Olusegun Olatunde Oyegbami is a business man who have spent over three decades in Nigeria Petroleum downstream and also author of Reversing the Rot in Nigeria. In this book he analyzes the fraud behind the Petroleum Equalization Fund (PEF) and other national issues. Excerpt.
What is the inspiration behind this book?
The inspiration is that things have become so bad that we must speak out and I have plumbed the depth of what has been happening in Nigeria for the past forty to forty-five years and have struck the nail on the head that the way we have being running the oil industry is what has led the economy collapse as we are witnessing today.
When we are talking of recession, the recession didn’t start today, it has actually been in the pipeline because we have been doing the wrong things in running this economy as more or less a social service, which it is not.
What do you think actually went wrong that led us to where we are today?
The over dependence on oil has actually led us into this situation we are in. Before discovery of oil agricultural happened to be the main stay of Nigerian economy, and it was providing employment for the teeming population of Nigerians.
But when oil was discovered, the way we have been running the oil industry made us to forget about agriculture, and we have also been running the oil industry in a fraudulent way such that everything that has being going on in the oil industry which is about 90% of the economy, everything that has been going on there has been full of manipulations and fraud. Such that as at now we are still maintaining that fraudulent situation and that is why this book is very timely.
We should note what I have written in this book is to make a turn around to rationality and sanity. It is only when we do that, that we can improve on the economy.
For now, we are just deceiving ourselves. The corruption is still very much ongoing in the economy and it is not being addressed by this present government.
In the book, you hit hard on some men of God by shielding some politicians, can you please expatiate on this?
Well, it is when the economy has been seriously bastardized and going downhill, that means the livelihood of people have been destroyed and they have become seriously hopeless.
So, it is this kind of hopelessness that the so called men of God are exploiting to even render them more prostrate, and that’s why I said that the politicians have destroyed peoples livelihood, they have made them to become hopeless and now, in “going to God” they have ended up being deceived further and their situation is being exploited and the society becomes even worse.
So, my own postulate in the book is that talking seriously there are really no men of God anywhere, anybody who is talking of God is doing it for his own personal benefits that is why we now have the so called men of God competing with the politicians even in the material acquisition of wealth such that we now have men of God in Nigeria, riding aeroplanes and building estates, acquiring a lot of material properties, which is actually in contrast to what the bible and the Quran teach us that we should build our treasures in heaven and we should help one another to make life better for everybody.
We have the men of God running universities where the tuition fees are very high, though I am not against high fees in universities. Don’t get me wrong, because if you want quality education you should be ready to pay for it. But when it is not being put in place by government but it’s put in place by these “men of God” just to make even more money then we should call into question our so called obedience to God, because God wants us to prosper and He wants us to be properly educated but it is not these “men of God” who should educate us but it’s the government to educate us. It is when government has failed to perform its duty, these people has moved into that lacuna i.e the space that is left vacant.
In your book, you pointed out the pointlessness in Petroleum Equalisation Fund (PEF) and declared it fraudulent, could you please educate Nigerians on this alleged scam?
The Petroleum Equalisation Fund, PEF was put in place either late 1975 or early 1976 when former President Olusegun Obasanjo was Head of State and current President Muhammadu Buhari as Petroleum Minister, and the intention might have been honest to let everybody have equal access to the petroleum product but equal access should not have been the mantra we should follow but equitable access.
That is to say if you are in a particular place where you are close to the petrol, then you can buy it slightly cheaper but it should be available to everybody in that location at same price.
The whole idea in economics is that you operate on a comparative advantage and localization of your advantage.
When you are in a place like Warri or Port Harcourt and when we are talking about importation, Lagos where the petrol lands should necessarily be cheaper than other places where they come to pick that petrol but where government is now paying to transport petrol to far places that is where the fraud comes into it, which make us to be running a non-economic platform, it is very wrong. Until we change this, Nigeria can never make any progress.
Because it is looking like Government is favouring those people transporting the petrol to their places at government expense, this should not happen and this is what has been happening for more than forty to forty-two years and until we change that we cannot get it right as a country. I am very convinced about this, you run an economy on an economic template and not as a social platform.
You said in your book that since 1975 till date, Nigerian government has never subsidized petroleum for its citizenry for one day, can you clarify this?
The price at which petrol has been coming in, has always been the economic price and up until the PEF scam became the money was being collected started to be more than what has been voted out of the purse of fixing the price.
Is like when you increase the price from N1 to N1.50k maybe before they use to allocate 5k out of that N1 for transportation but when it is now N1.50k they will add another 5k to transportation cost so that they will now have more money to pay for transportation and 10k will now be used for transportation.
So, they have not subsidized the price of petrol as at that time, all they have subsidized is transportation of the product to distant locations. So, it was when, often time when the price began to sky rocket to N100 they now decided that because we are bringing it in at N80 we are going to be giving you additional money, but all the extras are being added to cost of transportation.
Constantly, the cost of transportation that is the bridging element in the price build up, that is what always goes up steadily.
I am telling you that out of N145 as the cost of petrol today, N6.20K is still allocated for transportation.
Why? It means that anybody using fuel down south is still paying N6.20k more than he should have paid.
This is now gathered together to transport petrol to other parts of the country, especially the North.
It is really an economic matter that the south should not continuously right from over forty-two years ago be paying for transporting fuel to the North, because come to think of it whatever is coming from the North always has its own element of transportation that the South pays for. We have never eaten beef, cow, yam at the same price as the north.
It is purely an economic matter, it is when looking at it from political angle that you will say this man is trying to incite one tribe against the other, No, it’s purely economics. These are elements of deception that we have been having in this country. Sometime in the Second Republic some people were arrested for “smuggling” beans from Bida to Oyo. That is funny.
Nigeria government should let the Nigerians trade fairly among themselves, if we are going to trade in petrol take the petrol at the available price at the depots, add your own transport cost and sell it there, we will have normalcy in this economy within a year or two but now we still have deception and manipulation going on even right now because anybody who is buying petrol in Lagos is still paying N6.20k for carrying it to the north, it is wrong. That should stop.
It is when this manipulation stops then we know this government of Buhari is ready to fight corruption, because the same Buhari started the PEF far back then and he’s still protecting it till today, until we stop that before we know he is actually dealing with corruption honestly and he’s treating all Nigerians fairly across board. But for now, No, that is not happening.
As an economist, IMF want Nigeria to devalue Naira, what is your reaction to this?
The Naira is officially a confused currency in Nigeria today, because nobody knows the actual exchange rate. One thing I want to state here emphatically is that at any time you have a dual exchange rate for any currency, it is an invitation to fraud.
In Nigeria today, we have minimum of treble or quadruple exchange rates. It is very corruptive and fraudulent, it is very wrong. At any point in time there must be only one exchange rate, anytime a government has more than this, that government is fraudulent.
So now based on the exchange rate criteria we are running now in this Buhari’s government, I made bold to say that its most fraudulent government ever, because we have exchange rate now ranking between 197 and 380 look at that band! It means some people can quickly do fraud, if they want to manipulate the system they can actually collect the dollars at 197 and they can sell at close to 380, so we are just going deeper and deeper into corruption and it is most unfortunate that this government is the one that is supposed to be fighting corruption. But what this government is doing today is barking against corruption and grandstanding against corruption, I think we should actually be ashamed of ourselves in this country today.
So, talking of IMF demand for devaluation of naira. The idea of devaluing is find a sensible realistic rate for your foreign exchange rate. So, there is no reason for questions or argument and talking a lot of theories about if we are devaluing or not devaluing just find the exchange rate that you can provide the dollar at any point in time against it.
In any reasonable or developed economy of the world there is always exchange rate that goes up and down by probably 0.1% and at worst 0.3%, that is how exchange rate should float.
But when you now say you are fixing exchange rate for different categories of people, a rate for people bringing things in for government (N350), different from sourcing for it privately is (N380), for going on pilgrimage (N197), it is corruption incorporated. Please, whoever is in government should know that as soon as the exchange rate that as of now have 50k differential from a second level (if there is at all) that is an invitation to corruption, there should always be one exchange rate in any honest economy and Nigeria economy since we started PEF not been an honest economy.
It’s quite unfortunate, we have Ph.D in economics all over the country, I challenge them to read my book and see where they have been running contrary to the dictates of their calling.
You can’t have Ph.D in Economics in Nigeria and we are running the economy the same way we are running it in Nigeria and say you are proud of the Ph.D. I challenge this specifically man who I know very well who doesn’t know me Dr. Peter Ozo-Eson, we were in University of Ibadan (UI) together, I challenge him to read my book and know that, he has not been true to his calling, and many others like him should read the book.