France, Germany, Saudi Arabia, US, UK, China, All Subsidise Energy, Says Oil Chieftain, Majeed Dahiru

The only difference between this and the previous version is the headline. Readers have rejected the previous headline and it stands changed. All other things about this deeply interesting interview remain the same.

He appeared on an AIT programme and things have never been the same again on the hot issue of fuel subsidy. The interviewee appeared towards the end of the program to be invoking Frantz Fanon. Fanon warned that those struggling for independence from colonialism should be mindful of the day after independence. He suspected that the people would get a raw deal from those replacing the colonialists.

Fanon did not think that the African bourgeoisie had the sense of the people that their European counterparts had. While the European bourgeoise believed that colonialism was justifiable if that was the only way to secure their commoners from hunger and poverty, the new independence leaders in Africa lacked such sense. He indirectly argued how Obasanjo, (Umaru Yar’Adua excluded), Goodluck Jonathan, Muhammadu Buhari who, otherwise, do not see eye to eye on several issues nevertheless all removed subsidy. He also mentioned how all three of the most prominent presidential candidates in the last election made removal of subsidy a campaign promise.

Buhari removed subsidy in 2016, triggered economic depression immediately and had to restore it. What is Tinubu’s option now?

The interviewee gave it to Muhammadu Buhari, Nigeria’s immediate past president and his successor, President Bola Tinubu whom it was thought would be slightly different because he had some activist orientation. Tinubu gave a lie to that assumption by his inauguration Day fiasco on fuel subsidy. He said subsidising energy is the lessen the president should have learnt from his recent visit to France, not boasting that fuel subsidy removal will boost foreign investment. Can Tinubu regain the lost moment or he is too far gone?

This story will be updated as soon as Intervention gets the picture and fuller details of the interviewee beyond that he is an oil executive. This is not the complete transcript of the interview. This is only what Intervention wanted of the interview. Those who wish to listen to the full interview might, please, look for the video of the AIT interview in which the expert led the nation in the discussion.

“… This is one such moment. That statement in itself is one that for me is a product of the low level of thinking that characterised the eight years of Muhammadu Buhari administration and I would have thought that, by now, the least they can do for us is to just keep quiet for now to let us forget the trauma that we have been through in the past eight years, particularly in the kind of statements they made throughout that added to that trauma. This is one of such kinds of statement. Number one, it is not true that the former president did not remove subsidy. He removed subsidy in 2016 when he jacked up the price of PMS from the N87 that he inherited in 2015 to N145 and declared subsidy gone. He did it. But there was a consequence to that action. Nigeria went into a recession immediately. That singular action depressed the economy.

But they did it with the same province that the current administration is doing, that the price will come down when there is competition, deregulation and all sorts of jargons….

You cannot compare what happened in the GSM or communication sector with what we are trying to do in the energy sector. They are not on the same pedestal. And so when the prices began to go up because at the time he did it in 2016, international price of crude appreciated a bit and what that meant was that the local price of PMS (because we are importing PMS) was not increased and his own election was coming. So, he restored subsidy so that he could also win his own election. And because they saw the effect of subsidy on inflation and that was the first time Nigeria’s inflationary trend crossed double digit mark, because of subsidy removal. I remember penning my opinion on ‘How Buhari took us into recession and hyper-inflation’ was because he removed subsidy on PMS and that he should restore it. So, its restoration kind of mitigated the effect a little bit, … it didn’t get as bad as it is now. So, he had to do it for his own survival in government as well.

Alhaji Atiku Abubakar promised to remove subsidy if he won the election

As a matter of fact, this conversation around subsidy, we need to have a rethink about it. This leads to an important question: Why should subsidy removal lead to the loss of election by a presidential candidate and a party. Because it is a bad thing to do. It is like removing from the people the last most important, most effective intervention in their lives. So, if you know that you are going to do something that will make you lose election, it means you shouldn’t do it. It is simply bad.

Look, energy subsidy, not just petrol, diesel inclusive, electricity inclusive, any energy product needs to be subsidised by government because of productivity sake. No economy survives high cost of energy. None. That is why it is a priority of every government in the world to subsidise food. It is called food security and subsidise energy. It is called energy security. Governments spend hundreds of billions of dollars (on these). In fact, in 2022, the global amount spent on subsidy was one trillion dollars, globally, to subsidise energy. As we speak, Germany has imposed a subsidy on electricity and it is going to cost it Euros5b in the year 2023 for its industrial output. That subsidy entails the Government of Germany taking off 80% of the cost of electricity from manufacturers and industrialists. This is in addition to the fact that they subsidise food in Germany, they subsidise education and they subsidise housing and they have a social security welfare scheme for vulnerable and citizens. How do you expect a country like China that subsidise energy with USD130b as at 2022 alone to manufacture goods from Guangzhou alone and you that is in Aba manufacturing shoes and paying 40% tariff on electricity, how are you going to compete with those of China even in Ariara Market, considering the cost of production? So, when governments subsidise energy globally, they are doing it to boost productivity, otherwise the narrative that subsidising petrol or subsidising consumption is a flawed one.

Peter Obi promised to remove subsidy if he won the election last February

Response to the interviewer’s question that Nigerians actually bought subsidy removal because they have been made to believe that it is a few that are benefitting from the fuel subsidy – Intervention

Those we trusted the most, those we rallied around as champions of the people lied to us. They deceived us, they scammed us. And then we find all these poisonous If it is the case that only a few people are befitting from subsidy, why would it (removing the subsidy) have led to loss of election?

And what is the reality today? People are trekking to work. People can no longer go to work. There are fewer cars on the road. The economy is on a downhill. Inflation is setting in, hyper inflation and unemployment. People are losing jobs already. Companies are shutting down. You know why? PMS is the most important energy source in Nigeria because we are an informal economy generally. And SME dominate that informal sector. And the basis of energy to run that informal sector is PMS. So, Nigerians do not consume petrol for leisure.

…in the UK. Electricity is their main source of energy. And so, that is why UK Government has imposed an energy price cap. What is it called? Subsidy. That is, citizens should be shielded from paying the right amount of price for energy/electric power because it will disrupt their lives, it will depress the economy. And so, the UK Government imposed a USD100b subsidy on electricity and cooking gas. So, every government must prioritise energy security which is availability of energy and affordability. Which means that petrol, for example, which runs our economy, should be available at affordable price. It is the responsibility of government.

Government have been corrupt. The money that they should have used and prioritised for our welfare and security, they are consuming it with relish. This was the conversation we refused to have before this election. Cut down corruption. Those that removed subsidy from you are still driving a fleet of convoys that are being paid for by the government, they are still appointing aides. Your speaker – Speaker of Parliament – has just appointed 33 aides in the first instance. Our political leaders are still behaving like drunken sailors aboard a sinking ship and they are asking us to sacrifice.

It must be clear to everyone that removing subsidy is neoliberalism’s condition for accessing power in Nigeria

Do you know why government after government insisted on removing subsidy? You know why? That was the only thing that was effective in Nigeria. Despite the corruption associated with subsidy, the only thing government was really spending money on was subsidy because it must get to you, it must get to me at the pump. It is that which gets to you that was paining government, not the corruption one because if they divert revenue to other avenues of expenditure, you can’t even track it. If, for example, Government decides to say we have used subsidy saving to Primary Health Care in your village, how will you go and ascertain whether it is there or not? Is there no fraud in procurement? Why is government not stopping procurement entirely because of the fraud associated with procurement? Is there no fraud in every aspect, including recruitment, including appointment of … agency, is there no corruption associated with it? Why has fraud not disbanded Nigeria entirely because Nigeria is endemically corrupt? Why are we not telling government to fight corruption? It is the responsibility of government to fight corruption. It is the responsibility of government to fix the refineries. It is a shame! It is a shame that an oil producing country like Nigeria, a leading member of OPEC does not have one functional refinery at home. That should be the conversation, not subsidy removal.

The subsidy they have removed is going to destroy our economy. It is already destroying it. You can see the numbers. No country survives high cost of energy. None. Energy cost in UK caused the cost of living crisis in the UK. …Electricity is subsidised in France. Our president went to France for a summit, right. The company that provides electricity in France is owned by the French Federal Government. And they subsidise electricity in France. That is why France was not affected by the cost of living crisis that affected UK. So, if there is any lesson our president should have learnt from France, it is subsidy on energy. He should have learnt there that Macron subsidises electricity for his citizens. So, you go and celebrate subsidy removal as an achievement, you begin to wonder: are people in government actually thinking?

Why are investors not having loss of confidence because the US subsidises food and subsidises energy? US Government spends an average of USD50b every single year subsidising fossil fuel and renewables. The largest component of American budget is 19%. It goes into social security and welfare which is outright consumables. So, why is America still the hub of both foreign and overseas investment? How come the Saudis that subsidises fuel, subsidises petrol, subsides gasoline, subsidises education to foreign studies level, subsides healthcare in addition to food, how come Saudi is still the hub of oil and gas investment in the whole world? Saudi Aramco, for example, is in partnership with oil multinationals, it is one of the most gigantic projects in the oil and gas sector in the world. How come Saudi has not crumbled because of subsidy on almost all energy resources and products?

It is a huge lie. It is an abdication of responsibility on the part of the government to tell you that subsidy on energy or petrol or any other energy product is a disincentive for foreign investment. It is not just a lie but a senseless lie. I have been making this point even before the election that … directive for the three candidates to all chorus subsidy removal as a campaign promise.