Ajuri Ngelale is the Senior Special Assistant (SSA) to President Muhammadu Buhari, on Public Affairs. In this interview John Osadolor, with Deputy Editor, and Tony Ailemen, Assistant News Editor, in Abuja, Ngelale said Nigerians must come to terms with the new reality of the Petroleum Industry Act (PIA), which has made an end to subsidy payments irresistible. Excerpts:
Can you bring us to speed on the recently unveiled Five Year National Development Plans, especially as it affects the development of infrastructure?
You will recall that we just exited the Nigeria Economic Sustainably Plan (NESP), which really served as a bridge between the Economic Recovery and Growth Plan ERGP 2017-2020 and the new medium-term Economic Development Plan for the country, 2021 to 2025. Our focus is ensuring that we are really investing heavily in those sectors that will have tangible values on the lives of Nigerians. That of course involves dealing with core infrastructure. We are also focusing on how to reduce the cost of production in this country. We must address these because we are competing with Egypt, South Africa, Morocco, and others, for the over 200 million jobs and the over $3 trillion that will be coming in, on the backdrop of the implementation of the African Continental Free Trade Agreement AFCFTA.
We know that it is going to be the investment in infrastructure that will help reduce that cost of production, which will incentivize that investment coming here, instead of going to those other countries. The President has been very adamant about the fact that we cannot be a dumping ground for goods coming in from other countries. We have been doing this for over 50 years. We have a market of over 200 million Nigerians and most of who are very industrious, ingenious, and ready to work very hard. What we have said is that given the enterprising nature of our people, it is very critical that they are not mere consumers, but producers. The medium-term National Development Plans deal with the core investments drivers, including railways, roads, bridges, airports, seaports, etc, linking our farms to their markets and ports, which are strategic to the investment. Another core part of the plan is the role that the private sector is expected to play in unlocking the economic development in our country.
Looking at the GDP that will be over one Trillion Dollars over the next few years given the investment that coming in through this plan. We have been hovering around $500b for some years now. We are going to double that and move beyond the $1 Trillion mark in the years to come. To achieve that, we are putting in place, a very robust incentive structure for the private sector to come in and know that they are operating in an environment that is transparent and where the return on investment will be guaranteed. Before now, most of the investments were coming from the government, especially the public sector investments.
What this administration has pioneered is an innovation of bringing private capital into the public sector investment at a scale that we have never seen before. We have, for example, the Presidential Executive Order 007, which has created the Road Tax Credit Refurbishment Scheme. This effectively provide tax credit from the federal government to the Federal Inland Revenue Service FIRS, through the Ministry of Finance, Budget, and National Planning, and provides calibrated tax relief over the course of years, iso that we do not create a revenue shock in the immediate term. The tax relief is in exchange for upfront financing of very critical road projects across the nation. Already, we have seen the fruits of that in the N200b Bonny road project in Rivers State, which will link the Nigeria liquified Natural Gas producing Company NLNG at Bonny Island to the mainland for the first time in our history and facilitate easy road transportation of gas products. We know that this President is very committed to his drive to move our economy away from oil and move to a gas regime.
These are part of his efforts at diversifying our economy. On top of that, so also have the very critical Apapa to Oworoshoki expressway, which Dangote is investing heavily in through the tax relief. This will provide an effective road network across the ports system from the Apapa and the Tincan ports. This will totally decongest that axis, not just for easy facilitation of import and export flows and the attendant huge economic implications, but also for ease of doing business in that part of the country as well. There are others that will be coming up very shortly on the backdrop of this Executive Order 007. One of the major moves is the Presidential Infrastructure Development Fund (PIDF), where we will work with the private sector through the Nigeria Sovereign Investment Authority NSIA, to essentially take up very critical road projects.
This includes the long-neglected Lagos -Shagamu -Ibadan expressway, which will be completed next year, 2022, and the 2nd Niger bridge which will also be completed next year. The government is spending over N300bn on the projects and of course the Abuja to Kaduna – Kano expressway. The first phase of this 375-kilometer road is due for completion in the first quarter of 2023, while the remainder will be completed in 2024. These are the major investments on ground. Beyond these, we are also launching the N15Trillion Infrastructures Corporation of Nigeria, early, 2022. This is a landmark initiative that is going to be exclusively targeting Nigerian public infrastructure. This is targeted at critical infrastructures that the private sector can enjoy to boost the economy of Nigeria.
The roads and bridges that are being funded will be tolled, and Nigerians do not mind paying because it makes more economic sense to pay N100 at the tollgate, driving on well maintained roads…
Besides infrastructure, what other areas of the development plans do you consider very vital for now?
To start with, we now have a National Assembly that is focused on getting things done, without the usual grandstanding we had in the past. Things like the very critical Petroleum Industry Act that we have been waiting for in the past 20 years have now been passed into law. The function of the National Assembly in terms of the implementation of the Medium Term Development Plan is very critical. We have been able to get the necessary funds, to fund the government or public sector component of the Development Plan. So, talking about major projects like the new high-speed rail lines spread across the country, these were part of the borrowing plans submitted to the National Assembly which was recently passed.
Nigerians had following our experience with borrowing, lost confidence that government can borrow intelligently to fund projects. But our borrowing is not for recurrent expenditures. They are all being committed to funding capital projects. If we are going to borrow to fund the rails that will carry heavy cargos from the ports to the hinterlands and decongest our roads, that is going to be very huge. The roads and bridges that are being funded will be tolled, and Nigerians do not mind paying because it makes more economic sense to pay N100 at the tollgate, driving on well-maintained roads, than pay hundreds of thousands of Naira to fix their cars because of bad roads. What Nigerians don’t want, is to be paying more for services they are not receiving. Mr. President was able to strike a landmark deal of over $1b with the Afrexim bank. With this, we are now going to have strategic transparency around oil trading. What we have now done is to bring Afrexim bank to fund refinery reconstruction at Port Harcourt, they can have their funds back. The contractor handling this job has a reputation of having constructed several refineries across the world.
Can you take us through the implementation of the 2021 budget? How far have we gone, because the year is already coming to an end?
One of the things this government has been able to achieve amongst several others is having the January to December budget cycle, which the previous administration had been struggling to achieve. Why is that important, you may ask? Last year -that Coronavirus pandemic year, we were able to achieve over 90 percent budget performance. So, the budget was not just a paper budget. Budget performance has been excellent in terms of cash release. That has not been part of our history. Before now, we hardly enjoyed up to 40% implementation, in fact, whatever was released was shared amongst the operators of the system. So, we have really come a long way. Presently we have done over 95 percent performance. What is also very essential is the issue of what the President has been devoting funds into. This is the first President in our history that has barred all MDAs who have projects that will not be completed by 2023, from submitting fresh projects. The President is committed to delivering all the ongoing projects before leaving office.
Nigerians will want to know what your repayment plans are for the debts that we have been collecting?
You are aware that no administration operates in isolation. So, we can’t divorce ourselves from the previous administrations, or the incoming ones. The truth is that any debt accrued will be passed on to the incoming administration because debt is continuous. So, when we talk about the national debt, if you go to the Debt Management Office website at dmo.gov.ng, you will see the year-on-year debt total for the nation. You will notice that debts have two sides, Domestic debt, and External debt.
I have been hearing some of the rumblings in the press that President Buhari has increased the external component of our debts too much. What we need here is a thorough understanding of the dynamics of these debts. When we came into government, in 2015, about 84% of our total debts, both domestic and external combined, was domestic debt, while 16% was external debt. Now, there is a perception that foreign debt is very bad and more harmful to the economy, while domestic debts are very good. But it will shock you to know that the reverse is actually the case.
The foreign debt comes between 2% and 8%, meaning that your debt servicing is lower. Most Nigerians don’t know that debt sourced locally averages between 10% and 24%. Now, that means that at 84% domestic debt, most of the debts were taken at higher interest rates and which you must pay. This means that more government funds are now servicing debts instead of being devoted to tackling projects. Going forward, the President decided to change the ways we take debt by focusing on cheaper debts at between 6 % and 7% to now pay off our domestic debts that were between 14% and 16% so that our debt servicing will come down.
In 2010, our national debt was $35b, but by 2014, at the time when Nigeria had bumper oil revenue, our debts moved to $67b almost doubling. Yet they did not put down any infrastructures or lay down plans of how the nation can pay back the debts. This government is now having to service those debts. Some of the debts were used on the so-called Abuja CCTV scandals, where about $470 million was spent without results, not a single camera is installed. That was part of the money we borrowed and we had to pay back without results. This is where we are coming from. The debt borrowed in 2010 for example had seven years moratorium and repayment is now coming up and people don’t know that what we are repaying are old debts. Why won’t the people be angry? The fact however is that the anger is being targeted at the person solving the problems, not the one who created them because they are now out of office. What we have said now is that any lone taken must be attached to projects. We go to the National Assembly and say, we want, for example, $1.2b for a rail line from this point to this point. The President started the Lagos to Ibadan rail line in 2017 and has completed it. No government has started and completed such project. So, what we are saying now is that whatever we borrowed, we attach to a project, which you can see. Take the Enugu International Airport, which is to be completed in 2022, or the new Lagos international airport that will be completed next year, so also is the new Kano International airport. Therefore, it is clear that not all borrowing is the same.
This is the first President in our history that has barred all MDAs who have projects that will not be completed by 2023, from submitting fresh projects
Efforts no doubt are being devoted to the rail sector. What are the chances that these will be delivered before the end of this administration?
If you look at the progression from 2015 when we came into office, we had essentially, only one functional rail line. The Goodluck Jonathan’s administration reached about 80% completion on the Abuja to Kaduna rail line. Now, the truth of the matter, is that that line ought to have been completed in 2012, or 2013, but we ended up completing it. After that, we took the time to plan the remaining rail projects. We did a forensic analysis of where most of the tonnage is being hauled across the country and came up with the Lagos to Kano rail project. We have about 11 million tonnes of goods along the western corridor because of the existence of the big ports. We invested $1.7b on the Lagos to Ibadan rail line and people can see it. We are now pushing it through from Ibadan to Oshogbo through Ilorin to Mina to Abuja to Kaduna and finally up to Kano. So, that leg from Kaduna to Kano will be completed in the next 18 months.
On top of that, the President said look, we have to extend it to cover the Nigerian Iron Ore Mining Company, Itapke, and the Ajaokuta Steel company, leading to the Warri to Itakpe rail line. That project again was started in 2016 to cover 326 high-speed rail lines. We are now building the $3.9b extension, building a brand new seaport in Warri, linking the rail line to the Warri seaport. The rail from Itakpe branches into Lokoja, to Abuja to join the rail line coming from Lagos at Abuja and proceed to Kano. On top of this, the President also approved the PortHarcourt to Maiduguri rail line. A very strategic project that will link the originally neglected South Eastern corridor. The newly modified plans links every state capital in the South East with the rail line from Port Harcourt in the South-South and to the South East and the Middle Belt before again terminating at Abuja to link the entire nation with rail. It will link Nasarawa, Plateau, Gombe, Adamawa, and finally Maiduguri, in Borno state. All these are being achieved within eight years.
What have you put in place to ensure sustainability?
The keys to sustaining these programs will always come back to who takes over after President Buhari. What we are looking for in leadership is somebody whose heart is intended to do the right thing at all times. What we want to avoid is a situation where we entrust this nation into the hands of people who have no interest of anyone at heart, but those of themselves and their small families. So, it is going to depend on the ability of Nigerians to look critically at the next candidates and make the right choice. So, I am prayerful that Nigerians will make the right choice.
In anticipation, President Buhari has wisely built into the agreements that we have now, an approach that ensures that these projects have been paid for in advance. This means that the contractors have their funds ahead of his exit. This is done, so that no matter who takes office next, nobody will be able to stop any of the projects and the works the contractors are doing. That applies to the refinery, rails, roads, and power projects that are currently ongoing. This ensures that nobody is going to be disturbing these contractors for kickbacks.
On the issues of energy, we are challenged by the fact that we had a privatization program in the power sector that has failed, more or less. The engagement of those who had no technical competence and financial muscles to reform the companies led us into years where this government had to spend Trillions of Naira in bailouts. The sector had suffered from inefficient metering, generation, distributions, and the likes. We had a mess. We do not want to focus too much on that, but that is the reality. Now, moving forward, we now have a situation where the Vice President, Yemi Osinbajo was mandated to lead a central kind of command for the power sector, where all the relevant actors are now in one place.
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This has helped us to drastically increase remittances of the distribution companies through the central authorities so that we have now seen a massive reduction in our interventions in the sector. Firstly, we increased the tariffs, adopting what we call Service reflective tariffs increase. This means that people now pay according to the service they receive. So, if you leave in Ebute Metta, for example, where, perhaps, light is not up to 12 hours a day, then you cannot be charged an increase in service tariffs. Only those enjoying 12 hours and above in a day, received an increase in tariffs. So, those companies in industrial layouts, now remit huge money because they now get better services and consequently, pay more tariffs. We now set up mechanisms that basically ensure that money are paid through the CBN which acts as a clearing house. That has helped the power Distribution Companies. Prior to this, the government had been spending its hard-earned money to keep the lights on because the failed privatization created a situation where the Nigeria Bulk Electricity Trading Company NBET, on behalf of the federal government had to pay Gencos, for debts owed them, by Discos, for power supplied to them, which they failed to pay for so that Nigerians can continue to enjoy electricity. The government went further to buy millions of meters to help consumers so that they don’t have to pay for lights they didn’t enjoy through the estimated billing system. With a meter, it is possible to monitor consumption. Nigerians are not looking for freebies, what they want is Service from the providers and they are ready to pay for services provided. We already put out about one million meters, but the gap in the country is much more. Nigeria need about six million meters. We have about four million coming in the next eighteen months and we are confident that by 2023, we would have taken the metering gap from six million to about 500,000. And hope that the next administration can take care of the rest and bridge that gap.
What is government doing about the current epileptic supply of fuel ahead of the Yuletide season and are we afraid of complete deregulation?
You recalled that the Federal Executive Council FEC approved the sum of N621b to the NNPC as part of Executive Order 007 to fund roads repairs and rehabilitation, focusing on very critical road networks that are strategic to transportation of heavy-duty trucks, especially where we have the fuel depots. The Suleja to Mina road is one of the major expressways that has been neglected for over 40 years and this has a huge depot that is strategic for fuel supply to the entire northwest geopolitical region. Work is already going on. Already, the NNPC is investing massively in new depots and tank farms, ensuring that we can decentralize the fuel distribution networks across the country, reduce the cost of logistics for fuel from medium to long term. Now, the other part is man-made. You have a situation where because of the long subsidy regime, fuel marketers create artificial scarcity that they can play on, to basically rob Nigerians of their resources.
The core issue is that government has been working to ensure smooth supplies, with mandates to the Department of Petroleum Resources DPR to shutdown filling stations hoarding or creating artificial scarcity. This used to be a major part of our lives before now. People usually queue at the filling stations for three hours in a day for nine out of twelve months of the year just to get fuel. They even, through the black market make us pay three times the actual fuel prices. The reason why you are seeing them resurface now is that we still have that human factors to deal with.
The subsidy regime is going to be a thing of the past very soon. With the new PIA that was recently passed, our people know that this can no longer continue. What the government is doing is to put in place measures that will cushion the pains that will emerge. Our neighbors that don’t have the kind of economic fundamentals pay as much as N400 per liter. Yet their minimum wage is much lower. We also have to live the way that is more realistic so that government can put resources into those things that are more profitable to the common ordinary Nigerians. This is the redistribution of resources that the President is more committed to.
