Subsidy Removal; The way out - Politics (4) - Nairaland
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| Re: Subsidy Removal; The way out by baralatie(m): 3:38pm On Jun 11, 2015 |
kaboninc:at least you agree that the sector needs to be sanitized. |
| Re: Subsidy Removal; The way out by kaboninc(m): 3:41pm On Jun 11, 2015 |
baralatie: There is nothing wrong in bringing mother Russia here. But when comparing 'gold machinery' to 'oil imports'.... |
| Re: Subsidy Removal; The way out by kaboninc(m): 3:43pm On Jun 11, 2015 |
baralatie: Of course I do. So how we go about it is the issue. You can actually want the sector sanitized but it doesn't necessarily mean you know how the sector currently operated, how it got to its present status. And once you've missed this, of what use will be your solutions? |
| Re: Subsidy Removal; The way out by baralatie(m): 3:44pm On Jun 11, 2015 |
kaboninc:is Russia suffering from oil and gas abnormally |
| Re: Subsidy Removal; The way out by baralatie(m): 3:48pm On Jun 11, 2015 |
kaboninc:so at what point in @jpphillips write up miss "how the oil and gas sector problems evolved and got to this level" |
| Re: Subsidy Removal; The way out by kaboninc(m): 4:06pm On Jun 11, 2015 |
baralatie: Please direct your question to jpphilips who brought in the Russian intervention by asking government owned banks to transfer LOC liabilities in securing 'gold machinery', a commodity that's not subsidized, less demanded than oil. Oh Jpphilips, you remember that post on the Russian government devaluing the rubble, for all those who may be reading, here is the link: http://www.themoscowtimes.com/business/article/its-been-a-bad-week-for-the-ruble/493646.html I kept on wondering the rationale behind transferring the liability of LOCs from government banks to private banks. I was even pondering which government banks grant LOCs sef  Then I realised that your article never gave such a decision. Did you read where the largest commercial bank as at that time, Inkombank failed? Where that guy Pigman lost a whooping $500,000 due to an un-met obligation by Inkombank? Or are you insinuating that the liability was transferred from one government bank to another private bank? And that transfer led to the closure of the largest commercial bank in a country and you are encouraging that? What arrant nonsense.....  You need a fix bro. |
| Re: Subsidy Removal; The way out by kaboninc(m): 4:08pm On Jun 11, 2015 |
baralatie: Am sorry bro, but you need to read this: jpphilips: You saying the former Finance Minster failed is at YOUR own discretion. Now let’s take a look at your claim. PMS brought into the country are imported ON BEHALF of the Nigerian Government. Simply put, the Nigerian government (through the PPMC, a subsidiary of the NNPC) asks the Major Oil Importers (Oando, Forte Oil, Conoil, MRS, etc) to bring in fuel into the country so as to complement the products brought in too by the NNPC. So they are acting on the ‘instruction’ of the Nigerian Government. The product will then be sold through their outlets. So definitely, the Nigerian Government ought to assume all liabilities (including the profit margin) incurred in this transaction. That’s the bad side to this Import Principle Model. As at the time of importation, these companies take up bank credits to finance these imports with the guaranty of the Government to ‘stand in’. So they open Letters of Credits in USD before the devaluation and after the product have been delivered, and the LOC is to be liquidated, the naira value will not be the same as it was when the LOC was opened. For example, Kab Oil opens a LOC of $5 million @ 150 naira (CBN’s official exchange rate). When delivery and confirmation of goods is done, the exchange rate becomes 180 naira leaving a difference of 30 naira. Thus, 30 naira is the Exchange Rate Differential. Thus since Kab Oil imports on behalf of the Government, the liabilities (including the exchange rate differential) must be borne by the Government. So the marketers were right in requesting for it. Storage of these products forms part of the subsidy because it is inputted into the cost of the product and remember they all import on behalf of the government. If it wasn’t so, the cost will be transmitted onto the consumer and reflected in the cost sold to them. In diesel, an already deregulated product, the cost per liter sold at the gas stations already have other components (transport margin, storage cost) inputted. Not every storage/depot owner owns a license to import. Some build a storage facility and store products on behalf of other marketers who have more products than their facilities can contain. An example is between Capital Oil and NNPC. Then again, with respect to PMS, NNPC does not sell to private depot owners at any subsidized rate but use their facilities to store her products. Phase 2: Firstly, using the analysis of 45l per home is highly insufficient. The average Nigerian home does not have all the facilities as with homes in developed countries. At most, the electrical appliance that can be on for 24 hours is a refrigerator. So your 45 liter is seriously flawed. The best fix for power is still gas and gas plants. And this government has made commensurable improvements in availability of gas to power plants. There have been major problems some of which is vandalism because I wonder the economic gain derived in vandalizing gas pipelines. Phase 3: Kerosene is a commodity that strikes at the very heart of the average Nigerian as a large percentage of Nigerians use kerosene to meet their energy needs (cooking, burning, etc), from the urban areas to the rural areas even amongst the middle (and upper middle) class. Tinkering with it has a huge political cost which am sure, should you be in that position, would not afford to incur. Kerosene is used not just by the Nigerian people but by other industries like the construction and aviation industry. And should you own an airline, wouldn’t you go for a product that sells for a ridiculous lower price? Then again, since the retail price of kerosene is regulated (50 naira) why waste money importing such a product when I can’t even sell at the cost price? The minus of this is that the product is majorly supplied by the NNPC (don’t know if they are the sole importer). Now compare that to PMS. If NNPC was the only supplier of PMS…. Then again, if you’ve noticed, the focus has been on sensitizing people on appreciating clean energy and safe environment. Here, cooking gas (we have gas in abundance, we do not import and we have the facilities to produce and process it) is having a strong commanding preference over kerosene. Enlightenment campaigns especially by companies who do not participate in the kerosene racketeering is strongly been pursued especially in developing cities like Greater Port Harcourt, Abuja, Benin and in some cities in Lagos too. Also, this campaign is taken to the Nigerian on the street, the market women in Ketu and the traders selling on Broad Street in Lagos. My take is to encourage other oil marketers to go into this business and remove the subsidy. Phase 4 This piece you wrote up there, it is like you are a member of these unions. Firstly you said NUPENG alleges a production of over 170,000 bpd, yet from industry sources, the NPDC was struggling to cap 90,000 bpd as at 2013 yet you give a conservative figure of 130,000 bpd? Don’t you think you are exaggerating here? You blame Alison Madueke for the woes in this industry. Yet it was during her reign that we witnessed a considerable, visible and increased participation of indigenous Nigerian companies in the oil and gas industry especially in the exploration and production segment (upstream). It was in her reign that NPDC and other indigenous companies were given the opportunity to play a very big role in the upstream sector of the Nigerian oil and gas industry. Today we have Seplat, Seven Energy, Aiteo, Pan Ocean Oil all taking operatorship roles in these oil assets. When Shell began contemplating diversification of its business interests in Nigeria, the strategy was to go into deep-water exploration. This was as a result of constant insecurity, instability within the environment of the oil assets leading to financial and in some cases, human losses. This diversification strategy implies divesting (or rather selling off) their equity stakes (or participating interests) in these assets. In 2012, when the first set of divestments occurred (OML 26, 30, 34, 40, 42), NNPC as part of the original JV had a right of first refusal in the operatorship of the assets. So they took this and transferred the operatorship to NPDC. NPDC which originally operated 2 oil assets (OML 65 and 111) was given additional 5 OML assets to operate. That act really overwhelmed the abilities of NPDC both in technical and financial constraints. Remember, when Shell (and Total and Eni) were operating these assets, even with NNPC as a JV partner and most times defaulting in its financial obligations, operations were not disrupted. Now, NPDC who usually go to NNPC for approvals, is now given 5 additional assets to manage, how do you think they would cope? You made an unavoidable blunder when you alleged that All the oil blocks, production platforms, Marginal wells diverted, sold or on lease by madueke including the recently divested SPDC assets should be returned to NPDC with immediate effect. There were no oil blocks, production platforms, marginal wells that were diverted, sold or leased by Madueke. Your hatred for this lady must really be unfounded and compelling too. Participating parties (Shell and co, with a sum total interest of 45%) sold their interests (and not assets) to other companies while the Nigerian Government through the NNPC retained her interest (55%) in these assets. In the first set, the operatorship was transferred to NPDC. Am sure in subsequent sales (OML 18, 24 and 29), the new buyers would raise some concerns in the operatorship of these assets. The Nigerian JV structure is not subject to any Senate approval/vetting. Maybe from the President through the Minister, I can’t say. But I do know that the NNPC offsets its obligations after sales and that has been the major bone of contention between the NNPC and the government. Even the PwC report commented on this. NPDC operatorship license should not be revoked but the company should either be given the opportunity to grow its capacity, encouraged, financed or stripped off some assets to improve efficiency. They say to whom much is given much is expected. They are not capable for now. So they should be given some assets (2 or 3) according to their abilities and made to grow. If they show themselves capable to take on other assets and responsibilities, then they should be given the opportunity. Else they should continue improving. That’s how you grow a company. Phase 5 I think by this post, you mean the price to be considered for sales (or purchase of crude oil) should be less than the international market price? Maybe you should make some clarification here. However, why rebase the NPDC production? You of all person should know that NPDC’s business is about extracting crude oil and processing it (not refining) for sale to clients. Whoever buys this crude is of no economic value to NPDC but the price at which it is sold. Also note that, like I have pointed above, SPDC and co. sold their participating interests in these assets and nothing has changed. NNPC retains the 55% on behalf of the Nigerian government and the other 45% by the new party. Phase 6 The best solution is complete and outright sale. Even considering a facility management model have proven to be futile at best when it comes to managing government owned assets. Selling alone will open the door for investors to flood the market. Refineries will be built. |
| Re: Subsidy Removal; The way out by baralatie(m): 4:32pm On Jun 11, 2015 |
I can now see how mother Russia entered into this thread! |
| Re: Subsidy Removal; The way out by baralatie(m): 4:44pm On Jun 11, 2015 |
@kaboninc,this is the summarized format of his write up 1.probe and forensic audit of a,payment structure of import proceeds in the NnPC 2.Power generation and distribution remodelling based on population grid 3.Disposal of kerosene 4.restructure of Npdc 5.debasing 6.turn around maintenance of refineries. all of these are basically centered on SANITIZATION. ALTHOUGH,it has some flaws as you mentioned earlier but with this highlights.it is a lot easier to edit and work out that 'clicth' @jpphillips I hope the reduced format can be worked on to achieve at a sustainable solution. N.B Keeping it simple is gun in math class |
| Re: Subsidy Removal; The way out by jpphilips(m): 7:25pm On Jun 11, 2015 |
kaboninc: When you learn how to answer simple questions, then I will take you seriously. Soludo was the CBN governor as well as the Economic co ordinator. Can a CBN gov devalue the currency without the nod of the Cordinator of the economy? was there a drop in crude price in 1998 that necessitated Russia to devalue the Rubble? Was there a drop in crude price that necessitated the devaluation of the Naira? Did I ever argue with you whose job it is to devalue the naira? I fixed culpability on Iweala as the co ordinator of the economy, I never said it is her job to devalue the naira. Did Russia do something about her LOC when the Rubble was devalued? How much did Soludo pay as exchange rate differentials when he was faced with similar challenge? I will take you more seriously if you learnt summary in school. |
| Re: Subsidy Removal; The way out by jpphilips(m): 7:48pm On Jun 11, 2015 |
kaboninc: Nobody asked you to give us a break down of companies that make up the NECONDE consortium. You are just a Google noise maker that think people are interested in your 30mins research. Tell me the pedigree of NECONDE that justifies the acquisition, was the simple question you couldnt answer. you think that the Pedigree of Kaztek equals the pedigree of Chrome group. Please go back to school. Give us the pedigree of NECONDE not the companies that formed it, thank you!! The chairman of Gobowen is the Chairman of the NECONDE consortium, do you expect Gobowen to have a minority stake? So if you form a consortium, you will give chairmanship position to a minority stake holder? Their website said it is a major stake and you are still not convinced? Can someone help this young man to awaken his common sense. You said you are looking for a match to argue with you, well, I am looking for someone who has commonsense. 4 Likes |
| Re: Subsidy Removal; The way out by kaboninc(m): 7:49pm On Jun 11, 2015 |
jpphilips: Only in your widest imagination that Soludo was the "economic co-ordinator". So appalling to hear that from you. Can a CBN gov devalue the currency without the nod of the Cordinator of the economy? The CBN Governor does not need any sil.ly nod from any co-ordinator of the economy before taking decisions as the devaluation of the naira. Do you know what they call the MPR Committee? So this word/phrase "economic co-ordinator" was it in Soludo's administration or Iweala's tenure you began to hear about it? was there a drop in crude price in 1998 that necessitated Russia to devalue the Rubble? I believe there was. Was there a drop in crude price that necessitated the devaluation of the Naira? There f.ucking WAS A DROP! Did I ever argue with you whose job it is to devalue the naira? I fixed culpability on Iweala as the co ordinator of the economy, I never said it is her job to devalue the naira. Or you didn't argue? Someone who didn't argue on whose job it is to devalue the naira but "fixed" culpability on a woman who has no business in devaluing the naira? Oh you never said so? Hmmmm, let me remind you because you seem to have a short memory span: The bone of contention is that the coordinating minister of economy (CBN inclusive) devalued the currency and the FG incurred a liability of over 200b, Can you remember now? Did Russia do something about her LOC when the Rubble was devalued? Ahhhhh, I don't know what the Russians did about the LOCs taken. But sir, were the LOCs taken on behalf of the government? Was the government sponsoring the LOCs? Mr, you're not talking to kids here. How much did Soludo pay as exchange rate differentials when he was faced with similar challenge? Mr, was Soludo responsible for oil subsidy payments? Go read your books...and read it properly! And stop arguing on subjects you know absolutely nothing about! |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:00pm On Jun 11, 2015 |
[quote author=baralatie post=34664159][/quote] Importing pet. products by an oil producing country is madness, however, the fact that Nigeria does not have local production capacity, leaves us with little or no option but import. Refinery rehabilitation is phase 6, it is the least of our problems. Whether it is done by the Government, privatized or operated by private experienced firms is immaterial. NNPC is not our problem, NPDC is |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:01pm On Jun 11, 2015 |
kaboninc: Who was the co ordinator of the Economy under Obasanjo? |
| Re: Subsidy Removal; The way out by baralatie(m): 8:13pm On Jun 11, 2015 |
jpphilips:okay!now what would be the sustainable solution by govt in these three major areas that you have further highlighted excluding NPDC first. |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:14pm On Jun 11, 2015 |
baralatie: Do you expect Kaboninc to answer you? all he is interested is dat Nigeria guaranteed LOC for oil because of subsidy while Russia did not guarantee any. But common sense did not tell him that before 1998, the Russian govt banks guarantee LOCs for imports whether subsidized or not, due to the devaluation, the government made a paradigm shift and left LOC'S for commercial banks. He doesn't want to appreciate the move that saved the government some liability because he is yet to realize how dumb iweala is. The guy is just childish, he doesn't even understand that the bone of convention is the options available to the government not the commodity. The loss that sank a commercial bank would have sunk the government, he is so disconnected to realize that the arguement is the inability of the Nigerian government to protect itself. I really don't have his time. |
| Re: Subsidy Removal; The way out by kaboninc(m): 8:27pm On Jun 11, 2015 |
jpphilips: I will teach you a lesson today so that tomorrow, when discussing in a public forum, you learn to articulate your points in a clear, unambiguous, and concise way that one can easily understand when reading. You talk about the pedigree of Neconde. A simple search on the website tells us that Neconde is a consortium of companies formed to acquire an interest. So when talking about the SPV, do you talk about the entity Neconde or the components of what constitute it? The chairman of Gobowen is the Chairman of the NECONDE consortium, do you expect Gobowen to have a minority stake? You still don't know that being a chairman of a company does not make you the majority shareholder of that company. When I say you don't know. Believe it. The website said it is a major and not "majority" because a 40% stake is a major holding. You said you are looking for a match to argue with you, well, I am looking for someone who has commonsense. I didn't say I was looking for a match but you're not my match. |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:34pm On Jun 11, 2015 |
baralatie: You are summarizing for someone who claimed the plan is flawed but can't answer a single question there in? You are summarizing for someone who is carried away with irrelevant sermons with no bearing to the subject of discourse? you have time. If he is confident of the flaws, let him answer those questions. |
| Re: Subsidy Removal; The way out by kaboninc(m): 8:35pm On Jun 11, 2015 |
jpphilips: Oh Soludo.... Soludo was initially the Chief Economic Adviser to Obasanjo and later the CBN Governor. At no damn time was he the co-ordinator of the Economy. Stop dashing him titles. Hope you're enjoying my lectures. Then again, maybe in your own world will a head of a government agency/parastatal be the Co-ordinator of the Economy. |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:37pm On Jun 11, 2015 |
kaboninc: Chairman of a company? ? do you understand English at all? if you form a consortium, do you give chairmanship to a minority stake holder? Apply common sense and stop trolling!! |
| Re: Subsidy Removal; The way out by kaboninc(m): 8:37pm On Jun 11, 2015 |
jpphilips:Whoever listens to this guy is in deep sh.it. NNPC is not our problem? So why the PwC report? Why the eyes on NNPC? |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:44pm On Jun 11, 2015 |
baralatie: NPDC was never the first plan, read the OP again. Rebasing of NPDC and return of their assets is not even the first plan, |
| Re: Subsidy Removal; The way out by kaboninc(m): 8:46pm On Jun 11, 2015 |
jpphilips: Ignorance is a disease.
You're such a pity. The government of Russia guaranteed LOCs (which means they incurred all liabilities) and when the oil marketers were asking for the liabilities incurred in opening various LOCs be paid you blame the Minister for exchange differential cost? Don't you read what you write? He doesn't want to appreciate the move that saved the government some liability because he is yet to realize how dumb iweala is. Move? What move? The rubb.ish you spew here? The loss that sank a commercial bank would have sunk the government, he is so disconnected to realize that the arguement is the inability of the Nigerian government to protect itself. The inability of the Nigerian government to save it self...and the Russian government guaranteeing opened LOCs? See your reasoning? Am in something today . The almighty Jpphilips KNOWS ABSOLUTELY NOTHING! |
| Re: Subsidy Removal; The way out by jpphilips(m): 8:48pm On Jun 11, 2015 |
kaboninc: Who was co ordinating the economy under Obasanjo? mention a name!! |
| Re: Subsidy Removal; The way out by kaboninc(m): 8:54pm On Jun 11, 2015 |
jpphilips: When you understand the fact that a chairman of a company doesn't necessarily make you the majority shareholder then we can discuss the chairmanship position of Neconde. |
| Re: Subsidy Removal; The way out by kaboninc(m): 8:58pm On Jun 11, 2015 |
jpphilips: Stop being ignorant here. There was nothing like 'who's co-ordinating' the economy during Obasajo's administration. The title 'Co-ordinating Minister of the Economy was coined in Jonathan's administration. Learn! |
| Re: Subsidy Removal; The way out by kaboninc(m): 9:03pm On Jun 11, 2015 |
jpphilips: Like their assets were stolen. |
| Re: Subsidy Removal; The way out by baralatie(m): 9:18pm On Jun 11, 2015 |
jpphilips:I was thinking of moving forward to a more sustainable solution having identified the above observation. in your Op,the solutions were more like to sanitize the oil and gas sector but after been sanitized.is it sustainable to operate a system that exist as of present. |
| Re: Subsidy Removal; The way out by jpphilips(m): 9:21pm On Jun 11, 2015 |
kaboninc: You see why I asked you to calm down and hide till people who understand my "ambiguous" statements join the discussion. NNPC is not our problem, NPDC is. |
| Re: Subsidy Removal; The way out by kaboninc(m): 9:50pm On Jun 11, 2015 |
jpphilips: I see you've left out all my lectures on issues you claim you have an idea. Such a pity you couldn't appreciate it. How many people have graced your ideas? How many have sustained the discussion with you? You should be grateful that I even did. At least you know what Letters of Credits are, you know how the exchange rate differentials came about, you know who's responsible for managing the local tender - that includes devaluing the naira, you know the distinction between the roles of the CBN governor to that of a Federal Minister of Finance, you know that the imports on PMS are done on behalf of the government. Oh, lastly, you don't go about freely giving out false claims on the status of OML assets being operated by NPDC. Gosh, did you forget OML 88 and the Oriri Marginal Field? And the how my explanation (which you termed a "sermon"  on how DSO is in favour of the NGC's business model? |
| Re: Subsidy Removal; The way out by jpphilips(m): 9:57am On Jun 12, 2015 |
kaboninc: Very well then, You have no idea who co ordinated your economy during OBJ's era, thank me later!! |
| Re: Subsidy Removal; The way out by jpphilips(m): 10:07am On Jun 12, 2015 |
kaboninc: Stop twisting my words, I never told you that Russia transferred LoC's Liability? I used the phrase "Paradigm shift", for the records, Before the devaluation, Russian Government owned banks issue LOC's, in other to absolve the government of liabilities accrued due to devaluation, the russian government stopped the government owned banks from issuing LOC's, it is there in the article you refused to read. A Commercial bank who issued LOC's incurred a liability as much as $500,000, the reason I used it here is because a sane country did something to avoid a liability the co ordinator of your economy has incurred on Nigeria. Again, I was never in contention whose job it is to devalue the currency, as the coordinator of the Economy, it wouldn't happen without her knowledge, that i can easily prove. Again, when Soludo co ordinated our Economy, Nigeria imported petroleum products, there was not only a drop in crude prices but also an economic meltdown that forced Soludo to devalue the Naira, why did we not pay exchange rate differentials then? Finally, You have danced around NECONDE so badly that I have gotten the information I need, NECONDE as a consortium has no track record whatsoever in oil and gas operations, rather your infinite wisdom is suggesting to Nigerians to manage them because individually they have succeeded elsewhere, I said, it is not acceptable; even if I should agree with your abysmal analysis, the highest stake holder in the NECONDE consortium has only operated a "Marginal oil field" transferred in 2013 and he is not operating it alone, there is no proof that the oil field is successful, hence the phase 4 of the plan is still in play. You also do not have a damn idea why DSO for gas is a bad model, never mind that you could not point to a single country with proven gas reserves as much as Nigeria practicing it. I careless how you use sermons to bamboozle yourself, when you are tired, you will go back to sequestrate what I said from what you think i said. Like I said before, I am not looking for a match, I am actually looking for people who have common sense, my postulation is based on simple common sense, If you don't have it, I can't help you. I will attend to others when I am less busy. |
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