Sanusi Lamido Sanusi and me

Editor’s note: This guest post is written by Tunde Fagbenle, Post was earlier published on punchng.com

Since the brouhaha over fuel subsidy removal began, I have had some engaging exchanges with our irrepressible governor of Central Bank of Nigeria, Sanusi Lamido Sanusi.

I have decided to serve my readers some of these as the issues involved and the views of Sanusi remain germane to public discourse and national development. Enjoy:

My dear SLS,

“I am out of the country and only just got to watch the video (on You-Tube) of the ‘Town Hall Debate’ on the subsidy removal in which you and some eminent others participated.

“I am so glad I watched it, as it, on the whole, gave me a new hope in Nigeria, going by the quality of the argument, pro and con, of the debate. Exceptional are the performances of yourself, Femi Falana and Adams Oshiomhole.

“Of all, yours was stellar! I didn’t realise you had so much capacity for soapbox talk.

“But I am NOT persuaded by your argument or position on the subsidy divide. It just simply doesn’t add up that you would be convinced that the amount of subsidy is grossly inflated above reality of local consumption as a result of unmitigated fraud in the process.

“Your position that the corruption in the system is so deep and endemic sounds defeatist and hopeless, and makes one wonder how such ‘super powerful’ fraudsters would allow even the removal of subsidy to have any positive effect when they are always there to frustrate any system.

“Above all, I think it is sad that with someone as strong willed and passionate as you, and others like you (few as there may be) in the government, we can still have a country that is incapable of having working refineries.

“You will agree with me that the problem is clearly the (re)importation of our petroleum in refined form. Logically, the price of petrol (PMS or whatever), if refined locally, cannot be as high as it would be when imported. If nothing else, at least the cost of freight out and in would not be there.

“What I do not understand is why private refineries can, therefore, not thrive in Nigeria, regardless of the regimen (of subsidy or not) if the refined product can be competitive on the international (sub-Sahara African) market, clearly because of the advantage of their location in Nigeria where the “raw product” (crude oil) is available and direct.

“I mean, how can refinery in Niger Republic, which imports crude, be profitable while a private one in Nigeria cannot?

“Now to you. The only thing that kept coming to my mind watching you is ‘why can’t we have this man as our president’?

“I know you’ve set yourself the ‘supreme ambition’ of becoming the Emir of Kano (the stool of your grandfather), though I think it is impolitic to have declared such ambition so soon while the incumbent is still alive (well, by my Yoruba custom, that is!); but I would want to see a movement that can help in bringing someone like you, Oshiomhole, Fashola, and, even, Okonjo-Iweala to run Nigeria. What a great country that would be!”

Regards,

TF

From SLS

“Thank you very much, Tunde.

“Starting from the lighter note, it was not so much a declaration of ambition. In our own part of the world, the emir takes it for granted that every prince wants to be an emir and in fact, it would be a sad day if a prince, when asked his ambition in life, ranked another office higher than the throne of his ancestors.

“As you are aware, economic arguments have many sides and policy regimes need to look at political reality. One example is the forex management regime of the ‘70s and ‘80s.

“Nigeria didn’t have enough forex to finance its imports when oil price crashed and it had two options:

“One, to devalue the currency massively; or two, to ration through import licences.

“It chose the latter and under Shagari, import licence became a huge scam where middlemen made millions without adding to production. In the military government of Muhammadu Buhari after locking up politicians and being able to enforce the law with military might, and introducing transparency by publishing names of allottees in national newspapers, the rationing worked and genuine importers got forex at official rate. Babangida could not do this and devalued instead.

“You agree that with subsidy, fuel should cost N65 in Nigeria, compared to N130 in Benin Republic and almost 200 in Niger Republic and Cameroun. Sixteen states in Nigeria have land borders with neighbouring countries. You need to seal them and make sure every customs officer is honest and will never accept a bribe to let tankers pass through. We also need to ensure that no vessels are offloaded in the high seas; that we have accurate measure for liquid fuel imported and can verify amounts to avoid trans-shipment, etc.

“Assuming all this can be done, we need to compute the cost of surveillance and enforcement. The arbitrage opportunity is just too large I don’t see how scams can be stopped. It is basic micro theory.

“There is no reason our refineries shouldn’t work; and right now, for the first time in decades, those who actually built the refineries have finally been awarded the contracts to do TAM instead of the old method of giving TAM mandates to contractors like Emeka Offor. In 18-24 months, all four should be working at 90 per cent.

Pipelines also need to be fixed, having been blown by militants.

“Private refineries can’t survive because private investments don’t come in when the market is distorted. If the only way a refinery will be profitable is by receiving government subsidy, it will be a government refinery, period — no one will invest billions of dollars in that business model.

“But also remember that even with subsidy removal, there is the Euro crisis and concerns about security in Nigeria. So, I don’t want anyone to think private investors will start in-flowing billions into the country without things stabilising first.

“The refinery in Niger Republic — and Cote d’Ivoire — will not sell at N65. It will sell at market price and government of Nigeria will subsidise it. Niger will now have to refine its own crude and sell. The good news is that petrol in the north from Niger may be cheaper than from Lagos because of transport cost and thus reduce price differential until we build refineries and make imported fuel uncompetitive altogether, which is what we should do. We really ought to aim at exporting fuel and petrochemicals, not crude in the long term.

“I understand that we don’t agree on this, but I do hope you can see where I am coming from.

“And yes, I do think the cabal should be dealt with. However, I see from published names that these are Wale Tinubu, Femi Otedola, Sayyu Dantata (Aliko Dangote’s brother, I hear), Mike Adenuga…

“Question, Tunde, is: who is going to deal with these people? Let’s be realistic. Obama has still not dealt with the bankers on Wall Street, nor Cameron with the City. Finance capital buys political capital and together, they own the capital. It is the story of bourgeois bankruptcy.

“Let’s just move on. At least this element can stop now.”

2 Comments

1. 

   HADIMOHAMMEDBAKANO

   April 2, 2012 at 3:47 pm

   FINANCE IS THE ACT OF PASSING CURRENCY FROM HAND TO HAND UNTIL IT FINALLY DISAPPEARS,FROM HADI M. BAKANO 08107704848
2. 

   Hadimohammedbakano

   June 13, 2012 at 5:52 pm

   good day with much respect and hounour i wish to congratulate his highness and his excellence for the turbany of dan magen kano long live to royal highness,long live to governor of central bank from hadi mohammed bakano0817704848