to provide additional relief to consumers, the expenditure should be openly budgeted, capped and audited.

That distinction is central to Atiku’s argument.

But critics of the proposal can reasonably ask another question: Would subsidising domestic production actually translate into significantly lower prices for consumers, or would it primarily reduce production costs for private refiners?

That question deserves more than political slogans.

The Dangote Question

Atiku’s proposal has also been closely linked to the economics of the Dangote Refinery.

Atiku has argued that a private refinery should not be compelled to sell petroleum products below its production cost. He has described concerns raised by Dangote over margins, price controls and policy uncertainty as legitimate business concerns.

For critics, however, this raises a fundamental issue: Where should the line be drawn between supporting domestic refining and protecting consumers from high pump prices?

A production subsidy could lower the cost of crude going into a refinery. But whether those savings would be fully passed on to motorists, transport operators, farmers and households would depend on the structure of the subsidy, the regulatory framework, market competition and how prices are determined.

Those are not minor details. They are the substance of the policy debate.

From Public Refineries to Private Refiners

There is also a larger question surrounding Atiku’s longstanding position on public refineries.

In February, he argued that Nigeria should have privatised the refineries before spending heavily on rehabilitation. He criticised the latest attempts to revive them and said continued public investment in facilities that cannot operate profitably was economically indefensible.

This position is consistent with Atiku’s broader advocacy for a greater private sector role in the management and financing of Nigeria’s oil infrastructure.

Critics interpret this as evidence that his current production-subsidy proposal would further shift the centre of Nigeria’s petroleum industry toward private refiners.

That interpretation, however, should be distinguished from what Atiku has explicitly proposed: his stated production subsidy policy is designed to support domestic refining, while his earlier statements clearly support privatisation of state owned refineries.

The NNPC and the State Owned Refinery Debate

The condition of Nigeria’s public refineries has become increasingly controversial.

In February 2026, NNPC Group Chief Executive Officer Bayo Ojulari said the state owned refineries were operating at substantial losses and that the company was considering partnerships with experienced private operators. NNPC was also reported to be discussing a potential partnership with a Chinese company while retaining ownership rather than simply selling the assets outright.

Atiku subsequently argued that such arrangements should be abandoned and that the refineries should have been sold before rehabilitation.

The disagreement therefore goes beyond petrol prices. It concerns a fundamental economic question:

Should Nigeria continue to own and operate strategic refining assets, or should refining increasingly be left to private capital under government regulation?

Atiku has clearly stated his preference for privatisation.

But Will Consumers Actually Pay Less?

This is perhaps the most important question for Nigerians.

A subsidy directed at production is not automatically the same thing as a subsidy directed at consumers.

If government reduces the cost of crude supplied to a refinery, the policy may reduce the refinery’s input costs. But the final price paid at the filling station will also depend on refining margins, distribution costs, taxes, logistics, exchange rates, market competition and the regulatory framework.

Therefore, the central test of any production subsidy policy should be measurable:

How much public money will be spent, how much will pump prices fall, who will receive the subsidy, and how will government verify that consumers not merely producers benefit?

Those questions should be answered before the policy is presented as a solution to Nigeria’s cost of living crisis.

The Case for Public Refining

Supporters of public sector refining take a different position.

They argue that Nigeria, as a major crude producing country, should maintain significant public control over strategic petroleum infrastructure and use functioning government owned refineries to provide affordable fuel.

From this perspective, the objective should not simply be to reduce the cost of production for private companies but to ensure that Nigerians benefit directly from the country’s natural resources.

This argument also raises questions about the future of the Nigerian National Petroleum Company Limited and the role government should continue to play in the downstream petroleum sector.

The Iranian Comparison

The original argument also points to Iran as an example of a major oil producing country where domestic fuel prices remain substantially lower than Nigeria’s.

But comparisons between countries must account for differences in exchange rates, taxation, domestic refining capacity, energy subsidies, government controls, sanctions, consumption patterns and the structure of their petroleum markets.

The relevant lesson is therefore not simply that one country has cheaper petrol than another.

The deeper question is how each country structures ownership, production, pricing and subsidies and who ultimately bears the cost.

The Real Debate Is About Who Benefits

Atiku’s supporters can argue that his production-subsidy proposal is different from the old system of subsidising imported petrol.

His critics can argue that subsidising production without strong price transmission mechanisms could leave consumers exposed while reducing costs for private refiners.

Both positions raise legitimate policy questions.

What should not be lost in the political debate is the need for transparency.

If government is going to spend public money to lower the cost of crude for domestic refiners, Nigerians should know:

These are the questions that can determine whether a production subsidy becomes a consumer-relief mechanism or simply another form of government support for the petroleum industry.

Beyond Political Slogans

Nigeria’s fuel crisis cannot be solved by changing the name of a subsidy.

It requires functioning refineries, transparent pricing, effective regulation, reliable crude supply, competitive markets and accountability for every naira of public money committed to the petroleum sector.

Atiku’s February position on privatising state owned refineries and his September proposal for a production subsidy are part of a much larger argument about the future of Nigeria’s oil industry.

The political question for Nigerians is therefore not simply whether they support or oppose “production subsidy.”

It is more fundamental:

Who should control Nigeria’s oil resources, who should bear the cost of producing petrol, and most importantly who should receive the economic benefit?

Those questions deserve clear answers before Nigerians are asked to accept another major change in the country’s petroleum policy.

• How much the subsidy will cost annually.

• Which refineries will qualify.

• Whether public and private refineries will receive equal treatment.

• How the subsidy will affect pump prices.

• What percentage of the savings must be passed to consumers.

• How the government will audit the programme.

• What happens if refiners fail to pass the savings on.

• Whether the policy complies with the Petroleum Industry Act.