By Chiwuike Uba

Subsidised credit serves a different purpose. It may help viable businesses finance working capital or investment, but it creates repayment obligations. A household struggling with transport and food costs cannot solve its immediate problem by taking on a loan. Cash support, business credit and fuel-price relief are not interchangeable benefits.

The proposed excess-profit tax raises another distinction. Scarcity can generate windfall gains, and government has a legitimate interest in preventing extraordinary conditions from rewarding abuse. But high profits, legally defined excess profits and unlawful conduct such as collusion or price-fixing are not the same thing.

High profits do not prove misconduct, just as a windfall tax is not automatically harmful to investment.

A tax with a clear legal basis, defensible benchmark, defined tax base and transparent administration could capture genuine windfall gains while protecting ordinary commercial returns. A poorly designed or unpredictable tax could encourage avoidance and weaken investment in refining and storage, where Nigeria needs substantial capital.

Taxation is no substitute for competition enforcement. The announcement does not establish the tax’s precise design or expected revenue. Nor does a promise to ring-fence proceeds for transport support guarantee that beneficiaries will receive them. Published collections, disbursements and independent verification are essential.

Road levies present a similar challenge. Overlapping and unofficial charges increase transport and logistics costs, so addressing them is welcome. But Nigeria is a federation. Not every road charge is unlawful, and the Federal Government cannot abolish every levy imposed under state or local authority simply by announcement.

Invoking the 2025 tax reform laws without identifying the relevant charges, provisions and enforcement institutions risks inconsistent implementation and jurisdictional disputes. Government should identify offending charges, clarify which are lawful, name responsible agencies and publish compliance results.

Otherwise, operators remain caught between official announcements and unofficial collections.

Tomorrow’s energy security cannot pay today’s bills
Compressed natural gas (CNG) and a National Strategic Fuel Reserve are worthwhile long-term ambitions, not immediate answers to this month’s petrol bill.

The government’s claim that CNG is 60 to 70 per cent cheaper than petrol is not a universal guarantee of savings. Actual benefits depend on conversion costs, vehicle compatibility, refuelling infrastructure, financing, safety and location. Where stations are scarce or conversions unaffordable, larger fleets may benefit first while households and smaller operators remain exposed to petrol-price volatility.

CNG could reduce exposure to petrol shocks over time, but infrastructure that has not been built cannot reduce today’s transport fares. Government should publish measurable milestones for stations, vehicle conversions, safety standards and access to finance.

The same principle applies to a strategic fuel reserve. Announcing a reserve is not establishing one.

Its value depends on stock levels, replenishment arrangements, release triggers, storage costs, oversight and public reporting. Without evidence, there is no basis for guessing the appropriate volume.

A reserve that is too small may offer little protection during prolonged disruption. One that is too large or poorly managed could tie up public resources, expose stocks to deterioration and invite procurement abuse or politically motivated releases. Moreover, releasing fuel does not eliminate the cost of replacing it when crude prices or exchange rates rise.

Traffic management and NIPOST addresses may reduce some logistics costs. They are useful supporting measures, but not a complete response to a fuel-price shock.

Reform by principle, or relief by political convenience?
Fiscal reform is not complete when expenditure disappears from the budget. It must also be judged by its consequences for citizens. The old subsidy regime was costly, poorly targeted and encouraged smuggling.

The Presidency is right to acknowledge these problems. But the failure of one arrangement does not make every alternative sound, just as the risks of intervention do not make all intervention misguided.

Temporary relief can complement reform when it is transparent, targeted, time-limited and fiscally sustainable. It can undermine reform when it is opaque, leaves exposures unexamined or is repeatedly renewed at government’s discretion. Repeated interventions may encourage markets to expect further intervention and cause investors to price that uncertainty into their decisions.

The timing of the announcement will attract political commentary, but speculation about motives is not evidence. The more useful test is what the measures deliver. Citizens will judge reform by transport fares, food, electricity, healthcare and the survival of small businesses, not by economic indicators they cannot feel in their daily lives.

The distinction between what is proposed, approved, operational and still under negotiation matters.

Households may form expectations around benefits that do not yet exist. Suppliers cannot price risks under rules they have not seen, while investors may delay decisions when commercial arrangements remain uncertain. Without named institutions, implementation dates, funding arrangements and measurable indicators, the public cannot determine whether the intervention works or whom to hold accountable when it fails.

A policy announcement is not an implementation framework.

The same discipline must apply to the promise of single-digit inflation “in the near term”. Petrol is only one input. Inflation also depends on monetary conditions, exchange rates, food supply, fiscal policy, productivity, competition and expectations. A temporary intervention of unspecified scale and duration cannot guarantee a sustained decline.

Nor does a falling inflation rate necessarily mean falling prices. If inflation declines from 20 per cent to 9 per cent, prices are still rising, only more slowly. Households that have lost purchasing power have not automatically recovered it. Disinflation, falling prices and restored real incomes are different achievements. A credible inflation target therefore requires a baseline, timeframe, intermediate milestones and an explanation of how the measures fit into the wider macroeconomic programme.

From grand announcements to accountable action
The answer is not to abandon the package but to make it scrutiniseable.

Government should publish the pricing methodology, define the cost benchmark and disclose who absorbs any shortfall, how recovery will work, how long the arrangement may last and the maximum exposure permitted. Guarantees and other obligations should be assessed and disclosed under applicable rules.

It should clarify the relationship between the 30-day margin-forgoing arrangement and the N66-per-litre promotional discount, including eligibility, payment conditions, duration and expected consumer benefits. It should also explain how fuel supply will be protected without imposing unsustainable losses on suppliers.

Cash-transfer announcements should specify eligibility, coverage, payment schedules, funding and grievance procedures. Government should track pump prices, transport fares and distribution costs to determine whether relief reaches households.

Road-charge enforcement and any excess-profit tax should have a clear legal basis, a named responsible institution and transparent reporting.

CNG expansion and the strategic reserve should have measurable milestones and operating standards, while remaining distinct from immediate household relief. Every intervention should have a review date, published performance indicators and an exit plan. Temporary measures become harder to withdraw when their duration is vague, their costs are hidden or beneficiaries cannot tell what they are receiving. A clear end date is not a weakness; it demonstrates the difference between emergency relief and permanent policy.

The real measure of reform
Three questions will determine whether this package succeeds. Who pays? Every intervention has a cost, borne now or later by government, NNPC, suppliers, taxpayers or consumers. Who benefits? Relief must reach intended households rather than intermediaries. And how will we know? Announcements must translate into measurable reductions in the cost of living and doing business.

Economic reform must be fiscally credible, socially defensible and institutionally accountable. Nigerians have borne the cost of adjustment. They are entitled to see the risks and the accounts, and to know in plain language who is paying for the cushion.

A press release can announce a policy. Only transparent rules, credible financing and demonstrable results can make it one.
Concluded

Read the remaining part of this article on www.guardian.ng

Prof. Uba is a public affairs analyst.