No New Lies only New Fools.

On the fraud called fuel subsidy removal, this was what the renowned professor of economics said during Obasanjo regime:

Prof Sam Aluko RIP:
I was in Iraq before Hussein was killed by the Americans. Every Friday, Hussein will say ‘this oil is a natural resource from God, it is a God’s gift and we are making a lot of money from it, all the Iraqis should buy free fuel every Friday.’ He did not say they are going to remove subsidy. Instead of our government to do something similar, they are only oppressing us with the oil. I think it is unfair. In some civilized countries, such government would be voted out of power, so the question of oil subsidy is a fraud..

*** Except of his interview on oil subsidy removal below.

Don’t Be Deceived, There Is No Oil Subsidy – Sam Aluko.

Octogenarian Professor Sam Aluko, economist, former Special Adviser on Economic Planning to the Ondo State governor in the Second Republic, and chairman of National Economic Intelligence Committee (NEIC) under the military administration of the late General Sani Abacha, speaks with Hakeem Gbadamosi in Akure, Ondo State, on some topical issues in Nigeria and the way forward. Excerpts:

There is an ongoing controversy for the Federal Government will soon remove the oil subsidy; what is your view on this?
We have been talking about the removal of oil subsidy from 1999 when Obasanjo came in and at that time, oil was sold for N18 per liter. But today, we are paying N65 per liter and they are still talking of oil subsidy.

At that time, Obasanjo increased (petrol per liter) to N20, N22, N25; as I keep on saying, it’s a deceit. When I was in (the Abacha) government, I told them and they agreed that when you said you are subsidizing something, it means you are paying less than the cost of production.

For instance, if government wants to subsidise the price of yam and yam is selling for a thousand Naira in the market, and government demanded for N800 and promised that it would give the farmers N200, so that food can be cheap, one can now say government is subsidising the cost of yam, for the consumers. Similarly in the petroleum case, the cost of exploration of oil should not be more than N40 now and we are buying petrol for N65, kerosene for N100 and almost N150 for diesel.

So how can government be talking about subsidy when the cost of production of oil is less than what we are paying now? To me, we are paying tax to the government each litre of fuel bought. In other countries, it is through such things that government makes money. For instance, the cost of production in England is about 30p and so when they charge 1 Pound, they know that government is collecting 70p as tax on a litre of petrol.

And as they will tell their people, anytime they want to raise the state’s revenue, they put additional tax. They won’t be saying they are removing subsidy but they call it taxing; because that is the easiest way to tax. It’s a consumption thing and people who consume petrol are mainly those who have cars. They are plain to their citizens that they are collecting tax. Same thing obtains in America where they pay road tax or fuel tax.

That means the government has not been sincere?
They have not been sincere at all. Instead of refining our oil, and tell us we want to be collecting tax on it, they are selling our crude without any additional effort on exploration-which is done by foreigners, anyway. So, the NNPC does not explore more than 10 percent of the crude oil we export. So government has no cost; they export the crude, make a lot of money and use that money to import fuel instead of refining here.

If they say they are subsidizing oil, from where are they subsidizing, from yam? Because 95 percent of government revenue comes from oil, so you cannot use oil to subsidize oil, so government is making a lot of money from export of our crude oil because the cost of production of our crude oil is about a quarter of what they are selling. So they are making a lot of money from exporting crude, they are using part of that money to import; so if they are subsidizing, let’s ask them: where are they getting the money from? At least, 90 percent of Nigerians don’t pay tax. Or are they subsidising from our tax? Everybody depends on that oil money. So where are they getting the money from? Definitely from the oil. So you cannot be using oil money to subsidise oil when you derive your revenue from the oil. Government is only deceiving us and they have been doing that time and time again. When I was in government, when they increased fuel from N14 to N18, we objected then, my committee, the National Economic Intelligence Committee objected, since the government was making so much money from the oil. The citizens ought to pay less and now that the government is increasing the price by N4, why not put the increase into infrastructure and that’s the reason Abacha established the Petroleum Trust Fund (PTF) and put that increase into the developmental fund to make roads and some other infrastructure. (President Olusegun) Obasanjo came and abolished PTF and put nothing in its place. So that time, government did not say they remove subsidy; they said that the increase in the price of oil would be put into developmental fund to give Nigerians better roads, electricity, hospitals and so many other infrastructure. That was the government that was sincere with us because they knew they were making a lot of money from oil. Every oil-producing country does that for it citizens. I was in Iraq before Hussein was killed by the Americans. Every Friday, Hussein will say ‘this oil is a natural resources from God, it is a God’s gift and we are making a lot of money from it, all the Iraqis should buy free fuel every Friday.’ He did not say they are going to remove subsidy. Instead of our government to do something similar, they are only oppressing us with the oil. I think it is unfair. In some civilized countries, such government would be voted out of power, so the question of oil subsidy is a fraud.