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Subsidy Removal; The way out - Politics - Nairaland

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Subsidy Removal; The way out by jpphilips(m): 3:56pm On Jun 01, 2015
Subsidy in Nigeria has become our most controversial economic reality, without an introduction, Subsidy interference (partial withdrawal, total withdrawal and continuity) has proved beyond doubt to be fatal to the Nigerian people.

Arguments from all quarters over the years from the government and the media, leave a lot of holes that one could hardly make a comprehensive analysis of why each step was taken, ie if we could bifurcate the lies from the reality.

Personally, the only viable solution I could phantom is a restructure of critical areas of our Economy that will not necessitate a removal of subsidy but will render subsidy irrelevant, rightly put, subsidy phasing out. With a government enthroned on the platform of sincerity of purpose, Nigerians may want to consider the following strategy;

Phase 1:


Probe and forensic auditing of the existing subsidy regimen;

This is necessary to curb the inefficiencies in the system, recently, the Nigerian Failed Ex Minister for Finance paid "FOREX differential" as part of the subsidy regimen amongst other inefficiencies, that is so wrong to say the least. Even when the CBN issue FOREX to importers at the interbank exchange rate, yet we have to pay for the differential?
I admit there was an economic need to devalue the naira, the only justification for that payment was that relevant stakeholders were not carried along including those importers.
This is the latest inefficiency in the subsidy regimen, who knows what else is there? In 2012 it was revealed that storage of pet. products forms part of our subsidy and I ask why?
the answers didn't really add up because I have personally perused the DPR guideline for issuance of such license and storage is an integral part of it, how people without storage capacity, or people who rent storage facilities were issued those license, is where the audit will do the needful.
Issue of port delays to attract demurrage, import waivers, racketeering and other unscrupulous activities, NNPC subsidized products sold to Private depot owners at higher prices etc. I am convinced that a thorough fix in this area will save us about 15% of our current subsidy expenditure. Duration: (3 months)


Phase 2:

Power:[color=#000099]

[color=#000099]You cannot touch subsidy without fixing power, since both are a function of each other both in sustainability and cost, since the FG does not have the cash to execute a comprehensive power approach, then, Prof. Osibanjo's balkanization of the National grid comes in handy here.
During the process of restructuring Nigeria's transmission infrastructure, preference should be given to towns with high population density, it is estimated that a Nigerian home, consumes an average of 45l of petroleum products in 24hrs, therefore, If the number of homes per city could be estimated as 1/3 of the population of that city,

then Lagos [13.4m people/2.5m homes (2010 figures)], Kano (1.2m homes ), Abuja (900,000 homes), Ibadan (765,000 homes), Kaduna (500,000 homes) , Portharcourt (900,000), Aba (400,000), ogbomosho (360,000 homes), Maiduguri (359,100 homes), Benin (340,000), Zaria (300,000) and Jos (305,000) should receive a minimum of 17hrs electricity daily, balanced 9hrs during the day and 6hrs in the night, subsidy is expected to reduce between 25-30%. Already, Lagos, Abuja, Portharcourt, Aba and Benin all have existing IPPs, with 45% of subsidy receipt gone, then we go to phase 3
(duration: one and half years)

Again, installation of Prepaid meters will enshrine fiscal discipline in electricity consumers, that way however little we generate will go round.


Phase 3:


Trade off Kerosene:

There are a whole lot of intrigues surrounding the Nigerian Subsidy regimen on Kerosene, a plethora of Kerosene explosions and the 2012 incident when the FG announced the removal of fuel subsidy surprisingly, price of air travel doubled, it raised some legitimate questions if the Nigerian kerosene regimen subsidizes the Aviation industry and I ask why?

The downtrodden who are supposed to be the legitimate beneficiary of kerosene subsidy, hardly have the means to patronize the gas stations for the product, hence they rely on the surface tank retailers or the hawkers, at what price do they get it? just ask around and confirm.

The truth is this; Kerosene subsidy ends at the NNPC mega station, if you are lucky.
Then the airlines who are the major bulk buyers cart it away and the distributors are glad selling to them for quick money, so the surface tank operators get from the private tank farm owners who get from the importers at an unsubsidized rate, hence the distribution chain of kerosene, from Importer to the consumer is a huge fraud that doesn't need to be fixed, so why do we sustain it?

Air travel is a luxury so anyone who wish to embark on such luxury should be ready to pay for it, based on this assessment, Kerosene subsidy does not benefit anyone, except the aviation industry, if manufacturing industries could give up their AGO subsidy, why not Aviation? this move will reduce subsidy by 20%. (duration: 2 weeks consultations with relevant stakeholders) With 65% of subsidy gone,


Phase 4


Lean Government and Restructure of NPDC: It is only fair that Allison Madueke is arrested and charged for treason for crimes against the Nigerian people, NPDC by proxy. According to PENGASSEN, NPDC produces 170,000bopd, a figure I doubt seriously because by the end of 2013, NPDC is struggling to produce 90,000bopd, considering the mess Madueke made in the industry with her fraudulent indigenisation policy, I will give NPDC a fair 130,000bopd estimate for the sake of this analysis.

All the oil blocks, production platforms, Marginal wells diverted, sold or on lease by madueke including the recently divested SPDC interests should be returned to NPDC with immediate effect.
Buhari must recall the PIB from the Senate and strike off all the fraud there in and make the following changes;

*NPDC oil production will no longer be part of the Nigerian JV oil controlled by senate approved budgetary benchmark. By so doing, the senate must accept a lean government structure, that will cause a significant drop in government revenue (temporarily) but with a reduced recurrent expenditure, it is workable.

* NPDC operatorship license Must be revoked; NPDC will enter a fresh operatorship agreement with a company that qualifies with a track record of managing oil and gas production facilities. Agreement should be one that gives room for NNPC/operator expansion of production output.

* PRCN, WRCN and KRCN will have their operatorship Licence revoked, NNPC will award operatorship license to qualified refining companies to manage her operations, agreement should be one that gives room for operator/NNPC expansion of refining output.

* All the operators of NPDC, WRCN, PRCN and KRCN will be required to inherit their existing staff, train and deploy them and kindly lay off the unproductive ones to maximize efficiency.

* Export Prohibition law for NPDC output except as refined products

* Diversion of Petroleum products must attract a life sentence with no option of fine.

* Workman compensation for oil and gas workers ( a clear sharing formula for personnel charge between the contractor and the employee), an implementation agency must be enshrined in the PIB (to avoid union wahala)

Phase 5

Rebasing the NPDC production:

It is expected that the NPDC oil output is rebased, since the existing 130,000bopd of NPDC oil has been detached from the JV oil and SPDC interest divested, there is need to revalue the NPDC oil, starting from cost of production to logistics, that cost will be less than the international crude price, when fed to the refinery, the refining cost is borne by the trio RCN, I expect such products to be less than 87naira per liter.

Phase 6

Turn around Maintenance of all the refineries,


after which two different sources of petroleum products will exist in the country;

1) The trio RCN products
2) Imported Govt subsidized products,

With product 1 cheaper than product 2, interest will shift from 2 to 1 and subsidy will drop to 5%. As NPDC output grows, it is expected that new private refineries will come on board to utilize the new output that will further increase the RCN output and subsidy will die a natural death.

Some of the phases can run concurrently depending on how fast the Government desire results. Any government that attempts a total withdrawal in one day will end up clueless like her predecessor.
Subsidy removal requires a blueprint that will be followed over a period of time especially with high crude price, at a lower price, Subsidy will die a natural death.
cc Moderators for FP attention
cc Vulcan

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Re: Subsidy Removal; The way out by 2sex(m): 4:03pm On Jun 01, 2015
Hmmm
Re: Subsidy Removal; The way out by 2sex(m): 4:05pm On Jun 01, 2015
My question is, what is the excuses given by fed gov for not fixing the refineries nor building new ones considering the billions of dollars that has found it's way into hidden bank accounts?

4 Likes

Re: Subsidy Removal; The way out by donguutti: 4:15pm On Jun 01, 2015
Phase 1, I did some research on the Subsidy issue and from my calculation we can eliminate between 10-15 naira via optimization of the
subsidy regime

Subsidies on Petroleum products have long been a Pandora’s Box in Nigeria. It is a wonderful source of corruption, Greed, Happiness and a reflection of the Inability of the Africa to Optimize Its God Given resources. The existence of Fuel subsidies is a source of reoccurring debates, while the removal or Nonpayment of same subsidies raises ,Flashpoints, Scarcity, Protests and increased hardships on the Populace, which is quite amazing for something which some say does not exist. Today we examine aspects of Fuel subsidy and try to develop new and easy means of understanding It.As you might Note we have implied that Subsidy exists and also is been exploited By the players in the downstream Petroleum sector to Garner Illicit gains and Impoverish the Rest of the Country.

Our First Point of contact is the Recent calculations by Former Minister of Petroleum professor David Tam west in which He implied that The subsidy on petrol is a Farce. Many believed him and share the same opinion, but we Critically examined the Figures he used and realized he used an unreal Crude production Cost of $5 per barrel and an exchange rate of 160 N/$ .We find such assumptions spurious and thus we consider the Rest of the Calculations a Flight from reality to The land of Fantasy.

Our Second Point is asking such Questions as, How much Does It cost to Produce a Liter of Petrol (Premium Motor Spirit)in Nigeria, This question should be directed of course to the usual suspect ,The NNPC, but of course we expect No answers from them, The Management of the Orient refinery and the Proposed Dangote Refinery would have Adequate data to provide an answer, but then again their response is not Forthcoming. We are left with Figures from OPEC Monthly oil reports, which would be supplemented with Figures from The Petroleum Products Price regulation Agency(PPPRA),Customs and Ministry Of Finance.

Time to get our Hands and Brains dirty,Subsidy is the amount paid by Government that enables Nigerians to But Petrol below the Open market Rate,Fuel subsidy payments in Nigeria is influenced by 3 major factors, Crude Oil prices, The Exchange rate and Consumption. Subsidy for most intents and Purposes is funded from the Federation Account through the NNPC domestic crude Allocation and thus talk of Federal Budgetary allocation is Slightly misplaced.

The PPPRA templates Gives us a List of Components of PMS cost, (Cost + Freight) being the largest. The Gasoline (Petrol) Price per Metric Ton being the most important, and is largely determined by Factors beyond our Control. The freight is the amount charged for Transporting a Metric ton of PMS from a refinery (Mostly Europe or Eastern US seaboard to Nigeria).We do not know the exact freight costs used by the PPPRA to Know if it is competitive and this Omission might lead to exploitation as every $10 per metric Ton in Freight Costs would lead to a 1.3 naira increase in PMS cost per Liter.

Another Component of the PPPRA template, the traders margin is also another point of worry as we do not know what exactly it is, is it the Profit of the Trader who sells the Gasoline to us or who brokers the Deal and why is it a set figure ($10), despite fluctuations in Crude oil prices.Do we have a trading desk in our National Oil Company, NNPC .Traders Margin yields 100 Million dollars per annul for the trader, chai,what a Lucky trader.The PPPRA say the Traders Margin is Factored Into Freight Costs yet It appears as a Separate Component from Cost and Freight, weird ehhh……,Lucky trader.

Lightering expenses
According to the PPPRA,Local Freight charge is the cost incurred on the trans-shipment of imported petroleum products from the mother vessel into daughter vessel to allow for the onward movement of the vessel into the Jetty. This charge includes receipt losses of 0.3% in the process of products movement from the high sea to the Jetty and then to the depot. The mother vessels expenses are based on the allowable 10 days demurrage exposure at the rate of $28,000 per. Day. But does Lightering costs have to be more than 3% of Petrol Prices ,is that what obtains in other countries and can the PPPRA and NNPC prove such.
Moving to Other Aspects like the Storage charge , Jetty Charge and financing, there is not much data on those and we cannot ascertain the accuracy or Otherwise of such Figures.

Now that the Petrol has landed, it cannot be sold to us without the Tanker drivers, distributors -Filling stations like Oando, Forte Oil,Total , Ugo and sonns, etc. The retailers Take about 3.5% percent profit , which we consider ok , as cost of business(No ,we don’t own any Petroleum Stocks).

The transport 3 naira per Liter, which is approximately 100,000 naira per 33,000 tanker of fuel, here our problems begin as there is another cost of bridging, we ask bridging what exactly?What is the cost of transporting a 33,000 liter tanker of Fuel from Lagos -Maiduguri, or Port Harcourt to Maiduguri, we could ask some tanker drivers or look into our Military accounts to See how much they spend in tackling the Boko haram Insurgency.
What is the Difference between Bridging and Transport Cost, and how much does it cost to Transport a Tanker of Deregulated Diesel from Lagos to Maiduguri and do Bridging Costs apply to diesel. 33,000 Liter Tanker of Diesel is approximately 25 Tons, a Truckload of Cement of 500 Bags has the same weight, yet Dangote, Lafarge and Other cement Manufacturers Charge between 100(minimum)-200(maximum) per bag of Cement for Delivery Nationwide, this translates to 50000 -100,000(maximum) per 25 Metric Tons or 1.50K to 3 naira per liter , which leaves the question where are we Bridging the Fuel to, Libya perhaps, and is the Transport Cost borne by Retailers and distributors Free money as we also pay them to “Bridge” Petrol. This is Very Important as we consume 13 Billion liters of petrol annually with a Bridging Cost of 5.80 per liter which yields 75 Billion in bridging expenses. The Free money part might be accurate as the Minister of Finance Ngozi iweala recently said that Fuel marketers are in a Risk free Business.

Also does it cost more than 3Naira per liter,(100,000/Tanker) to transport fuel from the Lagos Jetties/Depots to areas within Lagos or better still what is the maximum distance that (100,000/33,000 L tanker) can transport. We believe transporting fuel within Lagos is less than that and Lagos accounts for More than 30% of our National Petroleum consumption, why then are we paying extra 6 naira to transport and “Bridge” fuel within Lagos and other nearby states. So many questions for the PPPRA, NUPENG, NNPC, Marketers and the Rest of us.

Do we also pay the Traders Fee, Finance Costs, Freight Charges on Locally produced petrol from our Refineries which we have been told by NNPC are Working at 30% capacity, If so WHY?, if Not why is there No separate template for domestic Fuel Production?, or are Those claims misleading?.

This Complicated process and the accompanying questions are only those Associated with Petrol subsidy , The Kerosene subsidy is another Mind Boggling maze which we are handicapped to Investigate. The Kerosene subsidy maze can be likened to a Black Hole which does not exist yet does exist which creates unending happiness for its beneficiaries and Utmost confusion for the Rest of us. In the Second part of this article we examine the Economic Factors affecting Petrol subsidy and their effects on us.

http://skuulmi.com/2015/05/how-to-calculate-fuel-subsidy
Re: Subsidy Removal; The way out by jpphilips(m): 4:16pm On Jun 01, 2015
2sex:
My question is, what is the excuses given by fed gov for not fixing the refineries nor building new ones considering the billions of dollars that has found it's way into hidden bank accounts?

Refineries appeared on Phase 6 of the plan, meaning, that refinery is the least problem of subsidy removal, did you read it at all?
Re: Subsidy Removal; The way out by vanilson(m): 4:19pm On Jun 01, 2015
Brilliant write up,kudos.
Detailed enough to assist the incoming govt to success.
I wish buhari and his team success in this task.
A survey of the current status of our refineries need to be done to know if dey r still redeemable from their dilapidated state or new ones have to be built
Re: Subsidy Removal; The way out by jpphilips(m): 4:20pm On Jun 01, 2015
donguutti:
Phase 1, I did some research on the Subsidy issue and from my calculation we can eliminate between 10-15 naira via optimization of the
subsidy regime

This thread is about the solution not analysis of whether or not it exist or what you need to make calculations.
It is for people who have their facts handy for proper analysis not subjective criticism, be guided accordingly.
Re: Subsidy Removal; The way out by donguutti: 4:25pm On Jun 01, 2015
Phase 2,No arguments

Phase 3...Kerosene subsidy is non existent and an NNPC scam, yet i have this feeling that this government might actually make a
populist move by enforcing the kerosene subsidy.

Phase 4...That would be almost impossible to achieve and would require changes to existing laws,Revoking refinery licenses
would not be palatable with the President Given his fatherly role in their creation.Would the new operators be private or public agents
or a Performance based private equity type management.

The PIB is dead one way or the other........It would not be signed into law...no need to expatiate

you should probably read more before making unfounded claims
Re: Subsidy Removal; The way out by netotse(m): 4:35pm On Jun 01, 2015
@jpphilips
Like you I'm surprised at the link between DPK and aviation fuel(jet A1), Jet A1 should be of a much higher quality so if there are people using one for the other I would be seriously surprised but then stranger things have been known to happen in this country.

As per power, your idea of directing power to places with higher population densities is off, you get more bang for the buck(well KWH in this case), if you go in the opposite direction. High density areas also tend to have higher energy consumption per capita (your average household in Lagos might have both a fridge and deep freezer), if you concentrate on low consumption areas you can reach a larger geographical spread. A bit of both would be workable. The siting of plants wrt load centers and fuel supply means a national grid will still be the ideal solution, anything else will require serious work on tariffs and regulation.

I agree the refineries should be leased out to established companies, anytime I read articles about them I cringe, I have an idea how much maintenance knowledge you need to have to run a complex plant and I don't think our government can provide the leadership.

All in all, nice article. Will be back after I digest it fully.
Re: Subsidy Removal; The way out by jpphilips(m): 4:38pm On Jun 01, 2015
[quote author=donguutti post=34317269]Phase 2,No arguments

Phase 3...Kerosene subsidy is non existent and an NNPC scam, yet i have this feeling that this government might actually make a
populist move by enforcing the kerosene subsidy.

Kerosene subsidy is long overdue, but I pushed it to three so that before it happens, the govt would have enjoyed a level of good will by effectively implementing phase two, I know Nigerians, give them 17hrs power and Buhari will become a Jesus overnight grin grin, that is the best time to strike with Kerosene, The Govt still need to prove its sincerity of purpose, not because your name is Buhari and you flogged people in 1984, then we must trust you in 2015, we must trade one good will for the other to be reasonable.


Phase 4...That would be almost impossible to achieve and would require changes to existing laws,Revoking refinery licenses
would not be palatable with the President Given his fatherly role in their creation.Would the new operators be private or public agents
or a Performance based private equity type management.

Every change in the oil and gas industry must be backed by law, that is why we graduated from the Mineral oil safety regulations of 1997 to PIB of 2015, the licence is with the government, revoking a govt held Licence has no Liability.
It has to be private of course, how do you think our JV agreement survived for over 40yrs now?



you should propably read more before making unfounded claims

Unfounded claims? are you crazy?
Re: Subsidy Removal; The way out by Nobody: 4:45pm On Jun 01, 2015
Phase 1: You may not know what you are up against (Trust me) and I see no possibility in Buhari achieving it.

Phase 2: Brilliant on paper but implementation?

Phase 3: The cabals will rise up against you and instigate the masses. Expect labour strikes and that will mark the beginning of the end.

Phase 4: You will need to amend existing laws. Trust me the "cabals" and friends of the cabals in the NASS will never allow it happen even in the next 5years
Phase5***

Phase 6: The previouse phases will have negative effect on phase 6

What we need is system restructuring not all these tactics that are Dead on Arrival.

Thanks

1 Like

Re: Subsidy Removal; The way out by jpphilips(m): 4:51pm On Jun 01, 2015
[quote author=netotse post=34317559]@jpphilips
Like you I'm surprised at the link between DPK and aviation fuel(jet A1), Jet A1 should be of a much higher quality so if there are people using one for the other I would be seriously surprised but then stranger things have been known to happen in this country.

Why do you think Kerosene explosion happen in Nigeria?
The Dual purpose in DPK refers to?


As per power, your idea of directing power to places with higher population densities is off, you get more bang for the buck(well KWH in this case), if you go in the opposite direction. High density areas also tend to have higher energy consumption per capita (your average household in Lagos might have both a fridge and deep freezer), if you concentrate on low consumption areas you can reach a larger geographical spread. A bit of both would be workable. The siting of plants wrt load centers and fuel supply means a national grid will still be the ideal solution, anything else will require serious work on tariffs and regulation.

Lagos will consume more electricity and that is what I want to achieve, I want high density areas to use electricity and turn off generators, that will reduce the number of times they refill and reduce the subsidy we pay on each refill.
My mission is not an expansionist programme but subsidy removal, the least harmful way!!


I agree the refineries should be leased out to established companies, anytime I read articles about them I cringe, I have an idea how much maintenance knowledge you need to have to run a complex plant and I don't think our government can provide the leadership.

Not a lease agreement but operating contract agreement.


All in all, nice article. Will be back after I digest it fully.

Take your time!!
Re: Subsidy Removal; The way out by jpphilips(m): 5:10pm On Jun 01, 2015
[quote author=barcanista post=34317865]

Phase 1: You may not know what you are up against (Trust me) and I see no possibility in Buhari achieving it.

Sorry Mr Thomas, phase one is the easiest for a Man like Buhari if he still has the sincerity of purpose. All the problems in phase one are man made!! His scion Dora Akunyili will deliver let alone Buhari. Just pray he finds the article useful and watch what happens!!


Phase 2: Brilliant on paper but implementation?

Prof. Osibanjo is already designing an implementation strategy for Phase 2, so far, he is on track, I read what he wrote the other day and it makes a lot of sense.


Phase 3: The cabals will rise up against you and instigate the masses. Expect labour strikes and that will mark the beginning of the end.

Not with the good will the Govt will enjoy after the implementation of Phase 2, cabal? which cabal? Jonathan's cabal? lol, the real cabal I know in the oil industry who import products pray for subsidy removal, the only cabal that want subsidy is the cabal created by Jonathan.
Jonathan, Patience, Madueke, Okonjo iweala cabals, they are the only cabals that want subsidy.


Phase 4: You will need to amend existing laws. Trust me the "cabals" and friends of the cabals in the NASS will never allow it happen even in the next 5years
Phase5***

I agree, that is precisely why I did not attach a time frame to it, however, Obj's blackmail weapon will come in handy here, any senator that misbehaves will have EFCC checking the price tag of his boxer grin grin, na joke i dey ooo, the govt can sponsor trekking youths to be demonstrating daily at the doorstep of the NA, isn't that what we are supposed to be doing ordinarily?


Phase 6: The previouse phases will have negative effect on phase 6

I disagree

What we need is system restructuring not all these tactics that are Dead on Arrival.

My proposal is actually a system overhaul, it will stimulate three critical sectors of the Economy, if you have a better idea, lets compare notes.
Re: Subsidy Removal; The way out by donguutti: 5:13pm On Jun 01, 2015
unfounded claims come from the Phase 2 and Phase 5 You claim "it is estimated that a Nigerian home, consumes an average of 45l of petroleum products in 24hrs" if we take the number of homes you estimated and multiply by 45 l per 24 hours we get a figure that only
exists in fantasy land.

Phase 5....NPDC rebasing..what is the true cost of a barrel of oil to be delivered to the refineries by NPDC , what
happens if consumption is greater than NPDC production.Even if we divert all domestic production quota
to the refineries at "True cost" would that not be a transfer of subsidy and not elimination, transfer from
finished product to unprocessed crude.Can the Government absorb the opportunity cost -Lower earnings.

What do you think about the president's proposal for swap agreements and how would those swaps help
develop domestic refineries in a more efficient manner that the swaps currently in operation
Re: Subsidy Removal; The way out by Nobody: 5:21pm On Jun 01, 2015
@jpphilips

I don't like back and forth argument. You don't know what you are saying if you think Buhari has integrity or he is serious. Someone that can't even declare his asset. You are also on a long thing if you think the cabals will allow "Phase 1"

For you to say Obj will "blackmail" NASS members shows that you are ignorant of the political workings of Nigeria.

For your "Osinbade is building it" claim, I laugh at you. Nigeria has lots of briliant plans on PAPER since the time of Gowon but implementation is another thing. I'm not thrilled by brilliant proposals on paper but by executing brilliant policies.

You should know the difference between system restructuring and policy overhaul. In system restructuring I mean the adoption of "True Fiscal and Regional Federalism" not policy overhaul that are usually Dead on Arrival within the present system.

You are banking 90% on assumption, this isn't a good way to plan.

Fyi: Buhari is a product of the cabals. Don't worry, you will soon come to terms.


I'm done bro...

2 Likes

Re: Subsidy Removal; The way out by netotse(m): 5:33pm On Jun 01, 2015
jpphilips:
Why do you think Kerosene explosion happen in Nigeria? The Dual purpose in DPK refers to?
The dual does not refer to aviation, the principal difference between aviation fuel and normal kero is that aviation fuel should not allow ice formation at low temperatures, this requires extra-processing thus the increased cost, so for anyone to be using Aviation fuel as normal kero...smh.

Found an article from 2011 that supports your assertion, wouldn't be surprised if it's still happening. I can guess who the marketer being referred to in the article is... does the term sea side boys ring a bell? grin http://www.thisdaylive.com/articles/kerosene-as-aviation-fuel-threatens-air-safety/105628/

jpphilips:
Lagos will consume more electricity and that is what I want to achieve, I want high density areas to use electricity and turn off generators, that will reduce the number of times they refill and reduce the subsidy we pay on each refill.
My mission is not an expansionist programme but subsidy removal, the least harmful way!!
Focusing on only subsidy removal is farrrrr less than ideal. Urban migration would increase putting more strain on the resources and you're likely to end up where you started. Since you say your goal is to remove subsidy then I'll leave this point alone.

jpphilips:
Not a lease agreement but operating contract agreement.
My bad, you mean something like an O&M? that would work.
Re: Subsidy Removal; The way out by netotse(m): 5:37pm On Jun 01, 2015
barcanista:
@jpphilips

I don't like back and forth argument. You don't know what you are saying if you think Buhari has integrity or he is serious. Someone that can't even declare his asset. You are also on a long thing if you think the cabals will allow "Phase 1"

For you to say Obj will "blackmail" NASS members shows that you are ignorant of the political workings of Nigeria.

For your "Osinbade is building it" claim, I laugh at you. Nigeria has lots of briliant plans on PAPER since the time of Gowon but implementation is another thing. I'm not thrilled by brilliant proposals on paper but by executing brilliant policies.

You should know the difference between system restructuring and policy overhaul. In system restructuring I mean the adoption of "True Fiscal and Regional Federalism" not policy overhaul that are usually Dead on Arrival within the present system.

You are banking 90% on assumption, this isn't a good way to plan.

Fyi: Buhari is a product of the cabals. Don't worry, you will soon come to terms.


I'm done bro...

Boss...I think Buhari himself is a man of integrity but he's seriously over-estimating how far his integrity will carry him especially considering the people around him. On some level I'm sure you realize that the goof with the asset declaration thing was from the spokesperson and not PMB himself, if we're going to criticize the president, it should be on the basis of ideas not small stuff.

2 Likes

Re: Subsidy Removal; The way out by jpphilips(m): 5:54pm On Jun 01, 2015
[quote author=donguutti post=34318742]
unfounded claims come from the Phase 2 and Phase 5 You claim "it is estimated that a Nigerian home, consumes an average of 45l of petroleum products in 24hrs" if we take the number of homes you estimated and multiply by 45 l per 24 hours we get a figure that only
exists in fantasy land.

Why dont you do the maths lets compare notes!! an estimate like the above is done with +/- 3times what the reality hold, I dont expect you to know that so, your case of "unfounded" is forgiven!


Phase 5....NPDC rebasing..what is the true cost of a barrel of oil to be delivered to the refineries by NPDC , what
happens if consumption is greater than NPDC production.Even if we divert all domestic production quota
to the refineries at "True cost" would that not be a transfer of subsidy and not elimination, transfer from
finished product to unprocessed crude.Can the Government absorb the opportunity cost -Lower earnings.

If you didn't understand it, you could just ask relevant questions and get the answers politely, the "true cost" is what the rebasing will achieve, it is expected to be less than the international price counterpart.
I didnt expect you to ask the second question if you read the article properly.
Define subsidy by nigerian standard? you seem lost in the whole issue, anyways, I have addressed the only legitimate question you have there
the rest are in the article.


What do you think about the president's proposal for swap agreements and how would those swaps help

The president's swap agreement will not work in the video, he based it on 1984 modus operandi, it has no bearing with our present day. as a matter of undiluted fact, mr president has nothing to give to them for the swap, whatever he touches will attract a price that will require subsidy, that was why I started by grabbing the NPDC production, knock it off from the budget then rebased it before sending it to the refinery.
Those three moves are strategic for effective implementation.


develop domestic refineries in a more efficient manner that the swaps currently in operation

Refinery is the least of your problems when you really want to deal with subsidy, trust me on that.
Re: Subsidy Removal; The way out by jpphilips(m): 5:59pm On Jun 01, 2015
barcanista:
@jpphilips

I don't like back and forth argument. You don't know what you are saying if you think Buhari has integrity or he is serious. Someone that can't even declare his asset. You are also on a long thing if you think the cabals will allow "Phase 1"

For you to say Obj will "blackmail" NASS members shows that you are ignorant of the political workings of Nigeria.

For your "Osinbade is building it" claim, I laugh at you. Nigeria has lots of briliant plans on PAPER since the time of Gowon but implementation is another thing. I'm not thrilled by brilliant proposals on paper but by executing brilliant policies.

You should know the difference between system restructuring and policy overhaul. In system restructuring I mean the adoption of "True Fiscal and Regional Federalism" not policy overhaul that are usually Dead on Arrival within the present system.

You are banking 90% on assumption, this isn't a good way to plan.

Fyi: Buhari is a product of the cabals. Don't worry, you will soon come to terms.


I'm done bro...


I am a firm believer in Buhari, I voted for him first in 2003 and has never wavered, until he proves me wrong, I have no reason whatsoever to doubt his integrity, you can now go to bed son!, remember to shut the blinds grin

3 Likes 1 Share

Re: Subsidy Removal; The way out by jpphilips(m): 6:17pm On Jun 01, 2015
[quote author=netotse post=34319318]
The dual does not refer to aviation, the principal difference between aviation fuel and normal kero is that aviation fuel should not allow ice formation at low temperatures, this requires extra-processing thus the increased cost, so for anyone to be using Aviation fuel as normal kero...smh.

I never said that the dual refers to aviation, dual refers to "two purposes", yes they contaminate Jet A1 with normal kero, I have conducted a QC check on jet A1 and got a density of 0.83 grin grin guess you know what that means.
If Government removes subsidy and flight charge increases, does it not prove that somewhere along the chain, Govt subsidize it?



Found an article from 2011 that supports your assertion, wouldn't be surprised if it's still happening. I can guess who the marketer being referred to in the article is... does the term sea side boys ring a bell? grin http://www.thisdaylive.com/articles/kerosene-as-aviation-fuel-threatens-air-safety/105628/

I may not be able to explain in details without mentioning names, truth is 99% of what Jonathan told you in 2012 were all lies, what we need to do first is to unlearn to relearn before this present government come with their strategy.


Focusing on only subsidy removal is farrrrr less than ideal. Urban migration would increase putting more strain on the resources and you're likely to end up where you started. Since you say your goal is to remove subsidy then I'll leave this point alone.

People in the village will just relocate to the city because Lagos have more electricity than them? I doubt if you will do that.
however we get electricity right, we can agree that the rural dwellers will be short changed in the short run, because the new owners will definitely want to maximize profit, why do you have more Redeem churches in the cities than villages? grin grin


My bad, you mean something like an O&M? that would work.

grin
Re: Subsidy Removal; The way out by DVanguard: 6:23pm On Jun 01, 2015
@jpphilips:
I respect your knowledge of Energy, Power and the Economy. I read your article, it really hit the points and belief i have about the challenges in our energy and power sector. You indirectly did not want to state that you don't believe in the subsid but technically created a platform to determine how much we need daily for consumption and how much compensation (subsidy) needed by the govt to pay for imported fuel.
I am challenged by your wonderful writeup. Kudo's.

1 Like

Re: Subsidy Removal; The way out by jpphilips(m): 6:29pm On Jun 01, 2015
DVanguard:
@jpphilips:
I respect your knowledge of Energy, Power and the Economy. I read your article, it really hit the points and belief i have about the challenges in our energy and power sector. You indirectly did not want to state that you don't believe in the subsid but technically created a platform to determine how much we need daily for consumption and how much compensation (subsidy) needed by the govt to pay for imported fuel.
I am challenged by your wonderful writeup. Kudo's.

This has always been what i am convinced will work, I promised someone in another thread that I will open a thread where other professionals will challenge it!! that is exactly what I want to achieve.

4 Likes

Re: Subsidy Removal; The way out by omolami: 6:48pm On Jun 01, 2015
So Nigerians should have celebrated GEJ in 2012 when through foresight saw the need for subsidy removal but which many Nigerians and some miopic leaders went gaga. Lagos state even organised themselves into group and stayed on. the park for God knows no of days just. to oppose the removal of subsidy. Now everyone is calling for its removal. What a shame to Fashola and co.including Buhari. Why has it dawned on them now? Leaders without foresight. GEJ our hero with positive foresight. God bless Gej
Re: Subsidy Removal; The way out by Orunto: 6:53pm On Jun 01, 2015
Fuel subsidy is corruption.
Re: Subsidy Removal; The way out by kaboninc(m): 9:49pm On Jun 01, 2015
JPPhilips....

I'll like to differ from the 'accolades' you've been receiving from posters above because your write up is filled with distortions, misinformation, misrepresentation and forgive me, ignorance. Then I'll like to add hatred for Jonathan and his team.

I'll take on your points (phases) tomorrow.

But before then, the only way to remove subsidy is simply by removing it. Just announce a complete removal and that's all. At this stage, it will cost us more (even at the risk of not solving the problem) should we tinker with a 'phased' removal.

Tomorrow, I'll explain better.
Re: Subsidy Removal; The way out by jpphilips(m): 9:40am On Jun 02, 2015
[quote author=kaboninc post=34328033]JPPhilips....

I'll like to differ from the 'accolades' you've been receiving from posters above because your write up is filled with distortions, misinformation, misrepresentation and forgive me, ignorance. Then I'll like to add hatred for Jonathan and his team.

I rather you point out the "distortions", "misinformation" and "misrepresentations" that is what the thread is about, it is not water tight yet, so I implore professionals to criticise the plan constructively, where you can not, i rather you stop distracting others who can.
The difference between you and I is this; while you brood over "hating" public officials, I utilize my quiet time, pick up their policies, analyse them comprehensively and extricate the merits from the demerits, of course over Benson and a cup of coffee grin
I dont have time to hate anybody, their policies affect me one way or another as such it is my duty to design an escape strategy for myself.


But before then, the only way to remove subsidy is simply by removing it. Just announce a complete removal and that's all. At this stage, it will cost us more (even at the risk of not solving the problem) should we tinker with a 'phased' removal.

Tomorrow, I'll explain better.


That is what the thread is about, let us see your strategy or forever remain quiet

1 Like

Re: Subsidy Removal; The way out by jpphilips(m): 9:43am On Jun 02, 2015
moderators please do the needful
Re: Subsidy Removal; The way out by DVanguard: 1:56pm On Jun 02, 2015
The Challenge the present government has now is how to enlighten the populace against the believe that subsidy must be removed. The so-called cabal has succeeded in that part which will be difficult to change. If the New govt removes it without addressing some of the question you raised in your phase 1, we are definitely creating another market cartel in the PMS market like the Diesel market.
{before we say we remove subsidy, we should be sure of the quantity of fuel we consume daily, the quantity we require with a period of time, the quantity we have subsidies as at present, the expected quantity. If all these are done, it will give us a clear view if we really pay subsidy, need to pay subsidy or remove subsidy. Cos from most position, we just keep importing without having a concrete record on our daily consumption.}
I believe the FG should streamline the number of Licensed Importers and ensure that certain guidelines are set before they are licensed to import fuel. The licensed importers will be given a grace period that after proper consultation will have a deadline that will ensure local production. Therefore the FG will encourage smaller refineries to be built and create a legal frame work for easy operation of the private sector in the system. The FG needs to be sincere and train it staffs to ensure they meet up with the challenge. Bottle necks on importation, port clearance, licenses approval etc should be worked on to easy and interest investors.
Re: Subsidy Removal; The way out by Demdem(m): 2:17pm On Jun 02, 2015
barcanista:
Phase 1: You may not know what you are up against (Trust me) and I see no possibility in Buhari achieving it.

Phase 2: Brilliant on paper but implementation?

Phase 3: The cabals will rise up against you and instigate the masses. Expect labour strikes and that will mark the beginning of the end.

Phase 4: You will need to amend existing laws. Trust me the "cabals" and friends of the cabals in the NASS will never allow it happen even in the next 5years
Phase5***

Phase 6: The previouse phases will have negative effect on phase 6

What we need is system restructuring not all these tactics that are Dead on Arrival.

Thanks

Protection seeker, when u say cabals, are they spirits?
This term ( petroleum cabals) was never used during obj and yaradua time though we were importing then but as soon as Jonah- daft came on board, they became an household name. Seriously, i believe it's a fraudulent term by the previous govt to hoodwink the Nigerian people. I don't see this fraud hopefully in this govt.

2 Likes

Re: Subsidy Removal; The way out by DVanguard: 2:24pm On Jun 02, 2015
Fixing power is a very big challenge that somehow compliment the high consumption of energy (pms). 60% of Nigerians that live in urban areas uses generator. If the power sector works the demand for pms will drop drastically. The proposal by VP is a fast and quick way of fixing power sector. But in the power sector there are two school of thoughts;
1. Need a National grid to monitor the distribution of power by building big power plants.
2. The building of small power plants and eliminate the huge cost of transmission and power loss along the line.

These is a big challenge, both of them have their advantages and disadvantages which can not be elaborated because of time. I belong to the school that believes small power plants should be built to solve the immediate challenge of the country. States that are buoyant can build their own power plant and supply their states and if the have enough can sell to the FG or to other states. With these system it will reduce the burden on the FG to provide power to the whole Nation. Over time they can even interconnect these smaller power plant in a ring form.
Also, private investors can be encourage to build small power plants to power industrial area. Power plants generating 33kv or 11kv should be encouraged, these will eliminate the huge investment in transmission but will require also investment in stability of the power system.

I still have a challenge in the source of power. The challenge of pipeline is yet to be resolve and also storage of gas within residential or urban centres are very dangerous. Using Solar and wind are very expensive. The best alternative is thermal, hydro and coal.
The coal power plant should be encouraged because of the huge deposit of coal we have in eastern Nigeria. Nuclear should be out of it cos we are yet to manage the hazards generated from our crude oil fields.
Re: Subsidy Removal; The way out by jpphilips(m): 2:51pm On Jun 02, 2015
DVanguard:
The Challenge the present government has now is how to enlighten the populace against the believe that subsidy must be removed. The so-called cabal has succeeded in that part which will be difficult to change. If the New govt removes it without addressing some of the question you raised in your phase 1, we are definitely creating another market cartel in the PMS market like the Diesel market.
{before we say we remove subsidy, we should be sure of the quantity of fuel we consume daily, the quantity we require with a period of time, the quantity we have subsidies as at present, the expected quantity. If all these are done, it will give us a clear view if we really pay subsidy, need to pay subsidy or remove subsidy. Cos from most position, we just keep importing without having a concrete record on our daily consumption.}
I believe the FG should streamline the number of Licensed Importers and ensure that certain guidelines are set before they are licensed to import fuel. The licensed importers will be given a grace period that after proper consultation will have a deadline that will ensure local production. Therefore the FG will encourage smaller refineries to be built and create a legal frame work for easy operation of the private sector in the system. The FG needs to be sincere and train it staffs to ensure they meet up with the challenge. Bottle necks on importation, port clearance, licenses approval etc should be worked on to easy and interest investors.



I am not sure there is any reserve anywhere, the moment you don't import, the queue at the stations will appear!!

1 Like

Re: Subsidy Removal; The way out by jpphilips(m): 3:01pm On Jun 02, 2015
[quote author=DVanguard post=34349381]
Fixing power is a very big challenge that somehow compliment the high consumption of energy (pms). 60% of Nigerians that live in urban areas uses generator. If the power sector works the demand for pms will drop drastically. The proposal by VP is a fast and quick way of fixing power sector. But in the power sector there are two school of thoughts;
1. Need a National grid to monitor the distribution of power by building big power plants.
2. The building of small power plants and eliminate the huge cost of transmission and power loss along the line.
These is a big challenge, both of them have their advantages and disadvantages which can not be elaborated because of time. I belong to the school that believes small power plants should be built to solve the immediate challenge of the country. States that are buoyant can build their own power plant and supply their states and if the have enough can sell to the FG or to other states. With these system it will reduce the burden on the FG to provide power to the whole Nation. Over time they can even interconnect these smaller power plant in a ring form.
Also, private investors can be encourage to build small power plants to power industrial area. Power plants generating 33kv or 11kv should be encouraged, these will eliminate the huge investment in transmission but will require also investment in stability of the power system.

I still have a challenge in the source of power. The challenge of pipeline is yet to be resolve and also storage of gas within residential or urban centres are very dangerous. Using Solar and wind are very expensive. The best alternative is thermal, hydro and coal.
The coal power plant should be encouraged because of the huge deposit of coal we have in eastern Nigeria. Nuclear should be out of it cos we are yet to manage the hazards generated from our crude oil fields.

Storage of gas?? how do you mean? the Gas line vandalism was a monster created by Jonathan and prof Nebo, we didn't hear of them during Barth Nnaji's time. Try and put a time frame on some of those points you raised and see how long building a power plant will take.

1 Like

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