…As Fuel import costs $15b yearly***
Vice-President Yemi Osinbajo spoke yesterday on the troubled economy and the Buhari administration’s battle to revive it.
In his view, corruption has been the major problem.
He painted a gloomy picture of the mismanagement of the economy under the Dr. Jonathan administration.
According to him, the country lost $3 billion to the Strategic Alliance contracts the Nigerian National Petroleum Corporation (NNPC) and some companies signed.
“The promoters of the companies made away with close to $3 billion, almost a tenth of our reserves.
“There is no way if someone made away with a tenth of your reserves that you will not have a major economic shock. And if we don’t deal with it, if we don’t talk about it, how will we be able to discuss our economy in a real honest way with a view to ensuring that these things do not happen again?”
He continued: “In one single transaction a few weeks to the elections in 2015, sums of N100 billion and $295 million were just frittered away by a few,” he told a gathering of businessmen, government officials and journalists in Abuja.
It was at the Seventh Presidential Quarterly Business Forum for Private Sector stakeholders at the Presidential Villa.
Osinbajo noted that when oil prices went up, Nigeria did not save for the rainy day, adding that the problem was not just that of a single commodity.
Osinbajo said: “Sometimes when we talk about our economy, we talk about the fact that we have relied on single commodity and that is one of the reasons why we are where we are. Yes, that’s quite true, but the fact is that proceeds from that single commodity were regularly hijacked consistently by a few. That is really the problem. If we had spent the proceeds from that single commodity the way we ought to, we won’t be where we are today.
“Most of the proceeds went to rent seekers in the industry and production,” he said
“When you consider that in 2014, as the minister of Finance has said, that oil price was an average of $110 a barrel and only N99 billion was spent on power, works and housing and when we talk about the economy we talk as if these are normal by every standard.
“Nobody should talk about the economy when you have this kind of huge leakages and huge corruption. Corruption that completely takes what you are allocating to capital projects.
“We saw from the presentation of Minister of Finance N14 billion was spent on agriculture in 2014, transportation N15 billion, so the total spent on infrastructure in those three years were N153 billion and in two weeks before the elections N150 billion was essentially shared.
“So if your total infrastructure spending is N150 billion and you can share N153 billion, that is completely incredible. That sort of thing doesn’t happen anywhere else in the world.
“And when we are talking about the economy, we must simply understand that this is the problem.”
The Vice-President said with less revenue, the current administration had been able to increase capital funding by 400% in power, works and housing, in defence, transportation, agriculture.
“If we want to do analysis in Nigeria, it is either fraudulent or ignorant if we do not bring money that belongs to corruption into the mass.
“This is what distinguishes, in my own respectful view, this administration from the other. I can say that with what I have seen, if you have a president who is not corrupt, 50 per cent of your financial problems are over.
“This is what I have seen, I can demonstrate it with facts and figures. If the president is corrupt, the entire financial system is compromised and that is what we have seen with the figures we have just seen. That is an absolutely important fact that we must take into account,” he said
Osinbajo, however, noted that corruption has not been completely wiped out under the current administration.
“Where corruption has become systematic, such as we have in our country today, you cannot deal with it in one fell swoop; it is not possible. In any event, you still have a lot of corruption fighting back. The system fights back and it’s both an internal and external fight back and you have to be steadfast and strategic to win the battle.
“There’s no way that you have a system such as ours that has consistently thrived on corruption and proceeds of corruption and public financing, in particular, that will give up and say, ‘guys, the problem has been solved’. No.
“It is a system that has fed on corruption and it affects all aspects of governance; so, trying to deal with it is certainly not a walk in the park.
“But I want to say that task has already begun and that task is being done consistently and I believe that going forward in the next few years, no matter how we are criticised, if we stick to policy especially controlling excesses and corruption in public finance, this country will make the kind of progress that it deserves to make with all the resources at our disposal.
“If we stick to the policy of ensuring that as far as public finance is concerned, there is no impunity and that we hold people to account, I’m absolutely confident that this country has what it really takes to make the kind of progress we deserve to make as a nation.” Osinbajo said.
Finance Minister Kemi Adeosun, Trade and Investment Minister Okechukwu Enelamah and Minister of State for Budget and National Planning Zainab Ahmed highlighted the various reforms being undertaken by the present administration.
Private sector participants at the meeting complained of various problems facing businesses, including power supply, high cost of production, high excise duty, abandoned Lagos-Ibadan expressway and non-linkage of small and medium entrepreneurs to the Economic Recovery and Growth Plan focus labs.
Osinbajo’s conclusion is that it will be impossible to develop any economy without first tackling corruption.
According to him, the massive corruption in the last administration is still having adverse effect on moves by the current administration to develop the economy.
Meanwhile, Nigeria is spending about $15billion yearly on fuel importation, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, has said.
A statement titled: Green Field Refinery Initiative yesterday quoted Baru as saying the country spends between $12billion to $15billion yearly to reduce the deficit in daily domestic fuel consumption in the country.
He said the Nigeria’s resort to fuel importation became imperative in order to improve supply and avert scarcity.
He said the development poses serious threats to the government’s dwindling revenue, if left unchecked.
According to him, the country’s dwindling fortune was caused by the fall in the international prices of crude oil , adding that the Federal Government is investing in additional refinery capacity alongside private investors, who have demonstrated their readiness to hold some equities in the project.
Baru said: ‘’To reduce the huge cost expended in importing fuel into the country, especially the money that is being spent in reducing deficit in the supply of the product, the government is investing in refinery capacity, alongside companies that are holding some equities in the refinery project. “Through this means, the government would be able to meet the country’s gasoline consumption of 36million litres per day and 10 million litres of kerosene per day.”
He said government is trying to establish three refineries with approximately 400-550 million barrels per day (bpd) in Lagos, Bayelsa and Kogi states, in order to boost fuel processing in the country.
Baru said the issue of location, configuration and shareholding structure of the refineries would be determined by the government and the private investors, adding that the refineries would be market oriented and profit motivated.
He said the government is in the vanguard of promoting new refineries in order to increase in-country crude oil refinery capacity and further help private investors to perform in the face of technical and financial challenges facing them.
Baru said the refineries will boast of state-of-the-art facilities, as well as provide high percentage of white petroleum products. He stressed that the refineries would operate as import substitution plants that would be supplying refined products to consumers in the domestic market.
‘’In addition, the refineries would be exporting to regional and international markets, with a view to make more money. This means that the refineries are going to play across borders, a development that would enable them to earn foreign exchange,’’ he added.
He said the idea would enable Nigeria to become fuel hub in West Africa , which according to him, boasts of 18 countries, 290 million population and Gross Domestic Product (GDP) of $340bilion.
He said the establishment of new refineries would enable Nigeria to become self sufficiency, as well as encouraging economic growth.
The refineries, Baru said, would have a multiplier effects on the economy because they would provide direct and indirect jobs for the people.