Abia Governor Alex Otti defends removing consumption subsidies on petrol and electricity, saying payment encourages efficiency while subsidy breed laziness.
Abia State Governor Alex Otti has defended the removal of consumption subsidies, arguing that subsidising what people consume can encourage laziness and corruption instead of supporting production and efficiency.
Speaking during an interview Anchor Ojy Okpe, he said the focus of government should be on creating reliable systems that allow businesses and individuals to produce, rather than using public funds to make consumption cheaper.
“When you subsidise consumption rather than production, you are just subsidising laziness. You are subsidising, sometimes, corruption. You know, because there’s just no way that people will not want to take advantage of the system.”
The governor said people tend to use resources more efficiently when they have to pay for them, arguing that reliable public electricity remains cheaper than running generators and bearing the cost of diesel and maintenance.
He also maintained his long-standing opposition to petrol subsidies, and said anybody who is pushing for petrol subsidy to return “does not mean well for the country.”
“When you have to pay, you are much more efficient. And anyhow you slice and dice it, it’s still cheaper than darkness. And if you have to run a generator, buy the diesel, provide for the maintenance, you will find that you are paying a whole lot more than public power supply.”
Otti said businesses should not depend on electricity subsidies if government can guarantee consistent power supply. “But most importantly, for the people who use it for production, for their factories, those people, they really don’t need the subsidy. They just need the constant power supply. And once you’re able to guarantee them constant power supply, they’ll pay. So businesses don’t need subsidy.”
He said low-income earners could also adjust their electricity consumption when faced with higher costs. “Low-income earners can always manage. And I’ve given you an idea of how they can manage. Well, in many parts of the world, they turn off the electricity to save power.”
Otti also backed the Federal Government’s position on ending electricity subsidies, saying he agreed with the Minister of Power that the subsidy should be removed.
The governor also maintained his long-standing opposition to petrol subsidies, saying he had consistently argued against subsidising consumption. “I’ve always been consistent on subsidy. And I’ve written extensively. I also refer you to my back page in THISDAY including I believe that one that I wrote in 2020 during the COVID. And at that time, nobody was buying oil. And I said it was a good time to remove subsidy.”
Otti said he supported government assistance for production but rejected subsidies that make consumption cheaper. “So I’ve always heard the view that once you subsidise consumption, what you get is what exactly what you wanted. So I don’t have a problem supporting production. But consumption should not be subsidised.”
He said the removal of petrol subsidy was the right decision and warned against restoring it. “You know, as election approaches, people will be making all sorts of arguments. But removing the subsidy was the right thing to be done.”
He insisted that anybody pushing for subsidy to return “does not mean well for the country.”
Otti said the subsidy system created opportunities for abuse, arguing that consumers became more conscious of their use of fuel when prices increased. “That’s where I stand. And I have sufficient reasons, including the scam that it became. So if you are being subsidised, you can just blast all vehicles, maybe 20 vehicles, put all of them on the road because somebody is paying for it.”
He said the initial hardship associated with subsidy removal could eventually give way to greater efficiency if the policy was consistently managed. “But then you find that at the time prices went up, people became more reasonable. So there will be the pain initially. But consistency and management would eventually make that pain give way to efficiency.”
Speaking on his stewardship of Abia State, Otti attributed his administration’s infrastructure spending and debt reduction to strict budget planning and control of recurrent expenditure.
He said his administration had committed at least 80 per cent of the state budget to capital expenditure over the past three years.
“We said no less than 80% of our budget will go into capital expenditure. So in the last three years, 80% to sometimes 82% of our budget was in capital expenditure, leaving a meagre 18% for recurrent spending.”
He said the approach had allowed the state to direct more resources towards roads, hospitals, schools and environmental projects.
“So that helps discipline us. So what does that do? That leaves us with a lot of the money to build roads, clean the environment, build hospitals, rebuild schools, and all the things you see.”
The governor said controlling the cost of governance was another part of his financial strategy. “The other thing it does is what I always have campaigned on, and that is cost of governance. It is a major problem in the country. If you don’t manage your costs very well, you will find that year in, year out, you are struggling. You are working hard. You are sweating, but it’s not showing.”
He said his administration had kept governance costs within 20 per cent of expenditure, including salaries. “Brought it down, caged it within that 20%. However, so you come to me, and you are coming, I decline it. Once I decline it, that’s it. So you cut down your cost of governance to 20%. Yes.”
He added that salaries accounted for about 11.9 per cent of the state’s costs, even after the minimum wage was increased. “Both salaries and, for instance, about 11.9% of our cost goes into salaries and all that. And we keep it there. Even though minimum wage increased, and we are one of the first states to implement, we make sure that every other thing gets cut down.”
Otti said Abia inherited N191.2 billion in various debts when he assumed office in 2023, including contractor debts, pension arrears and obligations to multilateral organisations.You inherited a debt of 191 billion naira. You are correct. It was 191.2 billion, different types of debts. Some of them were contractor debts, some of them were pension areas. Then the debts owed to multilateral organisations, and I think that one was somewhere about 148 billion, as reported by DMO.”
He said the state had since reduced the debt to about N48.4 billion. “We’ve actually reduced that debt to about 48.4 billion. So we’ve taken almost 75% of that loan out we’ve paid.”