The top 4 trending articles on Tekedia are on my postulations on how to fix Nigeria. Many politicians have extended invitations to join and advise their campaigns. My policy remains: I will advise ALL but none. In other words, I want to remain with no party even as I serve Nigeria. Yes, I do speak with everyone who calls but I have no interest in joining any political fray where black becomes white, and white becomes red, just to score needless points. In Ndubuisi Ekekwe, you want to see a technocrat , who is independent and fully alloyed to Nigeria’s progress, and not to any politician’s ambition.
Today, I want to present from my “3T2030 Plan for Greater Nigeria”, a plan to scale Nigeria’s GDP to $3 trillion by 2030, on how we can fix fuel subsidies. I believe that Nigeria will not advance economically unless we phase out subsidizing fuel. I have a playbook as someone running for a ministerial position in a future government in Nigeria. My fuel subsidy playbook is called 4YZero (4 years for zero subsidy).
Nigeria could spend close to $10 billion, about 25% of the national budget, to finance fuel subsidies this year: “Nigeria’s petrol subsidy scheme could cost 4 trillion naira ($9.6 bln) to finance this year”. This is simply unfortunate. Under 4YZero, ceteris paribus on Dangote Refinery, we will wean Nigeria of fuel subsidy in 4 years (I am cautious on Dangote Refinery since it is a private enterprise and I do not want to build a national economic plan fully on one company. So, I will assume that its impact may not change many things immediately).
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To deal with this subsidy, we will discuss with the labour union, civil societies, etc and develop a 4 year playbook. In the first year, we will spend $2.5 billion on transportation infrastructure and systems even as we remove 25% of the fuel subsidy. So, prices of fuel will go up by 25% but the recouped or saved funds from subsidies will go to transportation investments.
In Year 2, another 25% will be cut even as $2.5 billion is invested. By the 4th year, all subsidies are removed but $10 billion has been invested in transportation. But this investment will be smart.
We will put 50% of the funds into joint ventures (JVs) with private companies in aviation, waterways, rail and road transportations. The other 50% will be used to build four critical pillars which I have identified in the transportation sector (I will explain those pillars in future posts).
Upon the 4 pillars, the JVs will increase outputs and by doing that crash prices of transportation through competition (and that will reduce prices of goods and services). If that happens, the citizens will not feel the impact of the fuel subsidy removal.
This playbook makes sense. If Nigeria had focused on subsidizing NITEL to make telecom services accessible, it would have failed. But with Glo, Airtel and MTN, the nation has provided those services outside NITEL. We can do the same thing within transportation but we need anchors and pillars upon which the participants will build.
Under the direction of Mr. President, I will communicate clearly with all parties and together we can build a foundation to advance Nigeria. The problem is not just fuel, our challenge is that we have limited supply in the transportation sector. My village of Ovim minted many traders who bought things from Oriendu Market and used trains to sell them at Enugu and Aba. When the railway system collapsed, those opportunities went – and the farmers who supplied them lost reliable bulk buyers who paid better.
Nigeria’s aviation can double in months if we improve quality, expand infrastructure and invest in the sector. And those JVs will at least provide a vehicle for all major cities to have airports to boost aviation since most people cannot afford to take taxis to far away airports. Our 4 pillars will provide solutions at scale.
The playbook is clear: we will remove fuel subsidies and still grow the economy. That removal will be phased to ensure our most vulnerable citizens will not be negatively impacted.
Comment on LinkedIn Feed
Comment: if we Invest more providing electricity by having mini power grids, solar inclusive, the pressure on petrol and diesel will reduce drastically.
My Response: Nigeria’s electricity problem from my angle is not going to be solved by looking at technologies but by working to fix the legal ordinance which has made reflective pricing difficult. Our recent energy paralysis was seeded by the court which froze rates, depressing good capital going into the industry.
So, unless you fix that root cause, when you attain critical mass via mini-grids, etc, someone will go to court. That fear is why many are not investing since it is the court that determines the price of electric power in Nigeria.
Water rates have not changed in some states for decades. Yet, people say no drinking water. We need to deal with the root cause, transparently and honestly, to get Nigeria going. With that, the mini grids will become attractive to investors.
Comment: You’re the first to come out with solutions but I don’t find how you intend to do JV in aviation or rail or even road transport and succeed, I’m not saying it isn’t doable I’d like the how. When Arik with all the government support failed several FGN assisted mass transit are comatose, even the buses bought during Jonathan era cannot be found so I await the how? Ndubuisi Ekekwe
My Response: The biggest mistake in Nigeria is the government going directly to buy buses, etc and give private players to operate. That is because govt wants to be involved in procurement. We will do it the Israeli way. Inject that money via banks, PEs, VCs, who must match govt commitment. Anyone getting that money knows that it has to be repaid and it is not free. More so, these incentives will be agonistic of individuals or companies: level playing ground for all.
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The $10 billion figure is even a moving target, did we spend same last year or the year before? So it means that if we continue with subsidy, we could be hitting $15 billion by 2024, since our daily petrol consumption that used to be around 30 million litres is now hovering around 60 million litres or more. We don’t even know the amount we consume, and with substantial quantity smuggled across the borders, since petrol is too cheap here.
The people of Nigeria play politics to the detriment of their own lives, and that is why we are conformably allowing the government to borrow such a ridiculous high amount, just to burn petrol recklessly, as if those doing the borrowing are the ones to payback from their private pockets, we do not think in this land.
On having airports in all the states and major cities, making the routes viable will depend on how we reorganize our economic centres. Having airports everywhere is not the problem but what the people who fly to those destinations will be doing there, we planned our economic centres badly, that is why we have only 3 or 4 viable aviation routes in a country of this size. By keeping so many economic sectors within Lagos, we have reduced aviation revenues by perhaps 50%…