Powerful interests behind subsidy scam —Bewaji, Ex-Reps Minority Leader

Former Minority Leader in the House of Representatives and member of the Subsidy Committee set up by the National Assembly in 2005, Dr Wunmi Bewaji, speaks with BOLA BADMUS on the petrol subsidy removal by President Bola Tinubu and how the government can address its attendant economic hardship.

Nearly all the candidates in the last presidential election promised to remove petrol subsidy, but definitely each of them would have his approach to achieving that goal. But what people are saying is that before President Tinubu made the announcement that subsidy is gone, he ought to have put the palliatives on ground to cushion the pains on the people. What do you say to that?

Yes, you can say alright, you need to have palliatives on ground before announcing the removal, but… the announcement itself was a strategic move by the president. Knowing the powerful cabal behind the regime of petrol subsidy, if he did not make the announcement before the whole world on that day and had delayed it for one month, he would not be able to make the announcement again. And it is still we Nigerians that would be complaining: ‘Oh our debt is now N77 trillion’.  Nigerians would complain. Though a good leader would listen to people, there are difficult decisions which a good leader must take and damn the consequences and I think that is what the president has done. Yes, we need palliatives, but I am not a supporter of it.

Why?

During the Coronavirus period, you saw what Nigerians could 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. 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 the Minority Leader of the House of Representatives then, so 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 do not know anything about subsidy. The people that are behind subsidy regime 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, which is already happening, is a transition from fossil fuel to clean energy. I never thought it would come so soon. When Lagos State imported some electric vehicles (buses), some people were shouting, is this what we need now? Some people were complaining, saying this is ‘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.

Another thing which, unfortunately, Nigerians are not even thinking about is if a large percentage of our annual income 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, the natural gas, now, as we are doing that, should we also not think that other countries can be doing so, I mean other countries that buy our crude oil? 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 is going to be worth it.

What I would expect, the form of palliatives I want is not one where we are transferring cash. I do not 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.

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 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. You have 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 petrol subsidy is that the market inefficiency that has been going on for over 30 years has been removed. We are now going towards a kind of efficient operation of market forces of demand and supply.

There are two major factors on market efficiency when it comes to petroleum products: you are talking of availability and 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, it means that eventually you are going to have a situation whereby you are not going to have new investments.

For example now, in the last 25 years, the only importer of fuel into the country is the NNPC. They are the one that would license those who are to import and let me tell you ‘import’ in quote. Yes, they do not 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 is why you need a licence. Of course, NNPC said it would only import not more than 30 per cent just to create stability for the market. Now the private investors have 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, then you do not need the licence of NNPC to import again. You can now import directly. That is the meaning of the removal of petrol subsidy. What that means is that at the end of the day, the products would be available everywhere. As 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 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 and 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. It 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.

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?

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, it 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 $10 billion on subsidy alone. In 2022, the same amount of $10 billion. 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 $2 billion into mass transportation, that means the cost of transportation can be brought down heavily. So that is 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 a practical solution to food insecurity in Nigeria. The country is going through a terrible period of food insecurity and I think we need to do something about it. I think there should be a direct answer. I am not talking of the Anchor Borrowers programme. I am talking of a direct intervention, where vast arable land around us can be cultivated. I think the Federal Government can start a kind of social security investment, like it is 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 sold, and they are cheaper in the market. So we need to do some interventions. Why I said we should have a para-military approach to it is when you give money to the farmers, it actually ends up in private pockets and, of course, at the end of the day, look at Anchor Borrowers programme,  how much of it can we see the results? Where are their products? What are they producing? We cannot see them in the market. So the government needs to invest heavily. It is not just pushing out fertilisers and all those. Those are cosmetic approaches to solving food insecurity.

There is an 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 them to go to their farms. So if insecurity is not allowing them, maybe if you now have about four, five, six, seven Brigades with thousands acres of land, planting corn, planting tubers of yams, planting tomatoes, and then these products are coming to the market, there would be enough products. Look, we need to think outside of the box if we want to solve our problems.

What kind of collaboration do you expect between the National Assembly, and the presidency to move the country forward?

The collaboration I will want is a synergy; there must be a synergy between the National Assembly and the Presidency. I expect President Tinubu to institute a parliamentary caucus headed by him. This parliamentary caucus is one where National Assembly members would be meeting regularly with the president and his cabinet members, where policies are discussed at the party level. When I talk about National Assembly members, I mean APC members in the House of Representatives and the Senate. They would form a parliamentary caucus headed by the president.

When you have such a parliamentary caucus and all his cabinet members are there, the policies, programmes of the government would be discussed and agreed upon. And that is how members of the party would be privileged to every policy of the government that is coming up or that is still being debated.

It is not that members of the party would be sitting down inside the National Assembly and getting to know about a particular Bill, right there just as members of the opposition parties. What is the benefit of them being members of the ruling party? All this is the practice all over the world and the earlier we start, the better.

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