 Welcome back to the Breakfast on Plus TV aggregate, that was today in history, we'll be focusing on fuel subsidy and of course electricity subsidy in this particular segment of the show and we have the former TEC chairman Peter Esela joining us in this discourse. Merci. All right thank you so much Peter Esela for joining us. Can you hear us please? Yes I can hear you. All right so the International Monetary Fund is here again, I mean I mean this is not the very first time prior to 1986 you also have the structural adjustment program which was also the initiative of you know the IMF. Now they are asking that you know the Nigerian government should you know take away subsidy, electricity and of course fuel subsidy. Do you think we should do that? Well good morning and thank you for having me. First and first is the IMF can advise you, the IMF can give you whatever theory they want to, it's your responsibility to either accept or reject it. So what the IMF is saying, they can talk but it's not left for those who are elected by Nigerian people to decide what is best for Nigeria. Now why is the IMF saying government should take away subsidy? The first thing they are looking at is first they feel that government is spending so much money on subsidy. Why is government spending so much money on subsidy? Why would they be producing 1.9 million barrels? OPEC have just reduced our quota which comes to about 1.5 million barrels a day and then you'll be importing PMX. So there are a lot of dislocations in our economic system and structure that is not in the best interest of our people because those in leadership have not been thinking. So whatever IMF says, I think it's irrelevant. Well fine, inasmuch as Nigeria has its own prerequisite and they can actually decide to do whatever suits them economically but looking at all that we have in the country, judging by the fact that you said we spend so much subsidizing fuel, subsidizing electricity, do you really think that going by the other decision will not be in the best interest of Nigerians? Now first thing you need to ask yourself is that when you want to do any economic policy that you are trying to put in place, you must ask yourself, you must look at the pros and cons, what would be the result of the social dislocation that may emanate from it. So you ask yourself, which other aspect of our life do we really feel government directly or indirectly? Now we're talking about subsidy, gas right now has been subsidized in the UK because why? Because the prices have gone up, they have a band for it. So once the prices go beyond that band, then the government kicks in with help for the people. President Biden during the lockdown, they brought stimulus, they spent over a trillion dollars putting money in the pockets of Americans to stimulate the economy. So if we are taking away subsidy, we are taking away electricity, electricity subsidies too, then we need to ask ourselves first, what is the economic impact on the people? Yes, you must also be able to look at the economic impact on the people. And if you decide to take it up, how do you mitigate it? No matter how you feel that this is expensive, yes it's expensive, but you must ask yourself, is education subsidized? No. Is healthcare subsidized? No. Is transportation subsidized? No. In other parts of the world, you pay even if it's 500 naira per litre, at the time you get three pounds per gallon in the UK, you pay. But you know, if you have alternative, the alternative is that you go by, they have an effective transport system. It's not just this government, since the advent of the civilian administration since 1999, if we have decided to build an effective transportation system that would ameliorate whatever challenges that the people will face, it will be easy for the government to wake up and say, yes, this is very expensive and it has to go. But government is putting the cut before the horse. That is why we keep talking about subsidy and so when your guys reached out to me yesterday, I said not again, I don't want to be talking about this all the time, but we continue to talk about it because those who were elected, those in economic space, don't have a clue on how to get out of this mess. I understand all of that, Mr Ecele, but looking at all of the issues around them, subsidy, since 2012, it's been almost 10 years when Nigerians came all out, you remember the protests back in the day. But then again, there's always this talk about racketeering, corruption, who actually benefits from these subsidies? Is it the average Nigerian or some select few? Yes, there are racketeering, there is corruption, but when the government complains about racketeering and corruption and the government has the power, they have the instrument of law, they have the law, and each time you keep hearing about corruption, racketeering, nobody has been brought to the book. In the same society, if things are not working out well, whoever is infringing on how the society should go is prosecuted. So all we'll be hearing is corruption, racketeering, I'm aware that is happening, yes. But if that is happening, how do you deal with it? Are you not going to make the ordinary man to suffer for it? Sometimes people say, okay, the ordinary man also do benefits. If you go to a pump, if you go fill your tank, and you're spending about, ordinary life, we should be paying about 250 to 300 Naira per litre at the moment. If you have to go by the current price, the current Kudaiya price, it should be a little above 200 Naira, we should be paying right now. Now, if the ordinary man is buying less or paying less for that, that means he's also benefiting. So everybody benefits from it. But what we should ask ourselves is what is our long-term goal for that sector? How do we ensure that if I take away subsidy, normally what they're doing is civilized society, first of all, you take subsidy away, and you put it somewhere else that is more than you think would be more beneficial to the people. Now, before you take that subsidy away, do people have to feel your impact? Yes, this moment is working for us. From 1999, we'll be talking about this subsidy, Abbas Andrews did his own, Yara Dua did his own, Jonathan did his own, and the current administration have also borne his own, and they are still continually saying, okay, fine, we are going to do XYZ. But the money you've been getting all this while, what have you done with it? So what you have is a disconnect between the policy, the decision makers, and the ordinary Nigerians. So if I'm not feeling the impact of government, it's very difficult for you to not align yourself to whatever policies that government is bringing. It's not a civil subsidy removal, it's a bad thing in its own entirety. But the fact is, it's a heavy thing for you to lift without putting in place efforts to mitigate whatever fallout you will get. Peter Issele, Mr. Peter Issele, I would like to get your thoughts specifically. I know that you have given one or two reasons being that it's from the IMF and what have you. But do you think that the Nigerian government should remove subsidy? They have said that the plan is that in the second quarter, second half of 2022, subsidy will be removed. But you have IMF saying it should be done as early as the first leg of 2022. I want to get your position. Should subsidy be removed or not? My question is very clear. If you want to take away subsidy, there are certain things you must do before you take a subsidy. And this is what we've been talking about. These are what labor unions have been talking about over the years. So if you are not ready to put that in place, and then how do you take it up? And the people who accept immediately. But again, you also need to ask yourself, government says they will take it up in the first and second quarter of 2022. Now, I always talk about the structure and the process. The process for removal. Now, we can talk about the idea of racketeering and corruption. Now, we are paying subsidy, but subsidy is not captured in the budget. That in itself is enough for you to raise an eyebrow. Why will you pay subsidy that is not captured in the budget? So who is talking about the corruption and who is racketeering? Does it not have the sale and the stamp of government also encouraging it? So these are the areas that I keep talking about. It's not as if you take subsidy away and there is corruption or is racketeering, but it cannot happen without people in government also not acquaintance to it. That's my take in all of this. You are talking about electricity tariff. We privatize electricity. All the promises that were made during the privatization, I'm also privy to that negotiation. All the promises that were made, none have been met. None. And who is holding these private companies to be accountable? And the private companies are heavily subsidized between the Jonathan administration and this current administration. The subsidy that have been paid, that's the money that have gone to those companies, not to Nigerians now. It's over a trillion Naira. So it's as if you use your phone, you privatize telecoms. And then at the end of the day, you are also providing money for those telecoms companies to build base stations. Who is fooling who here? So those are the structures that I always talk about. Structures and process will bring out the enabling result for the people to follow through. When the process and the structures are not okay and you go ahead and implement it, we are going to have on our post-social dislocation. Okay, but let's look at what we currently spend. I mean 100. It's been, you know, put out that we spend 150 billion monthly for subsidy. And now prior to this time, if you look at statistics from 2006, between 2006 and 2015, it was reported that we spent 4.89 trillion Naira on subsidy. So my question is this, don't you think that this money or this resources that we have here probably would have been channeled to building more schools, road infrastructural hospitals? And what have you probably not even having to borrow because we constantly have to borrow to fund the budget? The question you also need to ask yourself is all your borrowings that you've been doing, where is the money? If you are borrowing money, first thing you want to borrow money for is that you stimulate the economy. Even if you are doing budget, budgeting is to create wealth. I don't know whether you've taken your time to go through the budget of the federal Republic of Nigeria. From reception, our budget is to spend. Our budget is not to create wealth. Okay, now you look at, go and look at the way budgeting is done in Europe or America. They look at the particular sector of the economy and say, this is where we are going to create wealth from. And the pumping money, whether it's IT, whether it's road infrastructure, but they are able to measure it. You have KPIs, key performance indicators. So what you need to do, if government says they want to take away subsidy, government must build the confidence of the people to do that. Now, how do you build the confidence of the people? It's that people must know that your budgeting, whatever you say you want to spend, is actually used for it. How do you borrow money? Who in the world borrow money for recurrent expenditure? Go through your budget. Recurrent expenditure is even higher than your capital projects. So how do you develop if your recurrent is higher than your capital project? So all of this is what government should do to make the people to believe and trust in the system. I work in oil and gas. So I know that there is corruption. I know that there is fraud in all of this. But I also know that there is also the political aspect. There's economic policy. Then there's the political aspect to all the economic policy that I want to put on the table. So it's for you to find the balance between the politics and the economics to avoid social dislocation. That is the only way we can move forward. So you don't think that we're spending so much and that all of these resources could have been channeled to basic infrastructure? You say we are spending so much. Why do you have government? Government is to make life easier for the people. If when we had a lockdown, did anybody send you any money to your account? No. But in other climes, people were in their house, locked down. They know they were facing challenges. People were getting $2,000 at the end of the month because government was being responsive. You pay your tax. Why are you paying your tax? So that government makes life easier for you. And so when you face your challenges, government will also be there for you. That is what happened in Europe. That is what happened in America. So if you say you are spending so much on subsidy, now if the subsidy is taking away, where would the money go to? Don't forget where we are coming from. 65, 75, 100, 145, all of these differences that have been coming in, that is in terms of increase in price. So if I got you correctly, Mr. Isel, if I just have to vote in very quickly, invariably what you're saying is that even the federal government went ahead and removed them subsidy and allowed them the factors of demand and supply to just hold sway. You're saying that over time, the price of our fuel will keep on increasing. Wouldn't we get to a position where there might be a reduction in prices? Of course, when we say there will be a reduction, yes, there will be a reduction. But you also need to ask yourself, is there also need to check the fact that you import petrol? So if we are not importing, if we are not in the business of importation, you will get like five, six, seven naira reduction that may come up from that. That's why I look forward to the refinery coming up and a lot of private refineries coming up that will also reduce pressure on products. So when we talk about the black market and the parallel market and the CBN rate, one of the reasons again is the pressure that comes from importation of petrol. So what government must do, my emphasis is on whether you want to take away the subsidy or not, you must find a way to find the balance between the economics of subsidy remover and the political aspect of the economy of subsidy remover. Specifically, Mr Issela, let's leave fuel subsidy for one moment and talk about electricity. In your opinion, because most Nigerians are actually arguing that they indeed pay so much for electricity, what with private metering here and there. That's a prepaid meter that is over time Nigerians still pay as high as possible. So if they indeed are paying this much, so how much exactly has been subsidized for electricity? Now, first thing is the government that will tell you that because now the whole thing is so opaque. It's opaque in the sense that you ask yourself, okay, why am I paying so much? I know I'm paying so much. I know I'm paying so much and I had to complain and they told me what they were telling me is that, oh, the transmitters possible that will get at least 20 hours of power daily basis. But we don't get that. So what you need to ask, why we need to ask the government is this sector has been privatized. Yes. Now, when you privatize this sector, are they giving us value for money? My answer is no. Who is providing the meter? Government is not the one providing metering. So government is the one providing the meter. Why would government be responsible in providing meter for a private company to not come and give to us? That's one. Number two, how many actually have access to meter? You can't, the metering is also something that is very, very, very problematic. Depending upon how knowledgeable you are, that's what matters or the influence you pull. That's what matters whether you get meter or not. But you have to pay for it. Why should government pay for the buy meter and give to those companies? And they did not give to us and they are telling us that that's we are being subsidized. Why? So a lot of things, that's why I always talk about structure and process. If you don't do it the right way, you are going to have Nigerians asking questions. And even if the government means well, we are going to have Nigerians having to question the sincerity and integrity of government because the process is not right. Okay. We definitely come back to talking about, you know, the process and the structure that you have mentioned in details. But before we get to that point now, para-venture the government heats to the advice of the IMF and remove subsidy. What will be the implication? I mean, what will be a cost, the cost for a liter of petrol for an average Nigerian and of course a unit of electricity? Now I can be very, I will be very direct. I will be, I can, I'm able to calculate that of petrol, that of electricity because the electricity, the way is tabulated. You can, there's no document to back it up. For petrol, we'll be paying over 200 Naira. We'll be paying between 220 to 250 because what you must know is that petrol, you buy in dollars. And when you buy in dollars, you're not selling Naira. So the conversion process is where the problem is. So when you were talking earlier, you said the prices can go up and come down. I think that is based on how strong the Naira becomes vis-à-vis the dollar. Clue dollar is sold in dollars. So if you have a weak local currency, even if the prices is $50 from $80, the chances that you will pay less is slim because of your weak local currency. And IMF can also come up tomorrow and say you have to devalue because one of the things that I found out about the years is when the Nigerian government is broke, their first point of raising money is to devalue the currency. But in other parts of the world, when they are broke, the first thing they do is to look at the aspect of their economy as they less create wealth in this aspect so that they can export. Because when you have a weak currency, it's very good for your export. That is if you have an economy that is very, very productive, unlike what we have now. So I can tell you that we're paying 200 Naira above for petrol. But when it comes to electricity, I can't tell you because electricity, the way it's calculated, the way it's tabulated, is opaque. It's mysterious. All right, Mr. Eseler, let's do talk more. Because I'm wondering why we've not been able to get it right as a nation when it comes to fuel and the PMS, that of kerosene, it subsidy had been removed under Nigerians after leaving But what's with all the advice, all the inputs that have been given to government over the years, there have been talks of them looking in the direction of modular refineries. You talked about dangote refinery. How come we're not looking at stopping importation of fuel in the long run or in the short run that is and concentrate on locally refining our own fuel for ourselves? So we'll be talking about these foreign exchange differentials and all of the issues that we have, that are increasing the cost of fuel for Nigerians. One of the biggest challenges we have is the quality of people who are living. When we're a president or a governor, your responsibility, I don't want to have a president that I like. I don't need to like a president. I don't need to like a governor. What I want is a president who has the capacity, a governor who has the capacity, a senator who has the capacity. So what we've had is that we've not had this quality of people who have the capacity to look at it and say, hey, this is where we have to go. If you say you want to take away subsidy, for example, the first thing you ask yourself is, okay, fine, what do I need to do? 20 years, none of those refineries from NMPC is working. Over 20 years. Since 1999, I'm going to use just 1999, 1999 to 2021. None of the refineries are working. Why will the refineries not work? That's a system problem. Now, then you will have the private sector. Yes, could also see being very supportive of that refineries coming up our stream. We're hoping that that comes up in 2022. If that comes up in 2022, what you have is you are no longer going to be importing petrol. So the pressure on your forex will be down. But these are things that would have been done 15, 20 years ago. And even if we want to remove subsidy, we could have achieved this subsidy remover more than 15 years ago. When the prices were so low, I remember when I was paying gas to walk up to the president and then the minister of petroleum said, take away subsidy now. And they said, what they told me was that they want to recoup all the money they've been spending. And then in six months, the price of crude tank and the government was broke. And the next thing was that they went ahead to devalue. And then they now reduce the price of payment. And what you now have, we have scarcity. Because the marketers decided that, no, we cannot bring in at this price because the currency have been devalued. So one is get your refineries to work. What that will also do is that you also create more jobs. That would be refinery, for example, will create direct employment of even up to 3,000, 3,000 direct employment and indirect employment of over 50,000. So that in itself, the spin off from having that refinery is huge. So when you talk about modular refinery, why is it not working? It's still the process. It's still the process of man-to-man. If you want to set up a refinery, for example, you don't need to know anybody in Europe or America. You don't need to know anybody. You just have a process, stick to that process. You fill the forms, you do everything that is needed and it's done. But in this part of the world, it's tough actually running business here. So I will say to all those businessmen that are able to survive a very difficult climate like Nigeria. But if government decide they are going to take away subsidy, if government decide they have to make refineries work, they have to make sure that they have a policy. I don't even know this government's policy for that sector. What is the plan of the government for that sector? That is key. Okay. So I would also like to find that, apart from that, because other persons will also complain of the effects that this would have, that if subsidy has been removed, it would trickle down on almost everything. So you would have the fact that cost of transportation would be on the high. It would also affect the prices of food and services across the entire country. So in this regard now, what should government do or what can government do to cushion the effect? You don't have to be a rocket scientist or to have a page in economics to just know that once this happens, everything is going to skyrocket. And when it skyrockets, the first place government is going to look at is, okay, we are going to start discussing how to increase salary. But the workers we are talking about, if we are going to use the former sector, how many percent? So what government need to do is say, okay, you want to take away subsidy. This government must look at the aspect of where we are feeling the pink more from its policies. If government says, oh, we want to make transport system, government can come over, we are going to make a hundred Los Lios buses. Now, we've had that, it happened in Augustine Justine. It happened in President Yarra Dua's time. It happened in President Jonathan's time. Is any of those transport companies surviving today? No. The government is talking about the private. No, it's not surviving. So if government says, okay, we are not going to, we are going to take away subsidy. We are going to bring the money into the economy to stimulate, to stimulate the economy. It's not government business to be saving money. No. What do you know about another part of the world is that they put money in your pocket. They put money in your pocket for you to spend because it is when you spend money, they are able to collect their taxes. Those are states that live on taxes. So you're saying that government should print small monies. Money should be printed. If government prints more money, then we are in trouble. Government is not going to print more money. But what I expect government to do is, for example, if you say you are spending 200 billion, I'll just give an example, 200 billion for subsidy payment. And you decide you want to take that money off. Say, you don't want to pay this money for subsidy. You are taking away subsidy and allowing demand and supply to take over that sector. Now, the question will be, where will you put the 200 billion? Where will be the most beneficial area to the citizenry that you put the 200 billion? That is questions which you ask the government. So you are not elected. We don't elect people to just enjoy the benefit of being in an office. People are elected to think. People are elected to think. So that is what we should ask the government. Where will we now put the money in the sector? Because you and I know that all the money that we are borrowing is going strictly more to the current than any other aspect of our personal life. Our attention is always on federal government. But I will tell you that the state government and the local government are even worse. They are worse. So what I expect government, what I will expect government to do is look at the area. Government have not even done that. They have not said that themselves to say which area of this economy is going to be beneficial to the people and let us put the money there. That also have to create wealth. So that people can spend money. If you can't spend money, you are not going to grow the economy. It's not even saving money that grows the economy. It's spending money for the money to go round. That is when the economy grows. Somebody is in the farm. Somebody comes ahead to buy a crate of egg and then a person uses to make mama put by the roadside. Somebody else comes and buys those food and eats and then the person is healthy. So those are the ways you grow an economy. It's not for you to just have the economy and you keep one billion. The very way the people don't grow economy is the middle class that actually grow the economy. That's why serious government all over the world look for every means possible to sustain the middle class. All right, Mr. Isil, let me just read out something to you from all of them. What the IMF said. I think we can take something away from that. The IMF noted Nigeria's past, noted that Nigeria's past experiences with a fuel subsidy removal which have all been short lived and reversed, underscored the importance of building a consensus, an improving public trust regarding the protection of the poor and the efficient and transparent use of the saved resources. The issue right here is that public trust. Do Nigerians actually trust the government to do the right thing? In case they are prepared to even remove all these subsidies? You see, I have got the worry that IMF report, what you've just said now, that is what we will be discussing. I made reference to trust. And what you have now is that Nigerians find it very difficult to trust the government. And the reason for this is a fallout from previous actions. I always say this, I say you can beat a child, but you don't have the responsibility to tell the child how to cry. So whichever way the child now goes ahead to cry, you can stop it. So what the IMF is talking about is the first protection of the poor. So if you are protecting the poor, then trust. Then whatever is coming out of that forms, how do you use it to mitigate whatever challenges that people will face? That's what we've been talking about. And that's what I've been emphasizing on, finding that balance. So that is also what the IMF is encouraging. The IMF is saying, okay, take away the subsidy. We need to take away subsidy. But you have to also build trust. You also have to put in place economy policies that protect the poor. But the IMF is not talking about that now. So the IMF is just telling you, take away the subsidy, but the IMF is not telling you how. It's not telling you how, when you take it off, how do you now protect the poor? How do you now build that trust? That is weird. The work is, but the IMF is not telling the government how to do that. Mr Aisaleh, don't you think Nigeria is actually going, maybe if I should say, on an overdrive? For how long can we actually sustain, subsidizing fuel, subsidizing electricity? For how long can we go and be a viable nation, looking at how it's done internationally? Now, even if we say we are going overdrive, yes, there are challenges. There will be challenges. Now, what I expect of this government, from when this government have missed three windows, three windows of dealing with subsidies, this subsidy problem once and for all. The first window was the very day the president was sworn in as the president of the Federal Republic of Nigeria. That's what they call political capital. Once you win an election, and with the way the president was elected, his political capital was so high, and you can use your political capital to do what I call the heavy lifting. So they've missed it three times. They had the window three times, they missed it. Now, if they still want to go ahead, then they need to look for what are the poor economic policies that we need to put in place? How do we build trust? This government has enjoyed more trust. This government has enjoyed a lot of respect. This government has enjoyed more support from the labor movement than any other previous government. There have been increases in PMS, no protests, no strikes, nothing in the life of this administration. So what I would expect is that they would have capitalized on it to build that trust and then look out for the poor policies that they can put in place to ameliorate whatever fallout that will come. Of course, you are going to have a fallout. Prices are going to go off. When I negotiated $18,000 minimum wage, it was $120 at the end of the month. But now you have $30,000 minimum wage that is actually about $73. So you find that your $18,000 was actually the purchasing power of your $10,000 is higher than the purchasing power of your $30,000 higher. Those are areas government need to also look at. And if you want to subsidize, how do we spend money? Head care, education, these are areas that stimulate growth. The easiest way to get out of poverty is education. So why don't you spend money there? Thank you so much. We have to call it a wrap at this point in time. Quite an interesting conversation. And Mr. Peter Seller, we look forward to having you, so we can talk about this because it's almost endless. And we would always talk about this from 1979, 77 up until now. We're still talking about subsidy and its removal. Thank you so much for being part of the conversation this morning. We do appreciate your time. All right, Mr. Peter Seller is a former president through Union Congress. Once again, we say a big thank you for making out time to be part of the conversation. We'll definitely step on the brakes now. When we come through, we will be heading straight to our second conversation this evening. And indeed, we'll be talking about the Nigeria Corporation workers calling off its strike. They're back at work.