The presidential candidate of the Social Democratic Party (SDP) in the February 2023 election, Mr Adewole Adebayo, speaks with some journalists on the increase in the pump price of petrol by the government, and other sundry issues. SUBAIR MOHAMMED brings excerpts.
Given the jacking up of the price of petrol to N617 per litre consequent to the removal of fuel subsidy, would you still label critics of subsidy removal as hypocrites?
To start with, there are two types of people who criticise the subsidy removal. There are the hypocrites and people who are consistent in their criticism. Some of us who criticised the subsidy removal have grounds to criticise the policy but those who supported anyone or any platform that said they would remove subsidy from day one are hypocritical.
Once you agreed to throw a five-year-old child from a 10-storey building, you cannot say I would be surprised if the child broke his limbs. There is no way you will implement the subsidy removal policy as they are doing it now that you won’t have the same consequences.
Economics does not permit cheating; you can only cheat in politics. You can inflate numbers in politics, but when it comes to economics, you can’t. You have to make the right policies because the consequences of wrong policy implementation will follow.
When we talk about hypocrisy, it didn’t start with the labour unions. It started with President Bola Tinubu who vehemently opposed former President Goodluck Jonathan when he removed the subsidy and they all took to the streets against it. But when he (Tinubu) came to power, he took the opposite direction and finished everything once and for all. It is not a political statement when you say people are hypocritical. We predicted all this. We discussed it then.
Nobody can pretend that they are not aware that it will affect the cost of living and push more people into poverty. There is nothing new in what has happened, it is just the natural consequence of the removal of fuel subsidy. And that was why during the presidential debate, we pushed for an alternative measure; that they should not do it. But they have done it and nothing has surprised me. In fact, it appears that this might just be the beginning except drastic steps are taken.
Would the prices of petroleum products have been different if the country’s refineries were working?
Except when production is problematic, it is always better to produce locally. We have a duty to refine locally and it is a policy decision. It doesn’t automatically guarantee lower prices, but it guarantees employment, reliability in case of distortion in the market and you have marginal decrease in cost. Look at other things that are being produced in Nigeria. Their prices are not going down. The cassava we consume are planted and harvested in Nigeria. Why is the price of cassava not falling?
For over a decade, we have been producing cement in Nigeria. Former President Olusegun Obasanjo once said that when we started producing cement locally, it would come cheaply. But cement has never become cheaper. Rather, the cost is rising. When government wants to commit your resources to their favourites, they will tell you that let us put our money in the hands of rich private people and you will get good prices along the way.
Economics doesn’t have a brother or sister; once a person is in a capitalist world and he is trying to maximise his profit, he will sell anything to his own mother at any price. So, price mechanism is just a small part of developmental economics.
In view of the astronomical fuel pump price, some people are suggesting a choice in compressed gas, what do you think?
Those are micro-economic decisions for individual firms to make because a government that cannot guarantee a price of petrol and takes a policy decision and says ‘it is not my responsibility to guarantee petroleum prices’, such a government cannot guarantee CNG or LNG. I think what the government needs to do is to foster energy production by lowering the cost for everybody, including finance cost, infrastructure cost, freight cost and regulatory cost.
Talking about drastic steps, apart from the N8,000 palliative, what other steps would you advise the government to take?
We should stop misusing the word ‘palliative’. The N8,000 is from the existing 2023 budget. The carryover is the by-product of plans former President Muhammadu Buhari administration left behind as to how they would manage the subsidy removal.
Even this $800 million from the World Bank was negotiated by the past government. Policy watchers shouldn’t behave as if they didn’t know that it was in the offing. It appears that the government is not aware of what we call monetary neutrality.
When you have no food, no means of transportation and no medical care, throwing money is not going to increase the number of service providers. It is not going to increase the value of real goods in the market. The N8,000 would give room for wastage. When the money gets to the beneficiaries, it is useless to them in the real terms. In the end, it may cause a bit of inflation.
The Nigerian elites are behaving as if there are no alternatives to subsidy removal. Subsidy has gone. I don’t agree with it, but it is a policy of the government and it appears that every mainstream political party and analyst agreed to that bad policy.
But if you want to continue along that path, what you do is to delink the people from the value chain of petrol. And the way to do this, for example, is from the transportation and logistics point of view. You make sure that the price of petrol does not impact the ability of people to commute.
In cities in Europe, America and around the world, common people don’t feel the negative effects of the upward or downward adjustment of the price of petroleum because their governments have provided public transportation that has been delinked from that. The common people are the easiest to take off that line.
You said there could be further dislocation in the price of petrol if there is further dislocation in the price of crude oil and depreciation of the naira?
There are three factors affecting it and none of them is accidental. It is the by-product of our politics. We are either importing as we are importing now, or we are preparing the market in continuation of importation, meaning, even if you are producing petrol in Lagos or Port-Harcourt or Akwa Ibom or Kaduna, the intention of the policy makers is just that we don’t regulate the prices of telephone, shoes or clothing or anything you buy in the market; you just follow what goes on in the international market. That is the policy position taken by the APC, the PDP and the Labour Party, the mainstream right wing parties in Nigeria.
They are leaving the naira to what they call market forces and the market is regulated by foreign currency. Unfortunately, most of the things people need in their lives are controlled by government policies but politics determines who goes into government. Your well-being, sustainability, employment, purchasing power, ability to preserve the fruit of your labour, to live in peace, all these are impacted by government’s decisions. These are the things you should consider when you are in politics.
Are you implying that the unification of the foreign exchange market and removal of the fuel subsidy by Tinubu’s administration is geared towards helping the friends of the government?
Is that not obvious? I am not saying it pejoratively. In economics, everything is about choice. There are many alternative routes to development.
Nigeria is a resource-rich country. I am not saying that because of its population, I am saying it because of the quality of people we have. Nigeria is rich in manpower. I think it is not too late for the government, starting with President Bola Tinubu and others, to have a rethink and a backup plan. I am saying with all sense of responsibility that if they go the way they are going, they will fail woefully. This is not because the government hates the people, but because they are adopting models that have never worked. In the past two months, more people have fallen into the poverty circle. This will surprise President Tinubu himself because his government is yet to succeed in lifting five people out of poverty.
Subsidy is one of the about 2,000 programmes that require spending government money. If you are looking at the top 100 money wasters, subsidy for petrol is not one of them.
The running costs of the National Assembly, the presidency and the military are major wasters of government money. We need the military but not the waste that is there. The third is the management and funding of the JV (Joint Venture) and production sharing contract. The fiscal management of taxation, and the waivers they give and the way we subsidise foreign exchange.
READ ALSO FROM NIGERIAN TRIBUNE
and then