 Welcome back to the breakfast on PLOS TV Africa. Fuel subsidy has always been a political talking point in Nigeria. Last week, Nigeria state governors met and decided it's time to stop paying subsidies on petrol. A report of a committee headed by Kaduna state governor Nasser Arufai said Nigeria spends 70 to 210 billion Naira every month to keep petrol at 162 Naira per litre. The pump price of petrol could more than double to 385 Naira per litre if subsidy goes. This morning we're speaking with a public affairs analyst, Nik Agouli, to of course quickly share with us. He has a lot of experience in these conversations. Good morning. Thanks for joining us, Mr Agouli. Good morning. Good morning. Happy to be here. Thank you. Thanks for joining us. A lot of Nigerians aren't excited about this. There's mixed reactions really. Some people say, well, it's better we do this now and bear the brunt than to continue deceiving ourselves. And then there's others who say this will just lead to total chaos because Nigerians cannot afford petrol at this price. Which side would you be on? Do you think it's high time that we take these steps and go ahead with it and let us suffer it for now and then get used to it? I would actually be on the side of, I think there's an echo. We can hear you clearly. Is it okay at your end? Yes, it is. Go ahead, please. Okay, fine. I will be on the side of removing subsidies yesterday. In fact, it should have been removed 10 or 20 years ago. So that is the side I am on. And the reason I am on that side is that those who say that subsidies, when subsidies are removed, there will be some sort of amalgadon. Have forgotten that subsidies on diesel and kerosene have long been removed and that amalgadon did not happen. Because if you look at the productive sector, diesel is the fuel used in the productive sector. In factories, you go to other places, like even in our big generating sets that are used in factories or used in offices. They don't use petrol. They use diesel. If you look at the big trucks that carry our goods about, the big buses that transport people, those massive transit buses, they don't use petrol. They use diesel. If you look at kerosene, which is like fuel for the poor, there is no subsidy on it. So petrol is actually the fuel that is used by the big men. If you look at this long-term voice, government officials or private individuals with their big SUVs, they are not using petrol. So if we are not subsidizing diesel, which is the fuel for the productive sector, we are not subsidizing kerosene, which is fuel for the poorest of the poor, then this whole gamut of scaremondry, as a fuel subsidy is removed on petrol, the economy is going to suffer collapse, is all propaganda that is fueled by those who are benefitting from this scam. All right. Great. I want to quickly step in here. Yes, there is a great argument with regards of stopping petrol subsidy because it will save Nigeria a lot of money, no doubt. But the ones you've mentioned, the industries who have to depend on diesel and all of that, that has also, I believe, been one of the reasons for the high cost of goods and services that Nigerians have had to suffer for a long time. Same thing with kerosene. Yes, a lot of people would argue that it's petrol for the poor, but it doesn't mean that they're enjoying buying it at that price. It doesn't also mean that companies across Nigeria enjoy buying diesel at the price that they buy it. And that's why the cost of goods and services have continued to be pretty expensive. Don't you agree with that? And so do you think that we should then add more of this high cost of leaving and high cost of goods and services, high cost of, you know, existing basically in Nigeria, when we increase petrol price of 385 Naira Eilita? Well, the thing is that this petrol price that government says is 385 Naira Eilita is an anomaly. You deregulate a sector as government is claiming that we do, then you don't regulate the price. For instance, the food sector is deregulated. So government is not the one deciding how much we buy a bag of rice or how much we buy a tuba of yam or how much we buy a kilogram of beef in the market. The prices are different. So if the government is truly, truly interested in deregulating, what they need to do is to open up the market. And what I mean, open up the market is that whoever is able to import petrol and sell it so long as they pass quality check by the government, let them sell their petrol at a price that will give them a profit. What that means is that you don't expect petrol to sell at the same price all over the country. If you go to Katina state today, you will buy a cow at a factory parade that you buy the cow in Lagos. So you cannot now insist that petrol should sell at the same price all over the country and you now say it's a deregulated market. This is an anomaly. I can assure you, given the international prices of gasoline in the US and petrol here in the UK, where I am speaking to you right now, if Nigeria sincerely opens up the market, deregulates and says whoever is able to import, should import, pass quality check and sell at their price. Petrol will not sell for more than 100 Naira in Nigeria. I can assure you of that. And it does sound very good. Okay. So you're saying basically that rather than the idea that Nigerians have that deregulation would make petrol price very expensive, you're saying basically this will create competition and make it cheap. Is that what you're saying? These prices that we have been paying and the government is talking about 385 Naira, these are prices that have a lot of inefficiencies in building. This is government importing petrol and setting a price and selling it. And we all know that there are a lot of inefficiencies in the bureaucracy of government. And we know that corruption is also embedded in the way government operates. So petrol is a business. The government should just hand solve petrol and the government should allow the private sector to take care of this industry. Let me give you an example. If you put petrol in a vehicle, that vehicle is not going to move. Why? Because the vehicle needs engine oil and the vehicle also needs spare parts to be able to operate. And the government is not subsidizing engine oil, the government is not setting the prices of engine oil, and people are buying engine oil and they are using it to lubricate their vehicles. So what is this big deal about petrol that government will not let go? Government has to let go of petrol just like they have let go of diesel and I can assure you that petrol will save for not more than a hundred Naira. I can give you the data. Here in the UK, where I am speaking with you, a liter of petrol costs 1 pound 25. But in that 1 pound 25, 40 percent is duty and 20 percent is VAT. So the taxation is 60 percent. So if you take out that 60 percent, it means the petrol costs 75 pounds and at 75 pounds given our exchange rate today of 535, that petrol will cost just 400 and 1 Naira. But then that is the UK. Here the minimum wage is 1,000 pounds a month. In Nigeria, minimum wage is 30,000. So I can assure you that if this petrol is allowed to come to Nigeria by importers, they will sell it for not more than a hundred Naira. So I wanted to just quickly mention how would you respond to those who say, well, like you've mentioned, diesel has been deregulated, kerosene has been deregulated, but it hasn't in any way brought the prices down like you're expecting for petrol. What would your response be to that? Well, the government is still involved. The government is still sitting on the downstream sector of the petroleum industry. What is needed is for the government to give way. The government should only be a regulator, and the government should allow private enterprise to superintend over this sector. This government does not bother about how much we buy drugs. Importers are importing drugs and selling it at a price that gives them a profit. And I can see that drugs or medicines are more important to us than even petrol. The government is not interested in how much we buy food. The government is not interested in how we buy clothing. You know, government has deregulated education for instance. So for a start, the government can say, let whoever is able to import should import and sell side by side with government so that consumers have a choice to drive into a petrol station and buy at a price. Why should the government be insistent that a particular product in Nigeria should sell at a particular price? It's an anomaly. It doesn't make economic sense. It's only giving room for corruption. In the UK, where I'm speaking to you now, there can be two petrol stations that are opposite each other and they have different prices. And consumers are making out their mind as to where to drive in and buy. For instance, I can give you an example. If you look at the Iqoi of Victoria Island equivalent of the UK, the petrol prices in those areas are higher than what you can find in Mushi and Odu Elecba. These are businessmen making their decisions. Selling petrol at higher prices in the affluent areas and selling it at lower prices in the less affluent areas. It's all about business. So when you have competition, you not see that. I mean, we have examples. Let us look at telecoms. I like telecoms because it's such a very good example of how the business sector can do things for us. Mr. MtN, yes. Yes. You've shared this example with us many times. And we do understand the importance of why the regulation is important. But in a country like Nigeria where we have this issue with corruption and you mentioned that the government should deregulate, let private individuals go ahead and put at whatever price tag they have. In other countries like Malaysia, Canada, we know that when they had their full deregulation of their oil sector, they established laws. Also, there were bodies that were constituted to make sure to monitor and ensure that suppliers and marketers were not selling above a certain price. But talking about the corruption factor in Nigeria, how can we ensure, how can the government ensure that marketers, independent businessmen would not be exploiting the public? There are two things there. The first is that competition helps the consumer because the businessmen are fighting for market share. And the secondly, government regulation can come in. MtN were alone and they were selling their starter pack at 50,000 Naira. I was in Nigeria, I was working in Wari when MtN started. 50,000 Naira was what MtN were selling starter pack. How much is a sim card today? It's almost a free. Today, they will almost beg you to come and take a sim card. Why? Because competition has eaten all that profit. That's an economics, you call that super profit. So those who come into the industry initially, they start making a lot of profit and then other businessmen see they're making money, they're not coming to that sector. And once they come into that sector, they keep crashing their prices so that they can attract customers until customers now start paying efficient prices. So if government allows deregulation and businessmen to come into the sector with their money, they will crash prices. Second one is regulation. Currently, as set up, the government has the petroleum products pricing regulatory authority. This authority is the ones that sets prices and says petrol we sell at 170 or now they are saying 385. That's just their worth to set the prices. How they determine the prices, we don't know. They have a template, but is it transparent? And now you're talking about they are subsidizing 93 million liters of petrol consumption every day in Nigeria. Whereas we know that this petrol is just going across the borders. So if you let businessmen come in, all of these inefficiencies will be eliminated. And then government sets up a body, an agency that is called Petroleum Equalization Fund, PEF. The only duty of this agency is to ensure that petrol sells at the same price all over Nigeria. Petrol is the only product in Nigeria that enjoys this type of regulatory agencies around it. How can you insist that the product must sell at the same price all over the country? If you buy yams in Benway, they will be cheaper than if you buy yams in Lagos. And the government is not bothered about that. So why is the government bothered about petrol that petrol must sell at the same price all over the country? But Mr. Agule, I just wanted to also emphasize a point you made earlier. You know, talking about deregulation, you're basically saying that for the first few years of deregulation, petrol will be very expensive, and fuel will be very expensive for Nigeria to buy. Because we know this is a capital-intensive business, and not every businessman will be able to just quickly swoop in and begin to make investment in this sector. So basically, you're saying that for the first few years, we're going to bear the brunt of pain heavily for fuel, before it gets worse, before it gets better, basically, right? Yes, somehow, if Nigerians have to bear the brunt before it gets better, let's just bear the brunt. Sometimes you have to endure the pain of injection to be able to get work. Because what you get is statistics. $200 billion monthly is spent on subsidy. Imagine that money going into agriculture, going into education, going into healthcare, going into repairing our roads. And we are putting this money in a can that we cannot even look in and determine where it is going. We already know that there's heavy corruption in this fuel subsidy sector. So let's Nigerians endure the pain knowing that tomorrow will be better. But I cannot show you of one thing. It's not going to take years for the prices to correct. Why? Because importation of petrol is simpler. They are not setting up refund rates. They are just going to the market to buy and bring in. So within a few months, I cannot show you the prices are going to correct. Because importers, we go to the open market, the open market, international market, they will buy these products, bring them into Nigeria, clear them at the port. Already, there are tank farms, there are tank farms in Nigeria where these products can be processed and then they can be distributed all over the country. Do we not, let us not underestimate the extent to which businessmen can go to make money. Mr. Agole. Day by night, they will put all the facilities in place. And I can assure you that in six months or less, the prices will correct. There's also, you know, of course, it's also maybe something we'll talk about on a later date, how Nigeria is consuming 93 million liters daily. A couple of years ago, it was just 30 million. How did we jump to 93? But let's, you know, talk about the conversation on refineries. You know, how much will that also change? Do we still, of course, bother with fixing any of the refineries if we're talking about deregulation? And if we go ahead with that, you know, would that also be- Sorry, I think the line has, the line, you asked a question about refineries. Yes, I'm not. The line has actually gone bad again. Can you hear me now? Okay, a bit, yes. No, I'm asking if we should still bother going ahead with fixing refineries or we should just let that go and focus on full deregulation. Okay, if I can hear you, were you asking whether we should still go ahead with repelling the refineries or just continue with deregulation? Already, I am not in support of the government repairing the refinery. I would prefer the government to sell the refinery and let those who buy the refinery repair the refinery and then refine. Why would you go and repair a refinery to sell? It doesn't make sense. I mean, we know very well that the government is not efficient in the way they do their things. So they should do repair the refinery. So basically what I expect the government to do is this. In the short term, the government should allow full deregulation for people to import and sell. In the medium and long term, government should sell off all the four refineries in Nigeria so that investors will repair these refineries and then they start doing local refining. By the time we now have sufficient local refining, government should then impose duty on imported petrol so that whoever is importing will not experience higher prices to allow the local refiners the market to be able to sell. This is what is obtainable anywhere else in the world. We understand the benefits of deregulation like you've explained to us. But how about the hurdles, you know, the challenges to achieving full deregulation in Nigeria? The first hurdle is that the government of Nigeria needs to show sincerity to Nigerians to convince Nigerians that deregulation is the way to go. Because a lot of miscommunication as came on during has been, there's an orchestrated campaign by those who are benefiting from this subsidies scam. Anytime government wants to remove subsidies or deregulate, this people fund all sorts of interest groups in Nigeria to come out and campaign against it. So government should show sincerity to Nigerians and take the bulls by the horns. One thing I would expect government to do to assuage the fears of Nigerians is that government should allow the private sector to participate in the downstream alongside the government. There are many other sectors that government is doing this parallel round with the private sector, like even in media. Government has its own media houses and today I'm speaking on a private media house. So government should let people start buying petrol, importing petrol and selling at their own prices. This whole issue of government setting a price that this is the price that petrol must be sold should not be stopped. So that as importers are coming in initially, the prices that will be sold in the private petrol stations will be higher than that of government. But with time, the private super profits will not be eating up by competition and then gradually, Nigerians will start seeing the prices drop and then they will not start driving into those private sector stations to buy. And with time, then there will be no need for government to even get involved by importing. So if government doesn't want to walk away outrightly, then government should allow parallel round so that people can have a choice of buying at 250 in a private station or buying at 180 in a government station or whatever. And I can show you that consumers will make their own decisions and choices depending on what they find and what they see. All right. Nikaguli, thank you so much for joining us this morning. Interesting conversation. We hope to speak with you again. Thank you. Thank you very much. So always a pleasure. Always. And of course, coming up next, we are moving to discussions around the Southwest, Sunday Bohu and his call for secession and the response by APC leaders here in Nigeria saying no to secession, but yes to the ban on open grazing. We'll get into that conversation right next.