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By Chukwudi Nweje
Former Minority Leader in the House of Representatives, Dr. Wunmi Bewaji, in this interview spoke on various issues including the removal of Fuel Subsidy by President Bola Ahmed Tinubu
Nigerians across the country are currently facing the pains occasioned by the removal of fuel subsidy, what is your view on that?
I would say without any equivocation that President Tinubu is on a sound economic footing in respect of the removal of fuel subsidy. I would also like to commend him for the free kick that he scored on the day of his inauguration into office as President of the Federal Republic of Nigeria because if he did not announce it that day, he may not be able to do so anymore; it was an ambush strategy. The powerful cabal would have frustrated his efforts to effect that policy.
For another two, three, four weeks, the issue of removal of fuel subsidy would have been thrown under the carpet, but that removal is something that was necessary for the survival of our economy. Nigeria has enjoyed over 30years of energy subsidy and as a result, Nigerians have built a fake lifestyle on supply of petroleum products that have nothing to do with the dynamics of energy market. And what is happening now because petroleum is an international commodity, is that as the world is moving from fossil fuel into clean energy so investment in fossil fuel is dwindling and that’s why worldwide, the cost of fossil fuel is increasing because a lot of investments are now going into clean energy.
Nigeria is not an island, I am telling you even if we refine the products here, the technology is still going to be dollar based, the equipment is going to be dollar based, we don’t manufacture the equipment here, the repairs and maintenance would still be dollar denominated. So even if it is my grandfather that is the owner of the refineries, he is going to run these refineries 90per cent based on a dollarised international market and at the end of the day, he is not going to be able to sell below production price. And what is subsidy? Subsidy is the difference between production price and the pump price. So if production price is N400 and the pump price is N150, what does that mean? It means that is a regime of N250 per litre subsidy and that’s what we have been running for decades, but we can no longer sustain this because Nigeria is broke, the rate of population explosion is unimaginable. We are now 215million people, so the population is catching up, and that’s why we are borrowing. We are already using more than 95per cent of our revenues even for debt servicing. So where do we get money for subsidy from? From where? These revenue we are talking about, 95per cent of it is made up of accruals from oil exports, where else do we get money from to finance our lousy lifestyle? When I say lousy lifestyle, you know an average Nigerian will want to ride 8-valve vehicle, a big, massive jeep, and you have people who have four, five, six, seven cars in their garages. So if you are buying fuel at N150 or N160, it means government is subsidizing it because the landing cost plus every other cost would come to maybe N500 plus profit margin. You know too that you have first- time car buyer who would go and buy a 6-valve or an 8-valve vehicle, do you think a White man, especially in Europe, do you think they are stupid when they buy small, small cars? It is because of fuel consumption, yes, they are cutting their coat according to their cloth. But that is not what we do here in Nigeria. Somebody that is just buying his first vehicle will want to buy a big jeep that will be gulping fuel, so we can’t continue with that waste and we cannot even afford it.
Nearly all the candidates in the last Presidential Election promised to remove fuel subsidy, but definitely each of them would have his approach to achieving that goal, so what people are saying is that by the time President Tinubu is taking that step, he ought to put the palliatives on ground to cushion the pains on the people, and reason why the pain is too much now, what do you say to that?
Yes, you can say alright, you need to have palliatives on ground before announcing the removal but like I earlier said, the announcement itself was a strategic move by the president, knowing the powerful cabal behind the regime of fuel subsidy. If he did not make the announcement before the whole world on that day, I can tell you, if he had delayed it for one month, he would never have made that announcement, and it is still we Nigerians that would be complaining, oh, our debt is now N77trn! Nigerians would complain, people would complain, so a good leader, yes, he would listen to people but there are difficult decisions which a good leader must take and damn the consequences and I think that’s what the president has done. Yes, we need palliatives, we need succor but I am not one of the supporters of palliatives.
Why?
During the Corona virus thing, you saw what Nigerians can do with palliatives and so what are we calling palliatives? What I want or what I would desire is for the government to put in place certain measures. Like I said, there was a Subsidy Committee that was set up by the National Assembly in 2005, it was headed by the late Senator Ibrahim Mantu. I was a member of the Committee as Minority Leader of then House of Representatives, and as a result I was privileged. As I am talking to you I have privileged information, which I cannot disclose because these are security briefings in the Villa. You see, a lot of people are talking out of ignorance, they don’t know anything about subsidy. The people that are behind subsidy regime, they are no small people, they are powerful interests with International backing. So posterity would praise President Tinubu for what he has done, and I am also sure that Nigerians in the fullness of time would see the wisdom in what he has done too.
Yes, like I said, I am not a fan of palliatives but what I would want and this is already happening, we need a transition from fossil fuel to clean energy. I never thought it would come so soon. When Lagos State, you know, imported some Electric Vehicles (Buses), some people were shouting oh, oh, oh, is this what we need now? Some people were complaining, saying this Eko for show, do we need those buses now? You can now see that the governor, Mr. Babajide Sanwo-Olu, actually had foresight in doing what he did because this is the new thing worldwide. People are transiting from dirty fuel into clean energy. And you see, another thing which unfortunately Nigerians are not even thinking about is if a large percentage of our annual income, annual revenue is coming from the petroleum sector which is fossil fuel and the world is transiting from fossil fuel to clean energy, does that not give a kind of foresight into what is going to happen to our revenues in the nearest future? The same way the Nigerian government now is working day and night to ensure that our vehicles move from use of petrol to CNG, this natural gas. Now, as we are doing that, should we also not think that other countries can be so, I mean other countries that buy our crude? If they are doing so, in the nearest future, what then happens to our crude oil? So this transition is going to be painful but it’s going to be worth it.
What I would expect, the form of palliatives I want is not one where we are transferring, this cash transfer, I don’t think that is what we need. What we need is investment in clean energy in terms of transportation, moving our vehicles from use of petrol to natural gas. We need a lot of investments in areas which you know the government is already working on, and I think they should ramp up whatever they are doing on that. They should ramp it up at the earliest possible time.
What about our refineries that are not working?
We would go back to our refineries, these are idle assets. I believe those refineries should be concessioned to the private sector. Nigeria should not spend a single Kobo on those refineries anymore, we should concession them to the private sector to manage because look, if we fix the refineries tomorrow and you put politicians there to run them, they would run them aground in another five years and then the story will become the same. And you’ve seen what Dangote has done, he built an entirely new refinery from the scratch and then why can we not have the Dangotes of this world, as private investors especially now? You know, one big benefit of removal of fuel subsidy is that the market inefficiency that has been going on for over 30 years has then be removed. We are now going towards a kind of efficient operation of market forces, that is, the forces of demand and supply.
There are two major factors when we are talking of market efficiency when it comes to petroleum products. You are talking of availability and you are also talking of affordability. If you talk only of affordability which 99.9 per cent of Nigerians like to talk about and you neglect availability, that means that eventually, you are going to have a situation whereby you are not going to have new investment.
For example now, in the last, let’s say 25 years, the only importer of fuel into the country is NNPC. They are the one that would licence those who are to import and let me tell you ‘import’ in quote. Yes, they don’t import, it is actually the NNPC that does the import in their name, on their behalf and why?
Why?
It is because of the subsidy. Let me explain it to you. If landing cost of a litre of fuel plus profit is N550 and we are selling at N150 per litre as the pump price, that means that the subsidy is N400 per litre which means that any interested investor cannot just wake up one morning and say I want to import fuel from Venezuela because if you import it from Venezuela, it gets to Nigeria at N550 per litre, how will you sell it at N150 per litre? So that’s why you need a license, are you getting me? Yes, but when you remove subsidy and NNPC has removed its hand from importation, of course, NNPC said it would only import not more than 30per cent just to create a stability for the market, now the private investors have started. They have now started, I think one private company received its shipment last week.
So it means that if fuel per litre is now being sold at the efficient market rate, which is N550, that means you don’t need the license of NNPC to import again, you can now import directly, that is the meaning of the removal of fuel subsidy. What that means is that at the end of the day, the products would be available everywhere. Like I said, Nigerians like to talk about affordability, now how about availability? But if we balance the two, availability and affordability and then if these private investors now start importing, I foresee a situation whereby a lot of our bank directors, I am just saying this in confidence, and even banks themselves would even start importing fuel. They would start using customers’ idle funds to import fuel. What does that mean? It means that at a point in the nearest future, supply is going to outstrip demand and it is going to start to force the price down.
People might have different access to capital, somebody may have access to cheap capital, another person may have access to capital from an expensive source if he has to pay a very high interest rate. Someone else may not have to pay any interest rate, that means that person can import cheaper. Somebody may even have access to International oil black market. Yes, there are a lot of countries that are selling, for example, Russia, Venezuela that are selling products on the high seas cheaper than regular market. So that means people who have that kind of access and they are able to bring in vessels from those sources can afford to sell cheaper and so once suppliers start fighting themselves, it then means that purchasers, buyers would start to smile.
There was even a particular video trending where somebody who claimed to be a marketer said that a litre of petrol should not sell more than N250, saying marketers are the ones making the huge profit. Besides, you would recall that the marketers made a U-turn to go and visit President Tinubu, congratulating him over the subsidy removal despite being against the removal long before the president was sworn in, what do you say to that?
No, it’s market forces that would determine the price. Before now, it was the marketers that were determining the price and how did they do it? They have something they call template, so this template is what they use between them and NNPC. So every time they go to the market, they sit down with the NNPC and they say this is the cost now, this is the source and we are buying from the x-market and this is the cost, including the insurance and freight, as well as the demurrage. They put all those things together and their profit margin. I was privileged to all this information as a result of my membership of that Committee of the National Assembly. And NNPC would then give them a bound that okay you can sell from within N150 and N155 or between N150 and N160 per liter. That has been what has been in operation ever since and that is why the marketers have always been able to dictate the price because in the end, you discover that when you are talking of the regime of fuel subsidy, the entire regime is a scam in many regards.
Look, somebody is given license to import 20million litres of petrol and the person involved imported five million litres but he gets his documents signed by the regulators that he actually imported 20million litres. Somebody is given license to import 50million litres, he did not even import one litre of petrol, but he gets his papers signed that he imported 50million litres of fuel. If you know the scam in fuel subsidy, you would cry for this country, it’s sad, it’s sad.
But why is the government not willing to arrest and prosecute those involved in such scam?
No, there are a lot of cases, go to EFCC, go to Special Fraud Unit (SFU), yes, go to them. Let me tell you, what has happened is that a lot of security agents have become part of the cabal. They’ve become part of the game so it would be stupid for any government to start chasing shadows, yes, I am telling you. It is an industry on its own. Even if President Bola Tinubu abandons his government to concentrate on fuel subsidy thieves, even for the next 100years, he can’t get to the bottom of the matter. This is an entrenched thing, this has strongest cabal in Nigeria because this is an industry that has produced billionaires without lifting a finger. They would stay right inside their sitting rooms, and they are making billions of naira. So I totally am in support of the removal of fuel subsidy.
What I look forward to is a situation whereby we would have aggressive investment in natural clean energy, yes, converting our vehicles, our generators to use natural gas and we would benefit from that.
What further advice do you have for the government now that a lot of money is going to be saved from the removal of fuel subsidy to ensure that the country benefits from the decision taken?
Yes, there is a misconception about the money because people are talking about how much have we made? Nigeria is really not like making money from the removal, what is happening is that the money that we would have wasted to pay for subsidy, we are no longer going to waste it.
But let me tell you something, this money we are talking about, NNPC is saying that the Federal Government is owing it, we have even been borrowing money to pay for subsidy for over one year now.
For nearly two years, we’ve been borrowing money to pay for subsidy, that’s how bad the situation is. So what is happening now is that the money we would have been wasting to pay for subsidy which would have landed in private pockets, we are not wasting that money as before, so that means we can now convert that money. What that means is that as time goes by, Nigeria, financially we are going to become stable.
Like for example now, the first thing is that we won’t need to borrow money for subsidy, that one is gone. Then, again, it means that, when you look at our debt profile vis a vis our budget, that means that as we grow more revenue, we are able to service our debt, then we are also able to put some tangible amount into infrastructure.
For example, last year, Nigeria spent $10billion on subsidy alone. In 2022, the same amount of $10billion, yes. So that $10billion, if we have not spent that money, imagine what we could have used $10billion for? We can put it into our rail transport system. If we put even $2billion into mass transportation, that means the cost of transportation can be brought down heavily. So that’s the kind of thing I would like the government to do, we need investment in agriculture to bring down the prices of food items, yes. We need practical solution to food insecurity in Nigeria, Nigeria is going through terrible period of food insecurity and I think we need to do something about it. I think there should be a direct, I am not talking of the fraudulent Anchor Borrowers’ Programme of Emefiele, I am talking of a direct intervention, yes where vast arable land around us can be cultivated. I think the Federal Government can start a kind of social security investment, like it’s done in Egypt.
Yes, we have the Army, they are heavily into agriculture, nothing stops us from having what I call Essential Services Command; we can start it in Nigeria. You can have a Command of the Armed Forces whose job would be to mass produce food for the market. And these items are now sold, and they are cheaper in the market. So we need to do some intervention. Why I said we should have a para-military approach to it is when you give money to the so- called farmers, it actually ends up in private pockets and of course, at the end of the day, look at Emefiele’s Anchor Borrowers’ Programme, how much of it can we see the results, where are the products, what are they producing? We cannot see them in the market. So government needs to invest heavily, it’s not just pushing out fertilizers and all those. Those are cosmetic approaches to solving food insecurity.
There is urgent need for this government to do something about food insecurity because it is going to be getting worse because the regular farmers are saying that insecurity is not allowing us to go to our farms. So if insecurity is not allowing them, maybe if you now have like four, five, six, seven Brigades with thousand acres of land, planting corns, planting tubers of yams, planting tomatoes, and then these products are coming to the market, there would be enough produce. Look, we need to think outside of the box if we want to solve our problems.
