 Welcome back to The Breakfast in Plosive, Africa. A second conversation is about the suspension of fuel subsidy by the federal government. After weeks of uncertainty over whether or not the federal government intends to go ahead with a planned removal of petrol subsidy, the Minister of Finance, Budget and National Planning has announced that the subsidy removal will be suspended till further notice. This announcement came after a meeting between the Senate President Ahmed Lawan and the Ministers Zainab Ahmed and the Minister of State for Petroleum Resources, Timi Para Silva. This came amidst a threat by the Labour Union to embark on a national strike. Now to help us look at the implication of this, we have joining us Nika Goulay, Public Affairs Analyst. Nika, it's good to have you join us this morning. Good morning, thank you very much. Let's set off on this note. The Petroleum Industry Act actually categorically faces out the fuel subsidy regime or removal as it were. And if you want to look at it by February, we probably should not be talking about whether or not the government is going to be involved in subsidy removal. What does this make? What's the implication of all of this, now that the federal government has taken a U-turn? Could this be that the law is turning on itself? Well, thank you very much for that question. I think the government of Nigeria has it all to blame itself for boxing themselves into this petrol subsidy regime that they have implemented over time. And it's unfortunate that the present APC-led government in their manifesto made it very clear that they were going to do away with this subsidy regime. Because in their own words, they said that it was a scam. And truly, the fuel subsidy thing is like a black box. You will never be able to understand it. And the reason why I blame the government for boxing itself into this quagmire is that there are many other products in Nigeria that are even more essential to Nigerians, that the government doesn't bother the price at which Nigerians buy it in the market. I'll give you a few examples. Food. There is no human that can do without food. But the government is not bothered about how much we buy food in the market. Drugs. When we are sick, we need medicines. Without those medicines, we will likely die. The government is not bothered about how much we buy medicines in the pharmacies. The same thing for rent. The same thing for buying clothes, for buying electronics, for buying houses. The government is not bothered. The government has allowed all those things to be priced in accordance with market forces. Even in the fuel sector, kerosene, which is the fuel that is used almost exclusively by the poor, the government has deregulated it. And the poor people are going into the petrol stations and buying kerosene at market prices. The same thing with diesel. Diesel that is used by the productive sector. As I speak to you, all the big buses, all the trains, all the trucks that are conveying the masses to and fro from their places of work and their homes are on diesel. And the price of that diesel is at the market rate. And the operators of those transport systems have already passed those market rates to the poor people who are in those buses. Farm equipment like tractors, we have factories, we have offices, they are all on big generators that are using diesel. The government is not bothered about how much they buy the diesel because the price has since been deregulated. But when we now come to a single product in Nigeria, one product called petrol, PMS, the government insists that the petrol must sell at the same price all over the nation. So the government is doing two things. First, it's fixing the price, which is what the former PPRA were doing. And then the government is ensuring that the price must sell at the same rate from north to south, east to west. That same government that we see a cow sold in Katina for 30,000 and sold in Lagos for 500,000, we can't do anything about it. That government insists that this single product must be sold at the same price all over the nation. But again, the government again is also boxing itself further into trouble. How? Because Nigeria has a refining capacity of 445,000 liters of barrels of crude oil every day. If those refineries are working at full capacity, there will be refining enough petrol for Nigeria's consumption and half enough for exports. But the government has not allowed the refineries to work. Neither is the government interested in either leasing out the refineries or selling them out. The government is sitting on top of refineries that are not working. Refineries that were spending almost half a trillion every year to run and refind zero barrels of crude oil. The other thing is that this government have not let the refineries to work. It's not the sole importer of petrol. Why is it, may not be why, the private sector to come in and import the petrol? But the PIA actually allows that deregulation and pricing concept. That's the legal framework and that's what the PIB ensures. And so if the government had already passed that, I mean we have the PIB as an act now and we should govern the activities of the oil sector. I mean to some extent. Then why is the government not going back and saying we cannot? Exactly. So these are the issues. A government that has signed a bill into law is not implementing the law. It's not letting the law operate as signed by the president. So this is the issue. You see, in the UK where I reside, you can have a petrol station opposite to the other one and they are selling petrol at different prices. The same way you go into a market, one trader can be selling a bag of rice at a slightly different rate from the other trader. Because both of them are trying to make a profit but depending on their cost efficiency or where they source their rice, they could say their rice at different prices. So why is the government not taking a simple step like that? By saying, look, if anybody wants to import petrol into Nigeria, go ahead and import the petrol. We as a government, we're interested in quality control. We will test and make sure your petrol is fit for the engines that are running in Nigeria. And once that happens, you'll begin to see investors coming to the sector, importing petrol and selling at prices that give them a profit. And once people see people making a lot of profit from that business, they will start coming into the sector and gradually the prices will start coming down because competition will set in. That is one thing. The other thing is that why are we having pressure on petrol in Nigeria? We're having pressure on petrol in Nigeria because we have a government that is seeing our gas being fledged and they are doing nothing about it. Instead of harnessing the gas and putting them into power plants so that we can generate electricity for the entire country, Nigerians are living in darkness so they have all sorts of petrol generators all over the place and they are going into the petrol station to buy petrol to put in those generators. If government just lets electricity to be supplied to this economy, there will be no need for those small, small generators that are having pressure on petrol. And if you want that thing? Okay, Mr Agouli, last year or so, if I remember correctly, when this issue of fuel subsidy removal came up and labour began to make some noise, I think it should be either 2021 or 2020, the federal government called the labour leaders, NLCTUC, into a round table, and set up a committee to look at certain issues and to see how best to fix a price that will be favourable to the people. If we talk about the Petroleum Industry Act, we are aware that labour has been also a very, very active part in the discussions that have been going on and the public hearings that have been going on. Many unions within the larger umbrella of labour in Nigeria, especially the oil and gas industry, made presentations and submitted papers in memoranda while the discussions with the PIA were going on. Now, if we're talking about the regulation of this sector and the expected implementation of PIA, you are saying the government is departing. Well, the Senate president is saying labour needs to shelve its planned strike for now because the federal government has backtracked on its decision. But he is saying there's no going back on the track. But people are asking, labour has been part of the process and has been aware of what's coming for some time now. So why are they making some noise? What do you say to this? Well, I duly support labour for their agitations because they are representing the people who are called the masses of the country. But labour also has to look at this issue disproportionately. They have to take away their eyes from emotions. They don't have to be emotional about these issues. Number one, we have subsidy removed today. Who are the people that will be worse hit? The first people that will be worse hit are West African countries. West African countries, it's not even Nigerians. West African countries that come to Nigeria and smuggle our subsidised petrol to their own country. At the advent of the current regime, daily consumption of petrol was being estimated at around 30 million litres per day. Today we're talking 60, 70 million litres. Have the number of cars on Nigerian roads doubled? The answer is no. Where is that petrol going? About 30 to 40 million litres of petrol are being smuggled across Nigerian borders into West African countries. And the people who we lose will be those West African countries. We have small, small West African countries that are Benetogo that are buying petrol at market prices and the economies have now collapsed. So when you now talk about Nigeria buying petrol at market prices and you say the economy, this is K-monjury. So that is the first group that we lose. Who are the second group that will be hit? The second group that will be hit are car owners, the people who have cars in Nigeria. Themuses don't have cars. If you go to all the villages with their cars, they don't have cars. By the way, this subsidised petrol hardly sits at 165 Naira in the villages. It's actually only says 165 Naira in big cities like Lagos and Abuja where the rich men have dozens of cars. You go to some estate, you are going to see 7, 8, 12, 15 cars parked in front of residences of big men. There will be the people that will be hit. And of course, those who are benefiting from the subsidy regime through corrupt means will be the worst hit as well. So the masses that label is actually fighting for are going to be the last on the ladder in terms of those who will be hit. So why should a poor woman go into a petrol station to buy kerosene at market prices? An artist who needs diesel in his machine to be able to do his work for the day, goes into a petrol station to buy diesel at market prices. Then the billionaire that comes with his convoy of SUVs into that petrol station is now buying petrol at 165 Naira. And who is paying for the 165 Naira? It's the money that should have been used to provide healthcare, education, roads and other infrastructure for the masses that is being used to subsidise the billionaire and his convoy of SUVs. So these are the issues that the government must look, I mean, labour must look at this personally and ask who is actually benefitting from this subsidy as we speak now. And let me tell you one thing. The budget, the national budget, the federal government budget that President Buhari signed into law did not provide for subsidy from July to December. Now that the government says they will provide for the subsidy, where is the money going to come from? The money is going to come from borrowings. So Nigeria is not going to go and borrow because the entire revenue of government for 2022 is just about five or six trillion and we are running a budget of 17 trillion. I mean, the revenue is eight trillion and we're running a budget of 17 trillion. So if additional costs through subsidy is going to come in, in July to December, it will be money that will be borrowed. So how can we go borrowing? Okay, Nick, we're out of time now and let's just add this as we share your thoughts in a minute or so. So one of the reasons that the federal government has cited for taking that step backwards is that the timing is problematic and one will wonder, I mean, what were you thinking in the first instance? But what time is better? They have also cited the issue of high inflation, of course, on the grounds of economy and that it would take a serious toll on Nigerians. So the question now is, what is the better time to remove subsidy? So the question as the federal government is that subsidy was removed on caroling. They didn't bother about the inflationary effect on the masses. It was removed on diesel, which is used in the productive sector. They didn't bother about the inflationary pressures on the items that are used in the productive sector, like food is carried in trucks that use diesel. They didn't bother about that. So I would say that this whole issue of the government lacking courage to take this decisive step could also be anything to do with politics. Because now they believe that if Nigerians are angry with them, election is coming up just next year. What I would then say is that if the government has now become lily-libert to backtrack on what they want to do, then let the government start setting aside crude oil. Crude oil, which they will give to the dangota refinery, which is expected to commence refining in the third quarter of this year. The government of Nigeria should start feeding dangota refinery with crude oil at cost, not market prices, at cost. Because crude oil belongs to us. And dangota refinery will be able to refind this crude and sell it to Nigeria, even below the current. That's certainly another issue that we can spend another 30 minutes talking about. We certainly will hope for another time and opportunity with you, Mr. Ajule, to discuss this further. Thank you very much for joining us on the breakfast this morning. Thank you very much. I have a nice day. All right. All right. Very interesting. Mercy conversations around subsidy removal, and of course the confusion and the back and forth between the president, the senate president, the minister of financial planning and budgeting, and the GMD of the defunct NNPC, all making these state pensions. And it was a bit confusing. You're not seeing a clear policy direction or policy statement from government. Well, he said it all, the 4.6 trillion era, and the excesses or the balance of the subsidy from the middle of the year to the end of the year will have to go abhorring. And the fact that we constantly, there's a lot of projection for the dependence on the Dangote refinery as way out and talking about the modular refinery. Sort of a civil bullet. It can't be a civil bullet because he's a capitalist. Profit would always be on top of the question. I mean, it would always be his thoughts. So that's also another case. The fact that you think that that will be a way out, I don't know what to say. Well, I don't think Nigerians are expecting that Dangote will give them petrol for free. No, but he's saying that, if you listen to Nika Gule, he said that when petrol is being at the end of the day, it will be sold at a particular rate. But you also want to agree with me that he is in business and profit is always it. Well, we've been told that they not turn around maintenance, but the rehabilitation of certain refineries in the country. We expect that very soon they will be on stream. A report was given by the government to the National Assembly, particularly the Port Haggard refinery. And let's see if we can get the refining capacity up a bit by the time Dangote becomes fully operational, which will be 2022. I mean fully operational 100% capacity. I don't expect that to be 2022. But let's just hope that the nations refineries can be actively refining at full capacity in a couple of, in a year or two's time. But we'll keep watching this space. Definitely, we will. All right. Well, we need to go. Thank you so much for being part of the show. It's been a great time, two hours of an amazing conversation. We will return tomorrow with the breakfast. If you missed out on any part of the conversation, that's all right to follow us on Facebook, Twitter, and Instagram, what, plus TV Africa. And do subscribe to our YouTube channel and plus TV Africa lifestyle and plus TV Africa as well. I am Messi Boko. Have yourself a fantastic day. And I'm Kofi Bartel, so we'll return tomorrow. Good morning.