If NNPC sells crude oil to Nigerian refineries in naira, petrol can sell for N300 per litre – Agbakoba
After coming under criticisms for demanding a media blackout on the Chicago State University, CSU, certificate saga of President Bola Tinubu pending the Supreme Court decision on the matter, former President of Nigeria Bar Association, NBA, Dr. Olisa Agbakoba, SAN, bares his mind on a number of issues bothering on the socio-economic, dollar dominated economy, offering ideas on how to reduce the price of petrol to N300. In this interview with Saturday Vanguard, he also says some sectors can raise N100 trillion, adding that N32trn was lying under Ministry of Finance Incorporated, while also noting that leadership and political parties in the country only pursue self-interests.
The President Ahmed Tinubu-led government has a lot of controversies to contend with: The socio-economic crisis occasioned by the policy of subsidy removal, the unified single exchange rate, the threat by the Labour Congress to shut down the country, the struggle to provide palliatives to calm frayed nerves, and now the issue of credibility as a result of the Chicago State Certificate saga.
Do you feel any pity for a government of five months having all these issues hanging on its neck?
Agbakoba: Well, it is very tough. Unfortunately, I can’t make any comment on the Chicago State University certificate issue. I don’t talk to the media when a matter is pending in court. If the matter is decided, then I can comment on it.
Generally speaking, President Tinubu has taken on a very challenging assignment. Let us assume that President Tinubu is the captain of an aircraft. Tinubu takes off from the runway; he has to climb out to a particular altitude. You know, in climbing, some pilots have a very smooth climb, while others have very turbulent climbing. Tinubu has been contending with two major headwinds.
One is the issue of the removal of subsidies, and another is the exchange control issue. How he handles them will depend on his skills as a pilot. But the climbing is very difficult.
When you are climbing out and you hit the head wind, you have to be in full focus. So, the climb-out has been extremely tough.
There is no doubt about it. What I think is that he ought to be using full power because when a pilot is climbing, he has the power to trot. What I see Captain Tinubu doing at this stage is using only 50 percent of his throttle power.
He needs to push that throttle to the limit so that the climb-out can be great. I will say that the turbulence will continue until the Supreme Court makes its final decision.
What is obvious is that Nigerians have to go through a very tough time. It has been the toughest time in the history of this country since independence, as garri, rice, vegetables, and other staple foods are way out of the reach of the common man.
It is important that the unsettled issue of the Supreme Court be decided so that we can put it behind us. Whoever emerges will still face the challenge President Tinubu is facing now. It is tough, and Nigeria has never been in this situation.
Apart from the issue of the removal of subsidies and unified exchange rate issues, I will also add another headwind, which is the Nigeria political configuration.
This is what people often refer to as restructuring. These are the three areas anybody who is confirmed as Nigeria’s President has to confront; otherwise, we will be on the merry-go-round.
Again, when the pilot fails to make a full plan to reach the cruising level, there is always a possibility of what is called an air return. This means that the plane comes back to the airport and lands. I hope you understand that possibility is there.
Agbakoba: Yes, I do, but let’s look at the possibility of a climb-out to a cruising altitude, when Nigerians can heave a sigh of relief. When do you hope to see that?
That is when we put the Supreme Court decision behind us. There is no question that the political climate is in turmoil. In view of the expectations of all the political parties with respect to the decision of the Supreme Court, that will cause a major headway. That is why I made the innocent statement that lawyers should not go to television stations and begin to make comments and quote laws as if the television stations were the courts of law.
Unfortunately, people misunderstood me, and said a lot of things. But I don’t care. Only the court can decide, not the media. That shows you the level of mistrust in the country.
I think the first headwind that will begin to settle the issue is the Supreme Court’s decision. The second headwind will be to stabilise the economy by deciding the micro-economic, physical, and monetary policies as well as creating jobs; otherwise, the exchange rate market will continue to climb. So, there are a lot of challenges and headwinds that will confront anyone who is eventually confirmed as president. No doubt, we are in very challenging times.
After 63 years of independence, we are still where we are, struggling to get it right.
It is bad leadership. All our political parties have let us down. They do not take into consideration the interests of Nigerians; they are only looking after their own interests.
All the political parties don’t put Nigeria and Nigerians first; otherwise, I don’t see why we shouldn’t have overcome these challenges a very long time ago. It is just a cycle. Go back to 1999 till date, nothing is new. They come, they make promises that they will do all kinds of things, stabilise the economy, stabilise the currency, but they do nothing. Is it not a big shame that we produce crude, yet we import petrol?
I can give an idea of how to reduce the price of PMS today by half. To achieve that, NNPC should sell crude to many modular refineries in the country at a naira price. Why should NNPC sell our crude oil to Nigerian modular refineries in dollars? We must set aside a national crude oil scheme for local consumption.
The price will drop to N300. I dare NNPC to try it; the price will drop. But if you sell it at the international market rate, how will those who are selling it locally source forex to buy and thereafter sell in Naira? They just have to jack up the price! That is the problem. It is important that the government understands how and when to make the right decision to help people and alleviate suffering.
Will that not also amount to bringing back the subsidy that the government is calling off since the price of the crude is dictated by the foreign market, where a large chunk of it goes and serves as our foreign earnings; therefore, selling it in naira will amount to subsidising the difference.
Agbakoba: No, no. Every country has a policy that if you are selling something to your people, it is not a subsidy. It is just a local price. The fact that it can be sold internationally at a higher price does not mean you will sell your local produce locally at an international price. I think that is part of the problem.
That is not a subsidy; rather, it is a national government decision to set aside a domestic crude reserve of between 400,000 and 500,000 metric tons for local consumption and to be sold locally.
That is not a subsidy. And even if it is a subsidy, so what? Is the one we have now at N600 helping the economy? Let it be, if it is a subsidy, but I don’t think it is. I think establishing a National Domestic Crude Reserve and sell it to people who are in the business of refinery so that all these shipping costs, insurance, freight, and other add-ons cost will not be added. Having done the sum, I think a naira-dominated national crude oil scheme will help to save 50 percent of the price.
And if you do that, it will have a great national effect on transport, food, services, and the economy.
It is in the interest of the government to slow down the growth of the economy, even if you apply that type of subsidy. The first type of subsidy was abused, but this will not be abused because it is being sold for naira. I recommend that government takes that step because we can’t continue this way.
What is your take on so many appointments of President Tinubu vis-à-vis the quest to reduce cost of governance?
Agbakoba: I think that the substantial distraction is the case in court, which, in my view, is affecting correct policy decisions. There is no doubt that the government is yet to settle. I know that all the candidates from the political parties spoke strongly about restructuring. But that has not come out in Tinubu’s policy, and I don’t know whether the government is waiting for the final decision of the court.
But there are lots of policy work that can be done but yet to be done, and that includes the bloated governance system. If we say we want to turn things around, it means that we want to transfer power that belongs to the federal government to the state governments, and therefore the federal government will contract.
If that happens, then many of the ministries will become redundant. For instance, if you move prisons from the federal to the state, the Ministry of Internal Affairs will have less to do. But it is still very open because the Supreme Court decision is anxiously being awaited by all Nigerians.
Five months after the removal of subsidies and other tough government policies, the so-much talked-about palliatives are not getting to the most vulnerable, and most state governments are not any better in the management of palliatives. Why can’t we just do anything right?
The real issue with palliative is that the government is broke. The government cannot fund palliatives effectively. I will rather prefer they use institutional and policy measures. I applaud the removal of VAT on the importation of diesel, but I will recommend that the government look at free school fees and medicals for all Nigerian students at all levels for two years.
That will be more effective than palliatives of N10,000–N20,000. I will go for institutional mechanisms that reduce burden.
That is quantitativeism. So you look for a pocket of reforms that, if introduced, will have a national effect on income and outcomes. People won’t have to pay school fees and medical bills; they will feel the impact at once.
You will see that that is the most effective palliative. But when you are targeting a palliative of N7,000 to N20,000, how would you determine whether people get it or not? So, I am more for institution palliatives, which will be far more expensive than money palliatives.
The judiciary also has its own share of challenges. Would you subscribe to unbundling the multiple roles of the CJN so that judicial appointments can be made in a more transparent manner, devoid of the whims of the office of the CJN?
Agbakoba: Yes, I do. Actually, the late Chief Justice Dahiru Mustapha constituted a high-powered panel of 29 stakeholders, and I was part of it. We concluded all the recommendations to transform the judiciary. Unfortunately, CJN Dahiru Mustapha’s tenure was only six months, and when he left, the whole thing died.
If he had been there and had implemented this massive constitutional recommendation for the separation of courts from federal to state and for more transparent appointment of judges, we wouldn’t be where we are today. I have always called on successive CJNs to implement that recommendation, but I do not understand why the government does not see the need to be efficient.
I really don’t understand. Look at the Uwais report, we had a very inefficient INEC, but in 2006, I was part of the Uwais panel that did a comprehensive report to unbundle INEC to make them more efficient, introduced the Election Offenses Commission, introduced the Political Party Regulatory Authority, and so many others, but no one implemented it.
I don’t know what it is that eats into the heads of our political leaders when they are in office. It is like they get amnesia and dementia and forget everything when they are in office.
That has been the problem. Not for lack of brilliance in political or economic planning, but implementation is the problem. I just plead with whoever is confirmed as president to just pick up the report and implement it, and we will just move forward. We shouldn’t be where we are. Nigeria is blessed with so many natural and human resources.
In about 10 sectors I have identified, we can raise N100 trillion, and our budget is only N22 trillion. Even when I engaged the former Minister of Finance, I asked her, “Do you know there is the Ministry of Finance Incorporated,” which is a body in charge of all investments and government assets? When she looked at what I was saying and did preliminary reports, she established that N32 trillion was lying down there.
And since she made that statement over a year ago, nobody has asked where the N32 trillion is. Yet we say we are broke! That is enough to fund our budget for the year and have a surplus. So, the government needs to do some serious thinking. It is not enough to be a minister; you must work hard.
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