Professor Yemi Oke is a Professor of Energy and Electricity, University of Lagos. He is a foremost energy law expert of African origin globally. Born 52 years ago at Itoko-Arinlese, Abeokuta in Abeokuta South Local Government, he attended Baptist Boys’ High School, Abeokuta; University of Ilorin where he studied Law; Nigerian Law School and Osgoode Hall Law School of the York University, Ontario, Canada (on full scholarships), for his LL.M and P.hD. An Egba High Chief, Oke holds the title of Bada Baamofin of Egbaland as well as other chieftaincy titles in Egba Kingdom. In this interview with BRIGHT JACOB, he said it was former President Muhammadu Buhari that removed the petrol subsidy, not incumbent President Bola Tinubu. He speaks on how to avert the regular fuel crisis in Nigeria. He said the Dangote Refinery should be encouraged to go full stream, the Port Harcourt Refinery should come on board, the Warri Refinery should be conceded to private entities while the Kaduna Refinery should be sold outright to Northern interests. Excerpts:
What is the way forward for the major refineries in Nigeria and what can the government do to stop the recurrent fuel crisis in Nigeria?
All over the world, there is no way you can permanently avert a fuel crisis. It is because of the volatility of the petroleum sector. The sector goes up and down. Petrol is an international commodity that you don’t solely regulate at home. There are forces of demand and supply and other global forces that congregate to determine the price and availability of petroleum products globally.
In the US, Canada and UK, the price of petrol is not fixed. It mostly goes up and sometimes, it comes down. But mainly, it goes up. So, it is not a question of something one can predetermine or fix.
But what the government can do is to rake supply up. I have said several times that Dangote Refinery should be encouraged to go full stream. They should also look at the Port Harcourt refinery coming onboard because they have been spending a lot of money doing Turn Around Maintenance. It should be fully turned around as intended.
The Warri refinery should be conceded – minimum 25 years fully conceded – to private entities and Kaduna Refinery should be sold outright to Northern interests. I repeat: Kaduna Refinery should be packaged and sold to a consortium of Northern interests to take care of the market in the North and other neighbouring countries who can buy from them.
With that, you will succeed in having a liberalised sector and having to move product from Lagos to the North would not make sense. And that will further bring down the cost of the product up North and reduce the pressure on supply in the South.
So, basically that is all we need to do. And once we have supply in abundance….it becomes a question of supply and demand. If demand outstrips supply, prices will go up. And if supply outstrips demand, it will come down. And we can start to modulate the price effectively otherwise you will be dancing in circles.
What are the real reasons why the increase in pump price of petrol has not made queues disappear completely from filling stations?
Queues are disappearing, definitely. Once you have a glut in supply, you expect queues to resurface. But now that most filling stations have supply….I am in Abeokuta now and the queue used to be very long, but not anymore. I left Lagos State yesterday (Thursday), and I know that the queues are receding.
It will take a while for the queues to totally disappear. Once the product starts being available, you just don’t see the queue disappearing in one day.
“Subsidy was removed by Tinubu’s predecessor, Muhammadu Buhari who gave a gap of six months after the passage of the Petroleum Industry Bill and actually did not make budgetary provision in the supplementary budget he did before the administration of Tinubu. Nigerians should be clearly aware of this. So, when Tinubu came onboard, he had no choice but to stop it because it wasn’t even budgeted for in the first place”
The NNPCL recently increased petrol price from N617 per litre to N897 per litre. Is the new price sustainable?
It is sustainable to me. Petrol is not something that people can consume anyhow. People have to do a rational consumption of petroleum products.
Rational in the sense that, a situation in which a household will have five cars, one for daddy, one for mummy, one for son, one for daughter and one for the house help, and they go in different directions in the same neighborhood, and they take different cars, will not be sustainable.
People have to reason that daddy can drop son, daughter and mummy off when they are going out. People now move by planning their movement so as to work as a group.
Even all over the world, people don’t just embark on a journey in their cars. They look for alternative means of transportation, such as rail.
A lot of Nigerians now are even abandoning their jeeps to go for cars that have better fuel economy.
Of course, we also look at the direction of the availability of product and inflationary trend.
But with time, this will be addressed, but honestly, it is a difficult one, because not just in Nigeria, prices of petrol are similar. Nigeria is even about the cheapest, still.
If you look at the variables, the product itself is not really refined in Nigeria as we speak. Even the mechanism and technology to extract crude oil, we don’t produce in Nigeria. Even the spares of those equipment, we don’t produce in Nigeria.
A lot still depends on foreign exchange that we don’t really readily have. So, by and large, we see a lot of forces congregating, as far as petroleum products are concerned. It is a tricky one, actually.
Was the removal of subsidy by the President a step in the right direction?
I think Nigerians need to be educated that it was not the President that removed the subsidy. It wasn’t Tinubu that removed the subsidy and I have maintained this position.
Subsidy was removed by Tinubu’s predecessor, Muhammadu Buhari who gave a gap of six months after the passage of the Petroleum Industry Bill and actually did not make budgetary provision in the supplementary budget he did before the administration of Tinubu. Nigerians should be clearly aware of this. So, when Tinubu came onboard, he had no choice but to stop it because it wasn’t even budgeted for in the first place.
Maybe how he declared it in his speech was what caused the problem. But people should have that understanding that it had been removed and the records and documents are there to prove that it was Buhari that removed it.
Though, I am not trading blames because it couldn’t have been otherwise because Nigeria couldn’t have continued to subsidize at that humongous level.
Remember that we still don’t have accurate mathematics of the amount of petroleum products we consume in the country.
Remember, too, that we take barrels of crude oil out of the country to refine, but the crude that they take out of the country does not reflect the actual need of the country, so there’s a topping up on the crude that is taken out of the country to be refined.
And then there’s no accurate data or record of the actual product that is brought into the country.
For instance, 60 million litres is brought into the country. But who confirms that it is actually 60 million litres? It could be like 50 or 45 million litres that were brought into the country as against the 60 million litres that were contracted and paid for.
So, there is a whole lot of fraud in it and I am not happy. Those are the issues at stake. But then, if you see a regime that is trying to do things correctly, then Nigerians should try to understand. Things were really bad and messy before but now we are trying to get things done correctly. This is my personal view and I am not speaking for any government.
Why has the argument over whether the government is paying or not paying subsidy continued to be heated and not gone away?
Technically, the subsidy has been removed. But the government needs to still intervene to have appropriate pricing, that’s the work of a regulator. If it is left solely to the forces of demand and supply, there will be a crisis in the country.
But we know that the handling cost of petroleum products, including Dangote Refinery, shouldn’t be less than N1, 000 or thereabout. So, the Nigerian government tries to put in all kinds of indirect subsidies as it were. Subsidies at the level of naira-for-crude kind of thing, tax holiday concessions that may not be called subsidy in the real sense of the word.
But then there’s a structured subsidy in the whole thing to modulate the prices to a reasonable extent.
With the benefit of hindsight, do you think there is anything the President could have done differently about subsidy removal?
I said earlier that it wasn’t Tinubu that removed the subsidy. Subsidy was removed by the previous administration.
For now we will continue with it and we will revisit it to ensure that the removal will have a human face that this administration will look at it and study the whole scheme of subsidy from where the last administration left it, and then we’ll see what we can do to make sure it has a human face. That would have been a better approach as against saying it was removed by Tinubu.
Should the president continue to combine his office with that of the Petroleum Ministry?
It is not the first time a President will combine his office with that of the Petroleum Ministry. Even if the President steps aside as the Minister of Petroleum, it does not change anything.
Diezani Allison-Madueke, a former Petroleum Minister, was fully in charge of the Petroleum Ministry and it was a messy situation.
The President is the leader of the country and all other ministers are under him. So, there is no big deal about it if the President wants to oversee the Petroleum Ministry directly.
The structure that we have is such that the President is still the supervisor of all the ministries, anyway. It is just that he is holding onto the Ministry of Petroleum and there is a minister there who reports to him directly.
We can even assume that to be as a result of the fact that the Petroleum Ministry is the nerve centre of the nation’s economy and I won’t blame the President for being there. And mind you, it is not a permanent decision anyway. He may decide to put a substantive minister there or continue with the arrangement – it doesn’t really matter.
Do you think that Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, should go or stay?
I have no answer to that. It is the President that can appoint or fire anyone there. If the President thinks that Kyari is doing a good job, he can retain him. And if the President thinks that his services are no longer needed in Nigeria, he can remove him. So, I have no position on that. I am neutral on that.
Should the electricity tariff hike in April this year have been slapped on Nigerians?
The average Nigerian will be willing to pay slightly more for electricity if it is available because it will always be cheaper than petrol or diesel.
And it got to a level where they couldn’t even afford to generate electricity to pay for gas. Gas is an international product essentially, and you are telling gas producers to be supplying gas at a loss to Generating Companies? Who does that?
So, if the global pricing of gas is going up, do you expect somebody to be “dashing” gas for free so that they will use it to generate electricity? And in spite of the increment in tariff, a lot of Distribution Companies are still insolvent technically.
So, if they didn’t increase electricity tariff, there would have been total insolvency. The entire power sector would have collapsed.
How about Nigerians who say that the increase has impacted negatively on them?
Let us be realistic. Look at tariffs; look at utility bills in other countries. See what people pay for those services in other countries. How many megawatts do we even generate as a country?
So, when we talk of energy efficiency, both at the level of consumption and supply, these things are not free. If someone must pay for it, then who pays the bill? Let us not be sentimental now. And nobody forces you, anyway, to consume electricity.
What I am against is paying for the electricity that you have not consumed. Because I feel people should pay for what they consume. So, if you cannot consume 20 hours, you can put yourself in darkness for 20 hours and consume four hours.
Electricity cannot be available for free. These things are expensive all over the world.
And the things that we ought to have done, we didn’t do them. It is now that we are trying to be realistic.
Before now, we were just doing it anyway. We print money, we give subsidies, we give rebates, we give waivers, people steal money and we keep borrowing money using 96 percent of our earnings to service debt. The country was actually dying.
“The structure that we have is such that the President is still the supervisor of all the ministries, anyway. It is just that he is holding onto the Ministry of Petroleum and there is a minister there who reports to him directly”
Some manufacturers have complained about the high electricity tariff and some of them said they folded up because of that. Do you think the tariff is sustainable for the economy and manufacturers?
Generally, no serious manufacturer will rely on grid-based generation to power its industry – no serious manufacturer will do that.
It is not going to be realistic. It will also not be sustainable. And then whatever arrangement they deplore for alternatives must be factored within the structure of their businesses.
So far, do you think the President is on top of the energy and electricity crises in Nigeria?
He is on top of everything and I want to be quoted as saying so. The fact that we haven’t seen the results that we are looking for does not mean that the man doesn’t know what is happening in the energy and electricity sector, and I will explain.
If President Tinubu is not aware of what is happening, well we have seen some policy interventions by him. Here is someone, even in Lagos, he was involved and concerned to the extent that he started the Lagos ENRON project, which was affected by the then Federal Government’s policies, and the rest.
Two, the same person was with Mobil and has major interests in the petroleum industry. So, Tinubu understands the policies of the sector.
When you talk of the power sector, the first thing he did was to push the Electricity Act so that states can now start to generate and distribute electricity and not suffer what he suffered as Governor of Lagos State.
And it will take a while before these things start to manifest. There are serious policy interventions that Nigerians are not seeing. With time, they will manifest. So, we shouldn’t be emotional about these things.
Do you think that Nigeria is ripe for renewable energy?
Nigeria has been ripe for renewable energy and renewable energy has been dedicated in Nigeria since. So there are documented cases of that.
When you say renewable, you mean solar, wind, biomass and the rest, and they have been around forever. And now, more Nigerians are embracing renewable energy.
