Former House of Representatives Minority Leader, Dr. Wunmi Bewaji, speaks on various issues of national interest, in this interview with BOLA BADMUS. Excerpts:
PRESIDENT Tinubu has been in office for about 18 months now, please do an assessment of the administration’s policies and their impact on the country.
The government that came into office about one and a half years ago, I believe that the quality of the reforms that the president initiated cannot materialize overnight because we had a systemic failure as far as the finances of Nigeria is concerned. You have a situation whereby the government of former President Goodluck Jonathan squandered a lot of resources.
During the Goodluck Jonathan era, we sold oil for as high as $140 per barrel and Nigeria was producing as high as 2.5 million barrels per day, but we squandered everything. The excess crude account was depleted; Nigeria’s foreign reserve was depleted, and then Buhari came. If Buhari had initiated these reforms, you know in his eight years, maybe we would not be in this kind of situation we have found ourselves. But instead of confronting that problem, Buhari and his team adopted a method that ended up compounding the situation and what was that method? They resorted to borrowing; they engaged in both external and internal borrowing. The Ways and Means went as high as over N30trn, that is Ways and Means only. And we borrowed so much, and by the time Buhari was leaving, the debt profile was almost N80trn. And there was a forex backlog of about $7bn. So you see this government came and brought two principal reforms. One, the unification of the exchange rate which completely eliminated arbitrage from of forex market. This is a huge feat by this government, which it ought to be applauded for and then the second one, is the removal of the fuel subsidy, which is unsustainable. Subsidy is immoral not just because limited number of people were benefitting from it, the fact that somebody is eating somewhere and other people were perceiving the aroma, that was the situation. The people that were eating were the billionaires, the oil tycoons. Nigerians, by buying petrol at N180 per litre, were only perceiving aroma of what these people were eating; it was unsustainable.
The subsidy was anchored on external borrowing; we were borrowing from China to pay for subsidy. Yes. And the thing is that as far as borrowing is concerned, we had borrowed to almost a point of insolvency. We were spending as much as 98 percent of our revenue for debt servicing only. All these analyses may not be what the common man on the street would understand. The common man on the street would probably look at the economy, maybe the price of a bag of rice or price of a litre of petrol, but economic fundamentals go beyond that. As far as I am concerned, the open market reforms that had been initiated – some people are making the mistake to think it is IMF, it is World Bank, no – it is common sense; government cannot continue borrowing to fuel my car.
This issue of subsidy removal is not quite clear. Some people are still of the opinion that government is paying this subsidy which it said had been removed. Also, people’s opinion is that governments in other countries still pay subsidy on some certain things, that nowhere you find that subsidy had been completely removed. What is your reaction?
All over the world, there is nowhere fuel is being subsidised. Nowhere. As we speak today, I watched a video yesterday of a Nigerian content creator, who went to Ghana to find out the price of fuel and other items and discovered that while we are crying here in Nigeria that oh! there is high inflation, it is worse in Ghana. The price at which they are buying fuel in Ghana is far higher. Today as we speak, a litre of fuel in Nigeria costs less than anywhere in West Africa. So how much is a 35 or 50cl bottle of water today? The thing is that people think local refinery will bring about low price of fuel, the local refinery we are talking about is business. The local refinery we are talking about as regards the components, the equipment, the maintenance, everything is in dollar. So that is how people are deceived to think that Dangote Refinery is coming to crash the price of fuel. Look, Dangote is a businessman. Dangote invested $20bn to put up that refinery, a majority of which will come from bank loans on which he would be paying close to 40 per cent interest. So Dangote would buy all the equipment in dollar, maintain his factory in dollar, a lot of expatriate workers, probably over 70 per cent of the workforce there are expatriates; you pay them in dollars. He would buy crude mostly in dollars. Dangote is importing crude from Venezuela. He is importing crude from America; you cannot expect Dangote to import crude at international market rate and then sell below production price.
But the expectation is that Dangote was going to produce crude products at cheaper rates. For instance, at a time, diesel was being sold at around N900 by him, just to let us know what was going to happen; what happened thereafter? People are fingering that some cabal may have taken over.
There is no cabal. Dangote is a businessman. If you had watched Dangote videos in the last 72 hours, you will know that Dangote is a businessman. He cannot sell below cost price.
But we should know that government is supplying crude to him locally.
Yes, government can supply to him locally. It is a good thing that government is doing that. What that can provide would be stability. Yes, that can guarantee price stability, but it cannot crash the price below production cost; it cannot. Supplying crude to say in naira and then Dangote also selling to us in naira is enormous advantage for the economy in the long run because it would remove a huge pressure from our forex market, provided it is competitive. Dangote price must be competitive, but why is Dangote not disclosing his own price openly? Why is Dangote pleading, probably, I would use the word begging local marketers to come and lift from his refinery and at what price? Why is Dangote not mentioning his own price? NNPCL had said that ‘you are free to sell to whosoever you wish to sell to,’ and so why is it difficult for Dangote to say this is how much I am giving it out to local markets? Dangote is a businessman and I will never support monopoly and I also think that this government would also never support any monopoly. If Dangote’s price is profitable, local marketers would patronize him. If it is not profitable, if it is cheaper for them to import, they will import. And nobody has told Dangote where to sell his refined products; he could sell to Ghana, sell to America, sell to Europe. So if he wants to sell to Nigeria, his price ought to be competitive that would make Nigerian marketers to say yes, it’s more profitable for us to buy from him. This is because, for example, the average local marketer importing from abroad will have to pay for both insurance cost and freight. So you if you buy from Dangote, you wouldn’t have to pay probably for insurance and also for freight. So those components, however negligible the figures might be, should reduce the price to an extent. But Dangote’s price is almost like the same with that of the imported fuel or probably maybe worse than imported fuel. That is the only reason I think the other marketers would think we probably can get this product cheaper outside than from Dangote. Dangote is saying that ah! I have over 500 million liters of petrol in my storage, but at what price?
Now, the high costs of materials in the country have generally been linked to very high cost of petroleum products and this is against the background of several promises made by the Federal Government that Port Harcourt, Warri and other refineries, belonging to it, would soon start functioning. What do you think is causing the delay? Is it because some people are trying to frustrate such efforts?
That is a conspiracy theory. No, not at all. The local refineries, the work being done there is going on perfectly, even the TUC chairman, who is also the chairman of PENGASSAN, a petroleum union, has come out openly to say that members of the union are working on those sites and that they are giving them a feedback and that even TUC Exco too, they are also monitoring, paying visits to those sites. He has assured Nigerians that this work is going on, day and night. And he said something that is remarkable; he said that this is the first time a government would have announced that it is refurbishing refineries and union members would actually see the work and be participating in that work. So the work is going on. They may give some tentative deadline that they have not been able to meet, but the work is going on. What many people don’t understand is that like people talk about the Port Harcourt refinery, but apart from the old refinery that is being refurbished, there is also a new refinery being built at that same site, which is also nearing completion. And the old refinery that is being refurbished is almost like turning it into a new refinery because of the new components that they are bringing in. I must say that the government has done a good thing to say that when we finish this thing, it is not going to be business as usual. We are not going to give it to bureaucrats to run it aground like before; we are going to concession it to the private sector so that it can run efficiently and profitably, which is a good thing. Now, once those four refineries’ refurbishment is completed, we will know that we are never going back to the previous situation whereby after running for some few months, they would break down again. If they would be concessioned to the private sector, that would guarantee that they can run efficiently. But the thing is that like I said earlier, even if we have those local refineries running, that would not mean that fuel is going to sell below cost price. There would always be a cost price below which the private sector person or the private sector organization that would take them over would not sell below. The only benefits I see here are one, price stability. Yes, once we have all our four refineries, the Dangote refinery and some other ones working, there would be price stability.
Two, there would be competition like we have seen something happening now between Dangote and NNPCL and also the local marketers. The local marketers think they can get fuel abroad, maybe at cheaper rate. Dangote also wants to sell. Yes, this is the competition that the government promised, which has started happening right as we speak. At the end of the day, I think Nigerians would be the beneficiaries of that competition. So if you can have all those four refineries joining in that competition, what it would mean is that there would be fierce competition, and then it would also enhance our foreign exchange market because I see a situation in the nearest future where we would not spend a dollar on fuel importation. So that would remove over 70 percent of pressure off our foreign exchange. It would make the naira to bounce back, very strongly. Naira is going to become a strong currency beginning with the selling of crude in naira, especially selling of finished products in naira too.
So that is the huge benefit that we are expecting, but Nigerians should not think that the era when the government would be filling their tanks would ever come back. The government has given very viable alternative, that is the CNG initiative. What I expect now is for the government to put in more funding into the CNG. Already, the government is giving one million kits for free. The government needs to do more than that. There should be more enlightenment and it is a shame that the Ministry of Information is not doing enough. In fact, there is zero enlightenment from the ministry, and that’s very sad. So, we need to promote this CNG in the situation we have found ourselves, because you would have a choice now between buying one meter of gas for N200 or buying one litre of petrol at over N1000. So you have that choice now. When you do this conversion, it doesn’t mean you have converted completely from petrol to gas; you can have a hybrid. Yes, if the gas finishes and there is no station nearby, you can switch to your petrol and then vice versa. So, I think government needs to promote this CNG initiative. It is even good that a corporate organization like Dangote itself is also buying into the government’s programme on CNG. So people would have a choice between the petrol at over N1000 per litre and CNG at N200 per meter of gas.
People are feeling the pains of Tinubu’s policies and programmes, due to hunger in the land. Now Tinubu has rejigged his cabinet, bringing new hands, fulfilling the promise he made months ago. What change would this bring?
A cabinet reshuffle was long overdue, but the cabinet reshuffle that we have witnessed, I want to believe is the beginning. It is not the end. This is because there are still a lot of dead woods in the administration that must be shown the way out. There is a whole lot that this government is doing that Nigerians are not aware of. Take the Students’ Loans. Do you know the number of students that have benefited from this scheme? Do you know that their school fees are being paid in their number, almost running into millions now? They are collecting monthly allowance from this government. This means that these people, these students would not drop out of school for lack of funding. But there is no publicity.
What people are complaining about is that all these achievements are not impacting positively on Nigerian citizens, that people are still hungry and angry.
They are impacting. Yes, people are hungry because at the time President Bola Tinubu came in, Nigeria was almost aground. If you are spending 98 per cent of your revenue, that means you are bankrupt. Nigeria was bankrupt when Tinubu came on board, spending 98 per cent of her income on debt servicing, not debt repayment, but debt servicing. Nigeria was practically bankrupt.
Prof. Soludo said that if not for Tinubu came in that he didn’t know what would have happened to Nigeria. He is an Igbo, mark that down. He is not APC. Let’s put aside politics. This government cleared the Ways and Means which amounted to N30trn borrowed by Muhammadu Buhari in less than over one year. This same government is financing its budget without borrowing and the government is still embarking on infrastructural projects. You have the Lagos – Calabar Supper Highway that is ongoing. You also have the Sokoto- Badagry Supper Highway that has also commenced. So when you have all of these, you know the result to come in. For example, when you look at the elimination of arbitrage in foreign exchange transactions, before President Tinubu came in, you had about four markets for foreign exchange; you had the black market, and the official market was about three. Some people got the formal official market; some others even got discretionary rate. Some of them were taken this from the CBN and then going back to the street to sell them. That’s why when you hear that some companies are leaving Nigeria. Some of these companies were engaging in currency arbitrage; they were not into any production or manufacturing. That’s the truth. That’s why when Tinubu came in, it’s over for them.
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