The Social Democratic Party (SDP) candidate in the February 25 presidential election, Prince Adewole Adebayo, has criticised the government of President Bola Tinubu for the removal of fuel subsidy. He lamented that the decision has thrown more Nigerians into poverty in the last two months, warning that unless Tinubu, his handlers and the All Progressives Congress (APC) rethink and have a backup plan, the government would fail woefully.

Given the effects of the hike in fuel pump price due to removal of subsidy, would you still label those criticising the removal as hypocrites?
There are two types of people who criticise the subsidy removal; some of them are hypocrites and some are consistent. Those who criticised subsidy removal, like me and other people, have grounds to criticise the programme. But those who supported anyone, any platform that said they would remove subsidy from day one are hypocritical.

Once you agreed to throw a five-year-old child from 10th floor of a building, you cannot say I am surprised the child broke the limbs. There is no way you will implement the policy they are implementing now that you are not going to have the same consequences. Economics does not admit of cheating. You can cheat in politics, you can inflate your numbers in politics, but when it comes to economics, you can’t. You have to take the right policies; if you don’t take the right policies, the consequences of wrong policies will follow.

When we are talking about hypocrisy, it didn’t start with the labour unions; it started with President Bola Tinubu himself, who opposed former President Goodluck Jonathan when he had smaller amount of subsidy adjustment and all of them went on the streets against it. And when they came to power, they went in the opposite direction, finished everything once and for all.
It is not a political statement when you say people are hypocritical; we predicted all these. We were discussing it then. Nobody can pretend not to have been aware that it will affect factor cost, if it affects factor cost, it will affect cost of living. If it affects cost of living, more people will go into poverty.

Just look at the position they took before and look at the position they are taking now, there is nothing new in what has happened, it is just the natural consequence of the action. And that was why during the presidential debate, we were pushing for alternative view, that they should not do it, but they have done it now, so nothing has surprised me at all. In fact, it appears this might just be the beginning, except drastic steps are taken to go off that line.

What steps would you recommend, in addition to the palliatives already promised?
First, we should stop misusing the word palliative. The N8,000 palliative they are talking about is a carry-over from the existing 2023 budget. The carry-over is the by-product of the plan the Muhammadu Buhari administration left behind as to how they would manage the subsidy removal. Even the £800million from the World Bank was negotiated by the past government. Policy watchers shouldn’t behave as if they didn’t know that it was in the offing.

It appears the government is not aware of what we called monetary neutrality. When you have no food, no means of transportation, no medicare, throwing money at you is not going to increase the number of service providers or the value of real goods in the market. What it is going to do is that there would be wastage, as the money will not be well used. When the money get to end users, it is useless to them in the real terms, because it does not have goods to chase with the money. In the end, it may cause a little bit of inflation.

The way to go about it now is that if it is the consensus, as it appears the Nigerian elite is behaving as if there is no alternative to subsidy removal, subsidy has gone. I don’t agree with it though, but it is a policy of the government and it appears every mainstream political parties and analysts agreed with that bad policy.If you want to continue along that line, you de-link the people from the value chain of petrol. And the way to do that is, for example, from the transportation and logistics point of view, is to make sure that price of petrol does not impact on the ability of people to commute.

That is why you see that in many cities, whether it is Singapore or London, the common people don’t see the effect when the price of petroleum doves up or down, because the government has provided public transportation that has been de-linked from that. The common people are the easiest to take off that line.

What do you mean when you said there could be further dislocation in the prices if there is further dislocation in crude price and further depreciation of the naira?
There are three factors affecting it, and none of them is accidental; it is the by-product of our politics. We are either importing, as we are importing now, or we are preparing the market in continuation of importation, meaning even if you are producing petroleum in Lagos or Rivers or Akwa Ibom or Kaduna, the intention of the policy makers is that we don’t regulate the price of telephone, shoes or clothing or anything you buy in the market, you just follow what goes on in the international market. That is the policy position taken by APC, PDP and LP, which are the mainstream right wing parties in Nigeria.

They are leaving the naira to what they called market forces and the market is regulated by foreign currency. So, even the Nigerian government has lost control over its own currency and has no control over how petrol is traded. The inputs you use for petrol, whether it is the crude oil or refinery engineering cost, administration or manpower, are all regulated by the US dollars.
Unfortunately, most of the things people need in their lives are controlled by government policy, but politics controls who goes into government. So, if you don’t identify your interest very well and articulate them and decide which of your life’s activities is going to be dependent on government decision, those ones that are dependent on government decision should be involved in your politics.

If your well-being, sustainability, cost of living, employment, purchasing power, ability to preserve the fruit of your labour to live in peace, are implicated by government decision, they should be the one to dictate your politics. These are the things you should consider when you are in politics.

Are you saying Tinubu’s unification of the foreign exchange market and removal of the fuel subsidy is to help friends of the government?
Is that not obvious? I am not saying it pejoratively. In economics, everything is about choice. There are many alternative routes to development.
Nigeria is a resource-rich country. I am not saying that because of the number; I am saying it because of the quality of people we have, Nigeria is rich in manpower. I think it is not too late for government, starting with Tinubu and co, to rethink and have a backup plan.
I have a feeling, and I am saying it with every sense of responsibility, that if they go the way they are going, they will fail woefully. This is not because they hate the people, but because they are adopting models that never worked. It will surprise, including the President, that in the past two months, more people have entered into poverty and they are yet to succeed in lifting five people out of poverty.

The measures they are taking now will not help the economy. Subsidy is one out of about 2,000 of government programmes that require spending government money. I studied them when I was running for president in order to cut cost. If you are looking at the top 100 money wasters, subsidy for petrol is not one of them.

One of them is establishment costs – running National Assembly, Presidency, military spending, etc. We need the military, but not the waste that is there. Others are the management and funding of the JVs (Joint Ventures) and production sharing contract, the fiscal management of taxation, the waivers they give, which is a government programme, and the way we subsidise foreign exchange. There are more than these I have stated though.

Why don’t we use the N500billion palliatives to get one solid refinery working? And would the prices have been different if the refineries were working?
We have a duty to refine locally, because it is an industrial policy decision, except when the production is toxic and problematic. It is always better to produce locally.

However, it doesn’t automatically guarantee lower prices; it only guarantees employment, reliability, in case of distortion in the market, and you have marginal decrease in cost. Look at other things being produced in Nigeria; their prices are not down. Most of the cassava we consume come from Nigeria, why is the price of cassava not falling? We have been producing cement in Nigeria for one decade.
When former President Olusegun Obasanjo was everywhere supporting few people who wanted to create monopoly market or geo-monopoly market in cement, he said once we start producing it, everybody would have cement cheaply. But cement has never been cheaper at all, rather, it is even worse than before.

When government wants to commit your resources to their favourites, they will tell you, “let us put our money in the hands of rich private people and you will get good prices along the way.” The law of economics doesn’t have a brother or sister. Once the person is in the capitalist world and he is trying to maximise his profit, he will sell anything to his own mother at any price. So, price mechanism is a just a small part of developmental economics.

In the midst of the hardship facing the people, the Nigerian Electricity regulatory Commission (NERC) is considering increase in electric tariff, as being demanded by the Distribution Companies (DisCos). What effect would this have if it does take effect? 
It’s like government driving a trailer load of cement on top of somebody’s leg and you are saying you want to reduce the pain, yet you refuse to move away from his leg and yet you don’t want the person to cry? This cannot work! How can we pretend that we don’t know that everybody in that value chain would continue to adjust his price to cope with it?

You throw dirt upstream, everybody in that downstream water way will have to deal with the debris. The product you are fighting over is in itself dependent upon on other factor cost. If you went down to adjust the factor cost, they will raise theirs too.

In view of the increment of the fuel pump price, some people are now suggesting a choice in compressed gas as alternative. Do you think it is a reliable and safe alternative? 
Those are micro-economic decisions with individual firms to make a decision about, because a government that cannot guarantee a price of petrol and takes a policy decision and says it is not my responsibility to guarantee petroleum prices cannot guarantee CNG or LNG.
I think government needs to foster energy production by lowering cost for everybody, including finance cost, infrastructure cost, freight cost and regulatory cost.