The Independent Media and Policy Initiative (IMPI) has said President Bola Tinubu could not have retained the petrol subsidy when he assumed office on May 29, 2023, insisting that doing so would have contravened the provisions of the Petroleum Industry Act (PIA).

The policy research group said Tinubu’s declaration that “subsidy is gone” during his inauguration was not a new policy decision but an affirmation of the reality created by the 2021 PIA, which provided for the end of government intervention in the downstream petroleum sector from June 2023.

In a policy statement on Wednesday, signed by its Chairman, Dr Omoniyi Akinsiju, IMPI argued that delaying the announcement would have created greater economic distortions, including hoarding, artificial scarcity and cross-border diversion of petroleum products.

The group said the President’s unscripted declaration provided a decisive signal that the transition to a subsidy-free regime had begun.

“Our research showed that President Tinubu’s explicit, unscripted declaration during his inaugural address served as a decisive policy signal to close the transition window and eliminate administrative ambiguity,” IMPI said.

According to the group, any staggered approach could have encouraged marketers and other operators to exploit the remaining subsidised inventory by engaging in speculative hoarding and diversion.

“By ending the subsidy on day one, the administration signalled to international financial markets, rating agencies and domestic stakeholders that Nigeria was committing to long-term structural reforms,” the group said.

IMPI said the policy subsequently enabled the Federal Government to redirect resources previously used for subsidy payments while introducing measures aimed at cushioning the impact of higher petrol prices on Nigerians.

“While the immediate declaration effectively ended under-recovery deductions from the Federation Account, the administration subsequently rolled out a sequence of structural and social mitigation policies,” it said.

Among the measures, it listed the Presidential Compressed Natural Gas Initiative (PCNGi), which it said was designed to provide a cheaper alternative to petrol for mass transit and commercial transportation.

The group also cited increased allocations from the Federation Account Allocation Committee (FAAC), temporary wage awards for public sector workers, the new national minimum wage and targeted conditional cash transfers for vulnerable households.

It further pointed to the administration’s efforts to expand domestic refining capacity, culminating in the naira-for-crude policy, which it said was aimed at reducing foreign exchange-related bottlenecks in supplying crude to domestic refineries.

However, IMPI turned its attention to proposals by African Democratic Congress (ADC) presidential candidate Atiku Abubakar and Nigeria Democratic Congress (NDC) counterpart Peter Obi advocating a return to some form of fuel subsidy, describing the position as economically dangerous.

The group particularly criticised Atiku’s proposal for the government to supply crude oil to local refineries at discounted or fixed below-market prices, arguing that the arrangement would amount to a “production subsidy” and create another major drain on public finances.

“At different fora, over the past two months, Atiku had proposed a model requiring the state to supply crude oil to local refineries at discounted or fixed below-market rates,” IMPI said, describing the proposal as “a dangerous populist deception designed to mask a massive fiscal drain under the guise of local industrial support.”

The policy group also faulted what it described as the assumption that the government has unlimited crude oil available to subsidise domestic refining.

“Policy proposals that promise cheap energy through state-mandated crude discounts are economically unsustainable. They rest on the false premise that the state has unlimited, unencumbered crude oil it can give away without consequence,” IMPI said.

According to IMPI, Nigeria’s gross crude production currently averages between 1.35 million and 1.65 million barrels per day, but only about 800,000 to one million barrels directly accrue to the Nigerian State through NNPC Limited and the Nigerian Upstream Regulatory Commission (NUPRC).

“This represents 55 per cent to 65 per cent of national production,” it said, warning that policies promising cheap energy through state-mandated crude discounts could prove fiscally unsustainable.

IMPI maintained that rather than returning to subsidy, policymakers should focus on strengthening domestic refining, expanding alternative energy sources and ensuring that the benefits of increased government revenues translate into tangible relief for households and businesses.