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The Subsidy Mathematics - Politics - Nairaland

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The Subsidy Mathematics by blackgucci(m): 10:39am On Dec 14, 2012
By Ogunyemi Bukola

One of the factors that encouraged my failed attempt at studying Medicine at the University is my passionate dislike for mathematics. I literarily can’t stand numbers and the magic that comes with mathematical procedures. But President Goodluck Jonathan in his infinite capacity for the miraculous sent me back to school for extra classes in Basic Arithmetic on Tuesday 11th December when I read a report that the President had made a request to the National Assembly for a Supplementary amount of N161 billion as fuel subsidy payment for the remaining three weeks in this year as, according to him, the original N881 billion budgeted for that purpose for the whole of the year had been exhausted.



Now, there is no reason to suspect our dear President of falsehood, but the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala had on October 21 said the N888 billion allocated for subsidy payments in the 2012 budget should be enough to pay petroleum product importers and that government might not need supplementary appropriation for subsidy payments in 2012. So I thought maybe Mr. President had been misled, yet again, by his retinue of ineffective, over-paid aides into submitting a supplementary budget request for the wrong purpose, or maybe there was a typographic error on the request paper and Mr. Jonathan meant to ask for N16.1 billion, or N1.61 billion. Anyway, I brought out my calculator to crunch some numbers to see where lays the error.



Just so you know how big N161 billion is, at least in budgetary terms, consider how it compares to some selected allocations in the 2013 Budget Proposal presented by President Goodluck Jonathan to the National Assembly some weeks back:



The N161 billion for 3 weeks fuel subsidy is: almost twice the total allocation for Agriculture in 2013 (N81 billion times 2 = N162 billion); more than twice the total allocation for Power in 2013 (N74 billion times 2 = N148 billion); more than thrice the total allocation for Water Resources in 2013 (N47 billion times 3 = N141 billion); more than twice the capital allocation for Education in 2013 (N60 billion times 2 = N120 billion); almost thrice the capital allocation for Health in 2013 (N55 billion times 3 = N165 billion); more than the capital allocation for Works in 2013 (N151 billion); more than twice the total allocation for Niger Delta in 2013 (N63 billion times 2 = N126 billion).



The N161 billion for 3 weeks fuel subsidy is more than twice the Statutory Transfer for Universal Basic Education in 2013 (N72 billion times 2 = 144 billion); more than twice the Statutory Transfer for Niger-Delta Development Commission in 2013 (N57 billion times 2 = N114 billion), more than the Statutory Transfer for the National Assembly in 2013 (N150 billion). Indeed, the N161 billion for 3 weeks fuel subsidy is more than the sum total of the 2013 total allocation for Science and Technology (N31 billion), Mines and Steel (N13 billion), Environment (N21 billion), Lands and Housing (N24 billion); Aviation (N53 billion) (sum total = N141 billion).







Now that we know just how big the additional N161 billion Mr. President is asking for is, please follow me diligently as we go through the arithmetic of year 2012 fuel subsidy payments. Please note that some of the figures used here are approximates.







First let’s go through the basics:



There are 52 weeks in year 2012, out of which we have spent 49 weeks, with 3 weeks left.



So far, we have spent N881 billion on fuel subsidy for 49 weeks, which translates into about N18 billion per week, N2.6 billion per day, N107 million per hour, N1.8 million per minute.



According to Mr. President, we need an additional N161 billion to pay for fuel subsidy for the remaining 3 weeks in the year, which translates into about N53.7 billion per week, N7.7 billion per day, N319 million per hour, N5.3 million per minute.







How much is fuel subsidy?



On January 1st 2012 when the government of Goodluck Jonathan decided to completely remove subsidy on fuel, one litre of PMS sold for N141. After the OccupyNigeria nationwide protests and help from Labour Unions, government agreed to a partial subsidy regime, with PMS to sell for N97 per litre. This means that actual subsidy on one litre of PMS is N44 (N141 minus N97).







How much fuel can we subsidize with N881 billion?



How many litres of fuel can we subsidize with N881 billion at the rate of N44 subsidy per litre?



N881 billion divided by N44 = 20 billion litres.



So the federal government has used N881 billion to, benevolently, subsidize 20 billion litres of fuel between January and now, which puts consumption at 20 billion litres in 49 weeks, 408 million litres per week, N58 million litres per day, 2.5 million litres per hour.







How much fuel can we subsidize with N161 billion?



So how many litres of fuel can we subsidize with N161 billion at the rate of N44 subsidy per litre?



N161 billion divided by N44 = 3.7 billion litres.



So the federal government is going to use N161 billion to, benevolently, subsidize 3.7 billion litres of fuel between now and the end of the year, which puts projected consumption at 3.7 billion litres in 3 weeks, 1.2 billion litres per week, 174 million litres per day, 7.3 million litres per hour.



So government estimates that Nigerians are going to consume three times more fuel in the next three weeks than they did at any point during the past 49 weeks.







How much is fuel subsidy for the entire year?



If the National Assembly approves the N161 billion Fuel Subsidy Supplementary Budget request as made by Goodluck Jonathan, total amount spent on fuel subsidy in year 2012 would be:



Amount spent on fuel subsidy for 49 weeks (N881 billion) plus Amount to be spent on fuel subsidy for 3 weeks (N161 billion) = N1.042 trillion



N1.042 trillion spent on fuel subsidy in 52 weeks translates into about N20 billion per week, N2.85 billion per day, N119 million per hour, N2 million per minute.







How much fuel can we subsidize with N1.042 trillion?



So how many litres of fuel can we subsidize with N1.042 trillion at the rate of N44 subsidy per litre?



N1.042 trillion divided by N44 = 23.7 billion litres.



So the federal government is going to use N1.042 trillion to, benevolently, subsidize 23.7 billion litres of fuel for the whole of year 2012, which puts consumption at 23.7 billion litres in 52 weeks, 455 million litres per week, 65 million litres per day, 2.7 million litres per hour.







How much fuel do Nigerians actually consume per day?



The answer to this question depends on the source you consult. According to Mr. Enoch Kenawa, the Secretary of the Oil Marketers Association, it is 35 million litres per day; according to Mr. Reginald Stanley, the Executive Secretary of the Petroleum Products Pricing and Regulatory Agency (PPPRA), Nigeria imports 59 million litres of fuel per day, but Nigerians only consume 35 million litres, while the remaining 24 million litres are unaccounted for; while the Nigerian National Petroleum Corporation puts national daily consumption figures between 30 and 33 million litres.



So we can safely assume Nigerians consume 35 million litres of fuel per day, which translates into about 245 million litres per week and about 13 billion litres for the entire year.







Subsidy figures based on national daily consumption:



If Nigerians consume 35 million litres of fuel per day, and government pays a subsidy of N44 on each litre:



Subsidy payment per day: 35 million litres times N44 = N1.54 billion per day



Subsidy payment per week: 35 million litres times N44 times 7 = N10.8 billion



Subsidy payment for 3 weeks: 35 million litres times N44 times 7 times 3 = N32.3 billion



Subsidy payment for 49 weeks: 35 million litres times N44 times 7 times 49 = N528 billion



Subsidy payment for a year: 35 million litres times N44 times times 365 = N562 billion



* Please note that the combined daily fuel productions of Nigeria’s four refineries, which are not subsidized, were ignored in this calculation to avoid complications.



* Also note that fuel was not subsidized for the first 3 weeks of year 2012.







Summary:



The federal government claims to have spent N881 on fuel subsidy for the past 49 weeks when in fact that actual amount should be N528 billion



The federal government proposes to spend N161 billion on fuel subsidy for the next 3 weeks when the actual amount should be N32.3 billion



If request for supplementary fund is granted, the federal government would spend a total of N1.042 trillion on fuel subsidy in year 2012 when the actual amount should be just about half of that (N562 billion).



The difference between government’s claims and actual amount is: N480 billion. Haven taken you through the rigours of how big, in budgetary terms, N161 billion is, I won’t take you through that stress for N480 billion. But do note that N480 billion is almost 3 times N161 billion.



Every single day in year 2012, for all of the 365 days in the year, including public holidays, and Sabbaath days which God asked us to keep holy, Goodluck Jonathan is short-changing Nigerians to the tune of N1.3 billion. N1.3 billion disappears from the coffers of the nation, goes into the pockets of the croonies of the criminals in power, and someone somewhere writes on that monumnetal fraud: Fuel Subsidy!



Every single hour in year 2012, N55 million disappears under the government of Goodluck Jonathan. Mr. President has installed an Automated Looting Machine into the cashware of the nation’s finances., he called it Fuel Subsidy. The machine dispenses N55 million every hour, almost N1 million per minute, round the clock. And that machine is about to get really busy in the next three weeks, if the National Assembly rubberstamps that N161 billion request.



Mr. President has declared an end of the year bonanza for his friends, it would cost the nation N161 billion.







Closing:



In closing, I bring you the words of Mr. Enoch Kenawa, the Secretary of the Oil Marketers Association via the Punch, he said: “We have said it continuously in the past that the N888bn fuel subsidy budget for 2012 was inadequate but the finance minister has been proving stubborn and deceiving Nigerians that the amount would be enough. We have been in this business for a long time and we know what the trends are. I am happy that our position has been justified. We are calling on the National Assembly to quickly pass request of the President so that supply of products can increase. Once the money is approved, Nigerians are assured of a good holiday period to ensure adequate supply of fuel during Christmas.”



There, brethren, is the handwriting on the wall, in bold letters for all to see.







Key Actors:



Oil Marketers: The bride of a looting regime; wants business to continue as usual.



Ngozi Okonjo-Iweala: after the resurrection of her conscience, refused to release funds for the yuletide looting bonanza.



Diezani Alison-Madueke: Daddy’s girl, angry with her born again sister, reports her to big daddy.



Goodluck Jonathan: promised to create wealth, presents an end of the year, chop make I chop proposal to the National Assembly.



National Assembly: asking “what’s in this for us?”



Nigerians: Cheated, deceived, robbed and raped, suffering diligently, smiling cheerfully.



Ogunyemi Bukola (@zebbook): The writamatician, he advises all Nigerians to take classes in calculus as the knowledge of partial differentials may prove useful in the understanding of the 2013 version of the Jonathan-metricks of fuel subsidy scam

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Re: The Subsidy Mathematics by Maxymilliano(m): 11:20am On Dec 14, 2012
Typical Nigerians, always want to eat their cake and still have it, all this brain racking voodoo subsidy mathematics won't have been necessary if total subsidy removal by the president was allowed to remain.

Subsidy regime is a fraud in itself and not totally foolproof, hence the need to be done away with completely, the supplementary payment became necessary in order to accommodate the outstanding arrears resulting from the forensic audit exercise and the remaining period of the 2012, an additional sum of N161, 617, 364, 911 billion over and above what was programmed in the 2012 framework is required.

Like the Senate President said during the approval, “Whether it is from the opposition or the Peoples Democratic Party (PDP) members, all the debates and contributions are extremely valid and nobody went out of track.

“There is no gainsaying and it is not a secret anymore to say that there is so much corruption in fuel subsidy management.

“Whatever system they adopt and I think the nation must take a decision now whether to continue this (corruption) or to stop it.

“If they cannot eliminate corruption in the industry, then, the other alternative will be to stop the whole exercised of subsidy and we will take the one that is easier and the one that will bring less pain to Nigerians".

But the question is are Nigerians ready to endure the necessary but temporary pain occasion by total subsidy removal

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Re: The Subsidy Mathematics by takedat(m): 12:45pm On Dec 14, 2012
A government so powerless to govern at all, save in unrestrained plunder and a National Assembly populated by criminals and thieves.

Fresh Air=Consolidating the Lootocracy!
Re: The Subsidy Mathematics by hotncold1(m): 2:30pm On Dec 14, 2012
Front page please!Well done OP
Re: The Subsidy Mathematics by Kewt: 12:32am On Dec 15, 2012
Front page please!
Re: The Subsidy Mathematics by Nobody: 6:26am On Dec 15, 2012
FRONT PAGE PLEASE!!
Re: The Subsidy Mathematics by bodejohn(m): 11:58am On Dec 15, 2012
While the OP did a good job in analysising what the fuel subsidy funds should have been, I will like to say that the total 881billion appropriated for fuel subsidy in the 2012 budget is not only meant for PMS but also Kerosene that gulps almost same amount as petrol. Before I get nailed to the cross, I also need to point out that my observation is not a cover up for the massive looting of the country's resources by past and present leaders.
The nation is under claws of charlatans who have no regards for the wellbeing of the common man on the street.
I have a feeling that the last days of this year and the first weeks of the new will most likely be like the last one, I don already stock up some fuel, atleast, the wahala go don settle before I finish it.
Re: The Subsidy Mathematics by 4Play(m): 12:15pm On Dec 15, 2012
All these calculations will be pointless if you scrapped the subsidy programme in its entirety.
Re: The Subsidy Mathematics by KENESAGA(m): 4:13pm On Dec 15, 2012
@Poster,i think u ar wrong, 888b is for 2012 fiscal yr which is surpose to run frm March, 2012-March, 2013, which means we hv spent about 37wks not 49wks as u stated. pick ur calc again please and do the right thing.

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