By Stella Odueme
The Independent Media and Policy Initiative (IMPI) has warned that the proposed restoration of fuel subsidy by the African Democratic Congress (ADC) presidential candidate, Atiku Abubakar, could cost Nigeria at least N12 billion daily in revenue losses.
The policy research group said the proposed production-side crude discount or subsidy model could encourage cross-border smuggling, undermine government revenue and impose significant costs on the national economy ahead of the 2027 presidential election.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, IMPI said its assessment focused on potential revenue losses arising from the smuggling of subsidised petroleum products into neighbouring countries.
According to the group, Nigeria’s domestic fuel consumption under a deregulated regime is estimated at 45 million litres daily, equivalent to about 283,000 barrels per day.
However, it argued that a return to subsidised pricing could push demand to between 60 million and 65 million litres daily, with an estimated 15 million to 20 million litres diverted across the borders into Benin, Togo, Niger and Cameroon.
IMPI explained that if Atiku’s proposed crude discount model reduced domestic petrol prices to N500 per litre, against an estimated international landed cost of N1,100 per litre, the implied subsidy would amount to N600 per litre.
Using an estimated smuggled volume of 20 million litres daily, the group calculated that the resulting fiscal loss could reach N12 billion per day.
At an assumed exchange rate of N1,400 to the dollar, IMPI estimated the daily loss at approximately $8.57 million, translating to N4.38 trillion annually, or about $3.12 billion.
The policy group warned that such losses would have far-reaching consequences for government revenue and national development.
It argued that the N12 billion potentially lost daily would represent revenue foregone from the state’s equity crude sales, which could otherwise contribute to the Federation Account Allocation Committee (FAAC) allocations shared among the federal, state and local governments.
IMPI maintained that the proposed arrangement could effectively divert public resources towards subsidising fuel consumption in neighbouring countries rather than supporting Nigeria’s domestic development priorities.
The group further warned that subsidised fuel prices could create incentives for smugglers to divert petroleum products to neighbouring markets where they could command higher prices.
According to IMPI, the practice could worsen domestic supply shortages, trigger stock-outs at filling stations and prolong queues in communities located in border states.
It also estimated that supplying an additional 20 million litres daily to meet smuggling-related demand would require about 126,000 barrels of crude oil per day.
The group said this volume would represent nearly 15 per cent of Nigeria’s state equity crude accrual, arguing that the resources could instead be channelled towards national economic priorities.
IMPI further cautioned that selling crude oil below international market prices could encourage illicit trading, including unauthorised crude exports and petroleum product smuggling, as traders seek to exploit price differences between Nigeria and neighbouring markets.
The group’s assessment comes amid growing debate over fuel pricing, economic reforms and the policy options being advanced by political actors ahead of the 2027 presidential election.