*Says Nigeria has capacity to get her legacy refineries to work
By Lateef Ibrahim, Abuja
Prince Adewole Ebenezer Adebayo ran the February 25, 2023 presidential election on the platform of the Social Democratic Party, SDP. He was one of the proponents of pro-subsidy.
In this interview, Prince Adebayo said, among other issues, that government should liberalize the energy sector to give room for more efficient and effective power in the country even as he chastised the Federal Government for concessioning the Federal property to individuals.
Q: The pronouncement of the removal of subsidy on fuel by President Bola Tinubu had a spiral effect on everything. Some said he should not have made such at that momentous time. What’s your take on this?
A. From what I know, especially for someone who took an opposite view when we started the campaign, President Bola Tinubu said he was going to remove subsidy during the campaign. Former Vice President Atiku Abubakar also said he was going to remove same. When they said that, I told myself that these people, with that kind of statement, that they have lost the election. Peter Obi also came around during the campaign that he was going to remove subsidy. So, I said Nigerians would reject these three people but it turned out that majority of the votes went to them.
For us that do not agree that removing subsidy is the best solution, we cannot come now and pretend that election hadn’t taken place. The people have chosen. No matter what you think about it, the voters didn’t mind them to remove the subsidy or they encouraged these three people to remove subsidy. The only contribution we can make to the discussion is to see how do Nigerians live well, locomote well and grow the economy without the subsidy. There are still subsidies in other areas but this fuel subsidy is gone now. The discussion going on now around the government with the unions is not to remove the subsidy but to see how the government can manage the fall out of the removal. With the removal, it will not cure the problem they want it to cure as time goes on. But as a leader and someone who ran for office, I have no moral authority to criticize a man who says what he would do . You don’t criticize a man for keeping to his word. Just live with it.
Q. Government said the money realized from the removal will be ploughed back to areas like education and health. As it stands there is no alternative to removing subsidy. Or is there?
A. Of course, there is. We need to audit the subsidy money to see that it is not all the money we spent in the name of subsidy. I thought we had capacity to audit properly and meter at every stage. We have capacity to get our legacy refineries to work and any other commercial refinery that any one establishes like that of Dangote. You cannot force them to sell their products because they would be unwise to ignore the marketers around them. You have modular refineries you can create. More so, all monies in government is unified. If I make savings from other leakages else where, I can use it to cushion what I spent on subsidy. If I get more revenue to the government I can also make sure I use that money, if, for example, if you are spending 4 trillion on subsidy, with proper audit, you can reduce it to 2 trillion. But it is not their manifestos, so you can’t force it on them, may be they didn’t believe that we have capacity to use the alternatives, may be they didn’t listen to it or may be they listened more to music of the campaign. The bottom line is that by June ending subsidy is gone. What we may prepare people for is to know that removing subsidy is just one of the options you have to deal with the financial anaemia in government. There are other things you can do without removing subsidy. On top of that after removing the subsidy, it doesn’t mean the problems will go away. If the government wants to grow the GDP by 6%, subsidy savings will help achieve may be 10% of that, you still have about 90% to find money else where. These are the issues they have to deal with. If you look at the 2023 budget as a microcosm, half of that has subsidy provision, the other half doesn’t have. Your half year savings from the subsidy didn’t make a dent in the deficit. We still have to borrow. There is no one door to solve an economy problem. But They have taken one liberal door to solve it. Hopefully, their partners in IMF and World Bank and International community will cooperate with them.
Q. Don’t you think that unintended benefits would come later along the way?
A. We knew how much we consume. Its just that we didn’t want to acknowledge it. To acknowledge, then you will see that people are taking the money away. That is why labour unions complained the other time that they don’t know how much we consume and things like that. The people working at the Atlas cove, pipelines, gas stations, tank farms, different stations across the country, are they not members of your unions, are they not the first to know what comes into the country?
When you ship, Deloitte, the insurance company, knows how much laden in the ship is, how many metric tonnes in the ship, when you finally offload, the owner of the tank farm knows how much is imported. If you go to Atlas Cove now , they know which is coming and how much metric tones coming into the country. Every 33,000 truck loaded is receipted.
All dispensers are metered. If you know how much you consume at the meter point, then your problem is solved. It is not that difficult to know how much we consume and how much is frittered away. I know that to make an economic soup that would be palatable for everyone, subsidy alone won’t be enough, you have other things that you need to look into. For example, if you have savings and you have about 3 trillion from subsidy and you apply it into government, you send 1 trillion and half of it is stolen, the people haven’t gained anything. If you take 1 trillion to Works to make good road and the people get value of 400b, then you haven’t saved anything. If you don’t generate employment, you have a problem. If you have cost push inflation because the workers and government would combine together, that injures the economy. Why? The government have raised factor cost, raising the price of petrol, workers would say minimum wage should no longer be N30,000. Minimum wage should be N100,000. May be by the time they argue on negotiation, it would drop to 70k. All of them are driving the economy naughty, because inflation is going to come, there is going to be much more money to put out. You want interest rates to come down, how will it come down below inflation? If money is losing its value by 25% per annum and I lend you money at 15%, I am losing already, even if you out interest. These are some the factors that government need to look into . I know subsidy is hard and as person that may go to the people tomorrow for support for votes but the truth of the matter is that you (the people) removed the subsidy.
I warned you that you shouldn’t try it but it has been done now. You have to take the injection with the pain, hopefully, the malaria would be cured.
Instead of quarreling with government over subsidy which is already gone, you allowed it to go. We must start to hold the feet of government to fire . Start scrutinizing the expenditure, not only expenditure meant to cushion the effect of subsidy but expenditure generally. We have to start saving money. We have to start growing our GDP. The investors coming into the country have to have an ability that could have a long term stability, that is why even though you might be against the policy being announced , flip flop over policies is even worse. Today, fuel price is 470. In 6 months time, you are bringing it to 700. No, float it since you have decided to take the bullet for that one but make sure there is competition so that people don’t end up having ability to choke supply because that is what end up with other products that have been freed. NNPCL must get out of importation business . Don’t rig the market. Allow everybody to bring their product to the market place. I don’t want government to fix the price .NAFDAC doesn’t import drugs, it only regulates. NNPCL should liberalize it. The business of bringing fuel into the country should be between the oil marketers and their bankers.
Q. The president talked about interest rates and the forex market. These are purely monetary issues resting squarely with the CBN. What do you have to say about it?
A. If you studied APC renewed hope manifestos, you won’t be surprised at what is playing out presently, because these are clearly what they said they were going to do. Of course, there have been some contradictions . For example, if you say you want to unify the exchange rates and that is if you allow the market to determine it, you can pretend that you don’t know much about the market and say the dollar is 500. Then people wont bring their dollar out. So what we call dual exchange rate is what government says its selling exchange rate and what another person sells his own. So, the only way the government can unify the market is selling its own dollar at the market rate because government cannot force me to sell my dollar to them at their own official rate,. Rather than do that, I will keep it, take it outside and do whatever I like with it, which is what is happening. So, the unified market, when created , should not be under the control of government. Government will just be a player there, which means government will now begin to think of how not to be a demander but supplier. But if the government is demanding more than it is giving, then government must be blowing its own currency. Demand and supply will be the order of the day. If that is the case, how do you now control the interest rates which follows the markets? If interest rate is not following the market and you are forcing banks, nobody will lend. If the CBN wants to lend at a very low rate, say to commercial banks at 8% so that commercial banks can lend at 12%. Now, if your artificial priced up bank loan is 12%, even if you are not a player in that sector ,say agriculture, people in order to access that fund in that artificial low exchange rate, will go there and pretend to be farmers. If I want to set up a TV station I will just say TV station farms limited so that I can be qualified. So you cannot contradict yourself. If you are in the market, your entire body have to be inside the market.
Then the government must control its own behaviour such that its procurement is done without too much corruption in it. That is proving that purchases are right, paying its workers on time and helping the workers. And one of the ways government can help the workers is to make sure that all the things you use fuel for, government provides alternative for the people. If the people have to worry about other social services like housing and health care and they have to worry to put their children in public school, then you haven’t gained anything from the subsidy cut. You must be able to take all this expenditures and socialise them and you can then leave the market alone. But what the government had been doing before is socialise the market and then ask you to go into the market to compete for your basic needs. But if the government wants to follow some of our ideas in the SDP, what they can do is allow the market to be free and socialise essential needs like housing and transportation. If you check the 3rd Mainland bridge, it will show you how we have been mismanaging. If we had the metro line and the red buses,
90% of the vehicles on the bridge will not be there and people will still get to work on time. So, if you socialise these expenditures, the cost will surely go down.
Q. How and where do you think government is going to get the funding you enumerated now, giving the fact that consistently the earnings of government have been nose diving?
A. Two fishermen going to the same sea doesn’t mean they will catch the same amount of fish because the fishing skill of one would reflect. Two farmers farming next to each other will not have the same yields as the farming skill of each farmer will reflect in the output. What you get out of government depends on who you put in government . Nigeria is a rich country. There is enough money to take care of all of us. There is no doubt about that. The resources are there and it is now left for the government, if they are efficient, whether they want to collect all their revenues. When AD (Alliance for Democracy) and the then ACN (Action Congress of Nigeria) took over Lagos and boasting of the increased revenue in Lagos. It wasn’t that it was a different Lagos, it is the same Lagos. They claimed their ingenuity brought about the rise in the revenue to Lagos. Lagos is inside Nigeria and Lagos is not the richest in Nigeria in terms of ability to generate revenue. So, if they focus on not using government resources to dispense favours, if they focus on revenue to use it for public good. If they focus on efficiency in procurement management, they can succeed. If they lead by example and reward productivity and ensure hanging around President, the vice President, the Villa and government houses generally and know that it is not the easiest way. Now the
government must be a promise keeper because it is the government that is distorting the economy because government will issue a contract to a contractor and the contractor in turn will go and collect loan from banks, government will default in their payment, the contractor too will default to the bank and then government comes again, gives money to AMCON to buy back the bad debt. All these will have to go away. And they should stop
concessioning government assets to private people .
When the late Chief Raymond Dokpesi founded AIT, he didnt take over NTA. He only bought licence to create AIT. When Igbinedion University was created, why didn’t they concession University of Benin to Chief Igbinedion? I don’t believe we should be concessioning government property to any one. President Obasanjo said the Port Harcourt Refinery should be given to Aliko Dangote to run but Yar’Adua said no. Now it has paid off for Dangote as he now has his own refinery and yet the Port Harcourt refinery is still intact. Chances are that if he had been given the Port Hacourt refinery, he wouldn’t have created the Dangote refinery today. Mother of all, do well with Infrastructure. That’s one area president Buhari, inspite of his one trillion faults, when it came to investing in infrastructure, he focused on it to the best of his ability, he focused on that. This people that came now, I believe they have better ability than him but they should not forget that investing in infrastructure- rail line, better airport, expand the sea port because ability to travel round the country, ability to carry good and services cheaply round the country, ability to move round the clock and that is why the issue of security should be dealt with decisively. I think Buhari started well on the issue of power for generation and distribution which he removed from exclusive list to the concurrent list. They should further liberalise it to make sure that all this Discos that just collect money without power, goes away, so that we can have a proper energy market.
Q. Is the country’s 46.2 trillion debt profile an encumbrance to the renewed hope?
A. I am more nuanced when it comes to debt. Its not the load that kills, it is how you carry the load. Government debt cannot kill the government. Three things to look out for about the debt. What did you use the debt for? The structure of the debt; what are the terms of the debt and the tenor of the debt? You also look at the issue of productivity. When you say your debt is high relative to your GDP but so if you increase your revenue and your GDP, your debt will comparatively fall.