FG Finally Removes Subsidy On Petrol                                   http://www.independentngonline.com/news/tfpg/article03         
By Chesa Chesa Snr State House Correspondent, Abuja

The Federal Government has finally approved the full deregulation of the petroleum sector to end subsidy for 'inefficient and fraudulent' operations.

Given by President Umaru Yar'Adua, the approval is sequel to the recommendations of the Steering Committee on the Global Economic Crisis which met at the Villa in Abuja on Thursday and convinced him on the "institutional deficit and structural bottleneck" which the Petroleum Products Pricing and Regulatory Agency (PPPRA) has become.

Finance Minister, Mansur Muhtar, who chairs the Committee briefed reporters on the deliberations. He was accompanied by Central Bank of Nigeria (CBN) Governor, Chukwuma Soludo, and Petroleum Resources Minister, Rilwanu Lukman.

Mansur recalled that N640 billion was spent to subsidise petroleum products last year alone, yet leakages continue in a system characterised by corruption, inefficiency, which showed that the "whole system has been compromised."

He said there will be a review of the PPPRA template, and a Competition Bill is in the works to combat oligopoly in oil and other economic sectors.

According to him, money saved from subsidies will be spent in other areas of need. The Committee endorsed the reversal of the last increase in pump price of diesel.

His words: "The huge fiscal burden we cannot continue to meet. We have found out that we are really subsidising inefficiencies, fraud, racketeering in the whole production chain and in that context basically given the competing needs for scare resources, government felt we needed to do something. We are also subsidising other countries."

A committee headed by Bauchi State Governor, Isa Yuguda, has been set up to devise the action plan and time frame for the deregulation process.

Other members of the committee are the federal Attorney General, Presidential Economic Adviser, Ministers of National Planning, Finance, Labour, and Petroleum, representatives of Labour and the private sector, as well as Edo State Governor, Adams Oshiomhole.

Muhtar also announced the government's resolve to stop pumping money into the refineries which have become drain pipes. Crude oil will be sent abroad for refining and freighted back home without necessarily selling crude to the refineries.

Only the cost of refining will be paid to supplement imported refined products until the local refineries are privatised and private ones come on stream.

Yar'Adua also approved the resumption of the sale of foreign exchange (forex) to licensed bureau de change, a reduction by 25 per cent of the fees charged by the Nigeria Stock Exchange (NSE) and the Securities and Exchange Commission (SEC), and a review of risk management procedures by financial players.

Mechanisms will be strengthened to effectively co-ordinate financial system through a committee chaired by Soludo, and there is removal of five per cent excise duty on all products, except cigarette and alcohol.

wow how many years has this deregulation thing taken them.

If this is true, then the Nig Labor congress (NLC) are going to be having their nationwide strike soon

Oshiomhole don join politics, so he no fit lead them as usual

http://www.ngrguardiannews.com/editorial_opinion/article02//indexn3_html?pdate=010309&ptitle=Soon,%20We%20Shall%20All%20Be%20Trekking&cpdate=010309

Soon, We Shall All Be Trekking
By Reuben Abati

It must be a joke, right? The proposed plan by the Federal Government to fully deregulate the downstream sector and remove the remaining subsidy on petroleum products. When the news first broke during the week, Nigerians were told that a committee had been set up to be led by the Governor of Bauchi State, Isa Yuguda, with a mandate to work out an action-plan and a time-table for implementation and consult with stakeholders.

The mischief and dishonesty are obvious: why set up a committee to seek the input of stakeholders when a final decision has already been taken? By yesterday, The Saturday Punch newspaper had reported that a pump price of N73 per litre may be announced within a week. The assignment of the Yuguda committee had been completed even before it had a chance to sit. A Petroleum Industry Bill, and another bill seeking to change the Petroleum Producta Pricing Regulatory Agency (PPPRA) template have also been sent to the National Assembly. Why not wait for the bills to be considered by the National Assembly?

The so-called complete deregulation of the downstream sector and the removal of subsidy may seem like a purely economic policy decision, but it is so tied to larger Nigerian questions that it ought to be more rigorously debated, and government should make haste slowly. As at this moment, Nigeria operates a partial deregulation regime in the downstream sector. Petrol and kerosene prices are regulated while diesel is fully deregulated. The regime is corruption-ridden, it is badly managed. There is no indication that a complete deregulation regime will be better managed. The problem is not one of form, but leadership.

The arguments being advanced to justify the proposed full deregulation do not make sense. All the arguments have a ring of deja vu. They are taken from the same textbooks that the economists have refused to update, the same ideas that led to the collapse of the global economy. Other countries are making a U-turn and subjecting textbook knowledge to the test of reality, Nigerian policy makers are still holding on to old paradigms. One of these days, we shall start stoning the economists in official corridors.

They tell us that in a fully deregulated downstream sector foreign investors, who have been suspicious of the Nigerian market, will be encouraged by a better pricing regime determined solely and fully by market forces. Marketers in the downstream sector will also be happier as the margins of profit will increase. The Federal Government under the new dispensation wants to privatise the country's four refineries, and it is convinced that investors will jump at the opportunity. To please us, they say as investors make more money, pump prices will reduce and the scope of price differentials will widen, enabling choice. But what is more important, the profit motive of investors and marketers or the interests of the Nigerian people?

Deregulation will not automatically guarantee the happiness of marketers and investors. Who wants to buy Nigeria's run-down refineries, with their obsolete technology anyway? And if anyone does, the profit that they seek will be automatically abbreviated by other challenges in the environment including transportation and the violence in the Niger Delta. I'll like to see those investors who would like to take on the refineries in the Niger Delta at a time when oil mutlinationals are scaling down operations and relocating their expatriate staff due to the menace of kidnapping in the Niger Delta. Besides, the Nigerian investment environment is unstable and uncertain and it is increasingly so. What if another government shows up in the future and introduces a different policy? Full deregulation as proposed translates into only one thing: higher pump prices of petroleum products and greater hardship for the Nigerian people.

It is curious that the recommendation is coming from the Federal Government Committee on the Global Economic Crisis. Elsewhere, recession has resulted in government becoming friendlier towards the people. Countries are introducing packages to stimulate the economy and to inspire hope. Prices are being slashed in order to encourage more spending, government is intervening to play a bigger role in the lives of the people in order to save nations from anomie. These same blind market forces that Mansur Muhtar and co are reinventing as the cure-all for the downstream sector is the devil in the global economic setback. Don't they know this? If PMS now goes up to N73 per litre, with the Naira exchanging as at yesterday at N173 to the dollar, with the stock market now a penny shop, with no regular power supply and no jobs, starvation wages are still being paid, companies are cutting jobs, and public officials are living large and bank directors are junketing about like a yo-yo in expensive jets, and the refineries are down, and there is very low capacity utilisation in the real sector, the only losers will be ordinary people. What should come first: full deregulation or house cleaning? I think the latter.

One major excuse offered by the Minister of Finance is that in the face of huge budget deficits, the Federal Government can no longer sustain an annual subsidy of about N640 billion in the downstream sector. In the past three years, a total of N1. 6 trillion has reportedly been spent. The question to ask is: How? Where is this subsidy that government talks about? How was it disbursed? It is not enough for government to talk about huge subsidy, it must explain what constitutes that subsidy. Now, they argue that if government can have access to this N640 billion per annum, it can then use it on infrastructural development. Well, we have heard that before.

It was the same argument that was used to raise the pump price of petrol from N11 all the way to N70, that was in those days when they used to tell us that a litre of petrol in Nigeria was cheaper than a bottle of Coke, and there has been no improvement in the quality of infrastructure since then. Muhtar says privatisation of the refineries is important and that government is determined to get it right this time. The Group Managing Director of the NNPC, Mohammed Barkindo says with local refining, cost associated with importation will be eliminated and retail prices will become cheaper. We don't think so. Because even if all the refineries were to work at optimal capacity, Nigeria would still have to import refined petroleum products to satisfy local demand. And can anybody rely on government's promise? The reality is that Nigerians no longer trust their governments.

The Minister of Finance put his finger on the matter when he lamented that the bane of the oil and gas sector is that government has been subsidising inefficiency and corruption. The PPPRA is to be reviewed because under the new arrangement, its role would have to change, but even more so, the Federal Government says, the body has been compromised. Also, the rehabilitation of the refineries, we are told, ended up putting money in private pockets, and so the Federal Government does not intend to spend one extra kobo on those refineries anymore. If the government knows all of these, why is it lamenting? It should immediately arrest those who have encouraged the inefficiency in the PPMC, the NGC, the NNPC, the PPPRA and let Nigerians know who and how the subsidy of N640 billion vanished annually without any impact on the economy and the people. The Obasanjo government once tried to audit the accounts of the NNPC. It couldn't come up with reliable figures. A proper audit of the present, operative template is advisable. Yes, there are leakages, but what exactly is wrong? First, the Federal Government must determine the actual cost of petroleum products, from production to the market. This will enable it to know the exact amount of subsidy that is required, and exactly how much has been frittered away, and by who. Perhaps if it knows the actual required subsidy, and plugs the leakage pipes, it may be persuaded to seek scapegoats elswehere. Second, sanctions must be meted out to the saboteurs when identified. Into whose pockets did the N640 billion disappear every year?

It was further argued that government intends to ensure open and free licensing in the downstream sector in order to break an existing oligopoly. But, if we may ask, who are the members of the cartels that Mansur Muhtar is complaining about? Can they be named? Could they possibly be the same persons who donate money to PDP political campaigns, or Presidential libraries and who are so neck-deep in PDP politics that their names show up every year on the National Honours List for services rendered to (sorry, for damages done to) Nigeria? Independent marketers in the downstream sector complain daily about the dominance of these powerful forces who alone exercise an undeserved monopoly in the sector. Is there any guarantee that government as it is can protect a regime of free competition? With 2011 around the corner, won't the Yar'�dua government still need the cartel in the downstream sector when it decides to raise funds for a second term project?

Again, government wants to do offshore refining. This had been recommended many times in the past, but even if the option is now adopted, has government thought its way through it? Or has this been thrown in merely as a convenient slogan after a fashion? To further simplify this matter: by cancelling subsidy for petroleum products, government wants to free more resources for its own use. I don't want to believe that the Nigerian government is cash-strapped. Is this not the same government that returns unspent money every year to the treasury? And if the lifestyle of government officials and the politicians is any measure of reality, government remains the most profitable business in the country today. If the Federal Government is looking for more funds, why doesn't it look elsewhere and try to cut its own costs and reduce the extravagance of government?. A salary cut for public officals was proposed recently, but one after the other some state Governors are already saying: "Pay cut? Count me out?" Why don't they cut the fat allowances and estacodes then? And strengthen the mechanism for checking corruption in official corridors?

About a month ago, the PPPRA had suddenly announced a surprising reduction in the pump price of petrol, from N70 per litre to N65 per litre. With the present development, it is now clear that government was playing games with the feelings of Nigerians. The reduction was meant to last for one month only. A month later, now the plan to remove "subsidy." The Nigerian Labour Congress has said that it will resist any increase in the pump prices of petroleum products, but it should do more than that. It should provide strong counter-arguments to expose the folly of the proposal and the wrongness of the timing. The National Assembly should be persuaded to act in the interest of the people and say to the Federal Executive: "No, not now".

we are not ready for this - definetely not right now. this is nigeria - prices NEVER come down. businesses do not compete for customers, they SHARE them. so after like a month of N65 fuel, enter the N100 and above fuel

we are in BIG trouble. no light in my house for two straight weeks. i buy at least 75 litres of petrol a week. . maybe its time to build that filling station. . .

we are not ready for this - definetely not right now. this is nigeria - prices NEVER come down. businesses do not compete for customers, they SHARE them. so after like a month of N65 fuel, enter the N100 and above fuel  Sad

we are in BIG trouble. no light in my house for two straight weeks. i buy at least 75 litres of petrol a week.  Sad. maybe its time to build that filling station.

My friend quit whining. You want govt to subsidize everything for you?. Why not also ask them to subsidize beer and ashewo for you?.

St. Fummi you are not being fair; normally this should be good news but everything is upside down in Nigeria. With this deregulation, except for NNPC that is govt owned and has no more than 20 stations nationwide, all the others will just bunch together and jack the prices up and there is nothing the common man can do. This is another way of stealing our national resources through the backdoor.

Please refer to my signature

St. Fummi you are not being fair; normally this should be good news but everything is upside down in Nigeria. With this deregulation, except for NNPC that is govt owned and has no more than 20 stations nationwide, all the others will just bunch together and jack the prices up and there is nothing the common man can do. This is another way of stealing our national resources through the backdoor.

If the prices are too high, goods and services will not be rendered and their sales will drop. Nigeria operates on a free market system, so allow the market forces to drag the price down.

Again, petrol is about $18 per liter in Sierra Leone but it's less than $1 per liter in Nigeria. Have they all died in Sierra Leone?

without a doubt, osunashawo belongs in the federal government. her soundbites are straight out of those retards' mouths - pure water costs more than petrol litre for litre

because they cut down the price of gasoline in yankee, you are able to pay your ISP and come to nairaland to make noise

St.Funmi:

If the prices are too high, goods and services will not be rendered and their sales will drop. Nigeria operates on a free market system, so allow the market forces to drag the price down.

Again, petrol is about $18 per liter in Sierra Leone but it's less than $1 per liter in Nigeria. Have they all died in Sierra Leone?

olodo making mouth. your 'free market' is what has led the entire world to this sorry pass. maybe if you took the time to read reuben's article instead of blathering about sierra leone

http://en.wikipedia.org/wiki/Gasoline_usage_and_pricing

check out th eprices in other african countries and stop using an anomalous situation in a nation still recovering from civil war as a basis for your stupid argument

Pay for your gas my friend and stop whining like a eunuch. Stop relying on tax payers money to run your generator especially the likes of you that evade taxes yearly.

What a sad, sad day for Nigeria. With present global economic meltdown taking its toll on civilizations worldwide, sensible, caring governments are seeking ways of cushioning its effects; but that of Nigeria, not unpredictably, has chosen to be an exception. Apparently, the poverty and suffering of Nigerians is yet to attain its desired level, and so it must be increased through any means possible.

Dr. Abati sums up it beautifully in his piece:

It is curious that the recommendation is coming from the Federal Government Committee on the Global Economic Crisis. Elsewhere, recession has resulted in government becoming friendlier towards the people. Countries are introducing packages to stimulate the economy and to inspire hope. Prices are being slashed in order to encourage more spending, government is intervening to play a bigger role in the lives of the people in order to save nations from anomie. These same blind market forces that Mansur Muhtar and co are reinventing as the cure-all for the downstream sector is the devil in the global economic setback. Don't they know this? If PMS now goes up to N73 per litre, with the Naira exchanging as at yesterday at N173 to the dollar, with the stock market now a penny shop, with no regular power supply and no jobs, starvation wages are still being paid, companies are cutting jobs, and public officials are living large and bank directors are junketing about like a yo-yo in expensive jets, and the refineries are down, and there is very low capacity utilisation in the real sector, the only losers will be ordinary people. What should come first: full deregulation or house cleaning? I think the latter.

Deregulation my a**. 

@St Funmi,

I wonder what manner of "economist" are you. _{sorry no insult meant.} 

Everything in Nigeria is simply not working. It is a story of lacking in the midst of abundance. Every Nigerian has lost the pride in getting identified with the green-white-green emblem. It is so sad!. Nigerians are tolerant in nature, they can adapt to any situation no matter how harsh. There has been public outrage in the western world, which despite the economic recession, they still have substantial comfort - Their Govts introduce measures that will mitigate the effect of the recession, they collect money every week, have access to free & qualitative medicare etc , even when they do not work or do not wish to work .

I am beginning to think if it is a curse being a Nigerian. @St Funmi is talking about taxes. Let me tell you , the word "budget" and "taxes" have no meaning to ordinary Nigerians again. Why will it ?!. The budget have no positive impact on the lifes of the common people on the street , and the taxes are being embezzled by the politicians at the corridors of power.

So, please, stop insulting Nigerians and even salute their courage for holding up despite the biting economic recession staring them in the face. In some part of the world, blood would certainly have been freely-flowing as a result of these govt let-downs

Jeez, why are Nigerians scared of paying the full price for services rendered?. They ask for constant power but will never pay their PHCN/NEPA bill; they ask for constant water but will want a govt subsidized one; same for school, hospice etc. Meanwhile, 90% of them do not pay their taxes, yet they want govt to perform miracle. I am for deregulation, let the govt deregulate everything even our hospitals and you'll watch them perform better.

All we should strive for is for an equal opportunity for every Nigerian citizen so that the hardworking ones will always get their efforts crowned with glory irrespective of your tribe,origin or religious affiliation. Nigeria is not a socialist state.

st funmi, u obviously know nothing about nigeria,its economy/politics, sadly, u make it SO OBVIOUS!!!

Pay for your services abeg. No subsidy on gas any more.

Lets thank God for his blessings by keeping us away from national war & anarchy like other countries & pray for HIM to intervene in these challenging times.
People dey suffer for this country -poor infrastructure,no light,no good roads,low level of education,molestation from area boys,etc.
We need to start getting things right b4 crime(due to joblessness) takes its toll on all of us.

Let's pray that the country can move forward now.
The statistics provided for, on funds spent on subsidy is frightening.
At least, some/part or the whole of the funds can go into infrastructure development as promised.
We can then start dreaming of the promised land.

the point is this, d govt will always release statistics when it favours dem! all govts of the world will always cushion its citizens in one way or the order! when fares were hiked previously, we were told its because of the black markerters and lots of pther crap, now we are being told that a cabal enjoys subsidy benefits and they must break it. what happened to the good old art of investigating, garthering info and charging to court, if indeed the cabal isnt just you! this is just EVIL!!!!

the government has got it all wrong; before they deregulate fuel the first r\thing they should deregulate is the government, remove all those 419 people who are chopping our money instead of giving them subsidy (or immunity)
maybe it's time for us to look to other sources of fuel like ethanol so that we can obtain our fuel from agriculture and put those kidnapping terrorists in the south out f business

Nigeria are the greatest masters of adaptation. like fela talk am suffering and smiling. We need a revolution.

Okay, let's now allow market forces to drive prices down like someone said.

Since the day I was born, only in Nigeria do prices of things ever increase and never go down except for mobile phones and tokunbo cars!

Rice, imported drinks, cocoa, just name it, even without subsidy and at the mercy of independent Marketers, you know every. I no fit shout.

Let's hope they aren't feeling the credit crunch hard, I think they just want to fill their accounts just in case the recession refuses to improved.

$0.02 pere!

Nigeria,

Where is the hope?!

The answer my friend is blowing in the winds, the answer is blowing in the winds - Bob Dylan.

It's a good idea in theory - without deregulation, the marketers simply waited for the government to import and casually sat by and made profits.

No one knows exactly how much government funding goes into the so called 'subsidy' so it's really hard to tell.

I think we should remove the subsidy - that is the only way we will ever have refineries that will be attractive to external investors. Without that, they will continue to be run inefficiently, because the same government agencies responsible for managing them are run by guys who will make money by getting a petrol importing contract from the government.

We need to plug all these avenues for corruption - since there is no more government subsidy, we can easily trace how much it costs to import the product to how much it costs at the pump - the companies like Oando, Total and others are public companies and we will be able to see clearly what they are making off petrol sales.

The government fixed price has always influenced potential refiners - it's so much easier to let the government import and you simply distribute and make a tidy profit - now we will know just how much it should COST.

I don't think the marketers will lump together and raise prices - it will not benefit them in the end. Right now government funds are being used to run private businesses - NNPC imports the overwhelming bulk of products, but the retailers sell the majority and make most of the profit.

It is a good thing - the artificial low prices being enjoyed in the south west will disappear. They will begin to experience what goes in Eastern Nigeria as well.

they should get ready for the reaction of the suffering masses.

Abati's criticisms are right, but not complete.

The fact is this: the failure to go the whole hog in deregulation is the problem - we would increase prices and fix them again, thinking that increasing prices will solve the problem. The petroleum products supply system is highly flawed and imbalanced - people depend on government importation to sell in their stations, why?

Let prices float FREELY and then we can arrive at a true price, not some price that gets agreed as a 'consensus' but doesn't hold ground a few weeks later because of market realities. The sooner we free this vital aspect of our national economy from government distortions, the better.

Raising prices alone doesn't solve the problem - the major suppliers aren't really keen on importing, government keeps importing and thus stops them from optimising their supply of products - why bother when the govt does it for you?

It may cause pain, but for goodness sake, if it is done, then prices will move freely up and down, instead of the dramatic hikes every couple of years.

debosky:

It's a good idea in theory - without deregulation, the marketers simply waited for the government to import and casually sat by and made profits.

No one knows exactly how much government funding goes into the so called 'subsidy' so it's really hard to tell.

I think we should remove the subsidy - that is the only way we will ever have refineries that will be attractive to external investors. Without that, they will continue to be run inefficiently, because the same government agencies responsible for managing them are run by guys who will make money by getting a petrol importing contract from the government.

We need to plug all these avenues for corruption - since there is no more government subsidy, we can easily trace how much it costs to import the product to how much it costs at the pump - the companies like Oando, Total and others are public companies and we will be able to see clearly what they are making off petrol sales.

The government fixed price has always influenced potential refiners - it's so much easier to let the government import and you simply distribute and make a tidy profit - now we will know just how much it should COST.

I don't think the marketers will lump together and raise prices - it will not benefit them in the end. Right now government funds are being used to run private businesses  - NNPC imports the overwhelming bulk of products, but the retailers sell the majority and make most of the profit.

It is a good thing - the artificial low prices being enjoyed in the south west will disappear. They will begin to experience what goes in Eastern Nigeria as well.

actually, it doesn't quite work like that - what happens most of the time is that the major marketers total, mobil, oando, texaco etal, import the product themselves at full cost, while the FG reimburses them on a later date. trust FG, reimbursement can be delayed for months on end - there was a period when the marketeres actually threatened to stop bringing in product, thats how bad it was.

profits are constantly shrinking. thats why texaco pulled out last year. this is how it works. you buy the product overseas. you load it onto your ship.your ship has to wait in line at the jetty to discharge. everyday the ship is waiting attracts a charge(demurrage) and this is a bastard that eats deep into profits. from the ship to your depot. from the depot, product is loaded into tankers which distribute it to retail outlets. anyone in the downstream sector will tell you - tanker drivers are a nightmare. they ALWAYs steal/divert  product from their tankers, and they go on strike for the flimsiest of reasons. during the subsidy, all these costs were borne by the marketers. now they will be transferred to us.

some may use otedola to argue in favor of deregulation. last year he commisioned his 'diesel direct outlets' where diesel was selling at was it n60  per litre? i forget. but it was way below the prices of other marketers. how was he doing this? well apparently, he was in objs good books. this meant that whenver his vessel docked at the jetty, it would get top priority ie it would be discharged immediately -and fk all of you other losers who got there first. thus he had practically 0 demurrage costs, and could afford to sell diesel at artificially low prices. now that obj is out of the picture 'diesel direct' is dead in the water .

we are in for it big time - costs are going to go way up. they are predicting n75 per litre. so my barber, the danfo drivers, okada riders, business centers  will all raise their rates to stay even or just to get their pown piece of the action. can someone say stimulus

I disagree oyb - what is the volume being imported by NNPC compared to the marketers?

Granted the marketers get delayed reimbursement from the government, but that isn't for the TOTAL import cost, that is simply the SUBSIDY.

oyb:

profits are constantly shrinking. thats why texaco pulled out last year. [/b]this is how it works. you buy the product overseas. you load it onto your ship.your ship has to wait in line at the jetty to discharge. e[b]veryday the ship is waiting attracts a charge(demurrage) and this is a bastard that eats deep into profits. from the ship to your depot. from the depot, product is loaded into tankers which distribute it to retail outlets. anyone in the downstream sector will tell you - tanker drivers are a nightmare. they ALWAYs steal/divert  product from their tankers, and they go on strike for the flimsiest of reasons.

we are in for it big time - costs are going to go way up. they are predicting n75 per litre. so my barber, the danfo drivers, okada riders, business centers  will all raise their rates to stay even or just to get their pown piece of the action. can someone say stimulus

This is very key to the problem - the government sets prices, don't factor in demurrage costs and so, regardless of how much it costs you, you must sell at the 'approved' price.

Now the marketers didn't complain when they were making steady profit regardless of all these due to government subsidy, but when all these things begin to eat into profit margins, they'll go lobbying government for a price increase, instead of working together to improve import facilities at the port or lobbying for that to be improved.

The system in inefficient - why should the government (i.e all of us) be subsidising rogue tanker drivers? Let the marketers deal with that problem. Let us know how much it is costing and let us pay the price.

Regardless of the demmurage cost or what not, it is obviously still profitable, if not they would all have packed up. The key is to give them full price flexibility so they can appropriately plan and develop their infrastructure. No one will invest in a refinery in Nigeria because the government fixes prices of products - completely untenable.

Government keeps using subsidies as the reason it can't do a lot of other things - let us remove that excuse and demand performance. I would rather have slightly more expensive petrol (we don't even know for a fact that it will be in the long run) than bad roads and all the other issues crying out for attention.

during the subsidy, all these costs were borne by the marketers. now they will be transferred to us.

Correction - the marketers paid for these upfront, and collected it from the government (US)  - [b]we are already paying for it, but no one knows how much. [/b]We will soon see just how much we are paying. As you mentioned, the most effective operator will have the lowest costs and have more sales. it's time we actually knew the true state of things instead of stories.

Okay, i am going to address this issue since a lot of people are not well informed.
The marketers can not just jack up prices as they wish. That is why the PPPRA was established. The PPPRA determines the CEILING price every other month. Marketers then choose to sell at any price BELOW the ceiling price.

To those of you crying. Deregulation already started since the price was dropped to 65 naira. At 65 naira, the govt didn't have to pay any subsidy. They are only making it official now. Petrol prices will only go up if CRUDE prices go up. If crude remains at $40 per barrel, petrol aint going up.

With regards to Deregulation:

Do you guys know that we have been wasting money subsidizing petrol. Does anyone here know about oil bunkering.
People buy subsidized petrol from Nigeria and smuggle it to neighbouring Niger where they sell it for 100% more. It's like we are bearing the cost for people in Niger republic.


Deregulation is good. The only problem is that the money saved from not subsidizing petrol may not be properly utilized.
I think spending 700 billion naira on fuel subsidy is a mere waste of funds. That money could be used to fix Nepa and all the roads in naija. (of course they won't do that)

This is a great move by the government, all this time the Nigerian Government was injecting Billions in the petroleum industry for the Nigerian people. Sadly some Nigerians  export  these products back in the neighboring countries by fraud.
Dr Abati was talking  due to the global economic crisis most government have became friendlier with the people, but in he seems to forget that the Nigerian Government has been putting subsidy in the petroleum industry since oil was first discovered and it never worked.

What a coincidence, But not only Niger republic ! People are benefiting from this all the way to Mali because it even more lucrative to take it there.

debosky:

The system in inefficient - why should the government (i.e all of us) be subsidising rogue tanker drivers? Let the marketers deal with that problem. Let us know how much it is costing and let us pay the price.

no way to deal with em - they are the only available means of distributing product as our railways have gone to hell

debosky:

Government keeps using subsidies as the reason it can't do a lot of other things - let us remove that excuse and demand performance. I would rather have slightly more expensive petrol (we don't even know for a fact that it will be in the long run) than bad roads and all the other issues crying out for attention.

beans!

well lets wait and see - though with all the reversals nigeria is famous for, i can't see any investor willing buying those refineries.

why the argument here? the govt of Nigeria is not deregulating because of that amorphous group called "market forces". Who are those "market forces"? Members of that very government who have sold our oil fields to themselves and their cronies!!!