For about two weeks or more Nigerians have been wailing and crying over the scarcity of Premium Motor Spirit(PMS) otherwise known as petrol or 'fuel'. Since the whole drama started, I've been silently observing reactions of people. Most commentaries on the issue were more centred on the effect of the problem and not the problem itself or the solution to the problem. Even prominent Sai Buhari fans were not left out. How do we address a problem when our interest is on the symptoms and not the problem? What is the problem of this fuel scarcity? What is the solution? This I shall address in this article.

The Problem? Petrol Subsidy Is...
Every year, a large chunk of our scarce resources is spent on subsidising 48 million liters per day just to 'relieve the masses burden'(in quote). According to the fmr minister of finance Ngozi Iwaela, Nigeria spent a whopping N2.3 TRILLON in 2011(yes, N2.3trillion) in the name of petrol subsidizing the product at N80 per liter(while the masses buy @N65 per liter). Between 2012 and 2014, Nigeria spent an average of N1trillion every year on this subsidy payment. As at today, Nigeria is made to cough out N619 million everyday to PMS marketers in the name of subsidy payment. Yet, how many Nigerians buy this product at the subsidised rate of N87 per litre despite the exorbitant amount paid to marketers?

The problem is not just the exorbitant amount paid on subsidy, there is also the problem the fraud and manipulation perpetrated by petrol marketers and their friends/allies in government that shortchange the public. These marketers will always file payment invoice to the government even when some of them don't supply the said product. In fact, it is an open secret that some of them divert the product to neighbouring countries and still file for claims of payment.

There is the third problem of sabotage by marketers and their accomplices. They deliberately hoard some of the product so as to sell them above the approved price(like what is being experienced) after creating artificial scarcity and panic buying in order to make more money. Instead of buying at the approved price of N87/ltr, the masses are forced to pay between N150 to N300 per litre for the same product. This loss is different from the billions of public fund that the marketers directly shortchanged the government. In addition to this, valuable manhour is wasted on filling station queues by citizens that want to buy the product.
This is the reason behind the present scarcity of the product that we are experiencing for over two weeks.

The fourth problem is that of blackmail. What led to the fuel scarcity in April/May this year? The marketers after being paid N350billion, N31 billion and N154billion, came up with another N200billion request for payment. Their claim was that N159billion (of the N200billion) was for "exchange rate differential". The government said they won't pay until they verify the claim, the next day booooooooom! Fuel scarcity. As usual, Nigerians curse the government instead of looking at the issue.

A painful part of it is that nobody get convicted for the aforementioned crimes. In fact, the goats are quite aware that irrespective of the yam they eat, nothing will happen to them.

The Past Administration Missed It...
Let us recall that before the 'subsidy removal' in January 2012, the open market price of petrol was N138.59 per liter. The government was paying N73 per litre on subsidy while the masses were made to pay N65 per liter. The government of Jonathan on January 1, 2012 would later remove the subsidy completely because "it cannot be sustained" as claimed by the government. Protest and agitation ensued. The masses argument was that a 100% rise in the price of the product without palliative to ease the attendant suffering will only increase their suffering. The government on the other hand maintained that the subsidy can't be sustained. Eventually, there was a compromise. The masses were to pay N97 per litre while the government pay N41 per litre for the subsidy.

As God will have it, the open market price of the product dropped to N89.84 per liter in January 2015. A price lower than the subsidised N97 per litre as at then. The government was presented with an opportunity to end the subsidy regime while Nigerians will be paying N89.84 per litre for the product, a price lower than even the 'subsidised' product of N97/ltr as then was. The government instead chose to keep the subsidy by reducing the price of the product to N87/ltr. Let me quote the PPPRA's Executive Secretary, Farouk Ahmed

based on the landing cost of N74.35 per litre of PMS as at the close of business on Friday, January 16, 2014, the addition of distribution margin of N15.49 per litre would translate to an open market price, or pump price of N89.84 per litre.
www.premiumtimesng.com/business/175262-arrived-n87-petrol-price-pppra.html

Was there any wisdom in keeping the subsidy at N3 per liter at a point when Nigerians can pay N90 per litre, a price lower than the then subsidised rate of N97 per liter? It is my opinion that Jonathan's government missed it.

The Solution? Subsidy Should Rest In Peace
As at July 2015, the landing cost of petrol was estimated at N123 per litre, while the open market cost of the product was pegged at N138 per litre. This means the government paid N51.6 per litre at N87/ltr pump price, ie spending N2.8Billion daily to service the subsidy of 48million litre per day.

As at September 10, the landing price of the product dropped to N93.93 per litre while the open market price was put at N109.42 per litre. With the pump price at N87 per litre, Nigeria is coughing out N22.42 per litre to service the subsidy and costing us N1.07billion daily on 48 million litre. (See Sept 10 publication of GUARDIAN)

As at October 20, the expected open market price of petrol was pegged at N99.9 per litre. Meaning we pay N12 per litre on subsidy at N87 per litre pump price. That is N619.2 million on 48 million litre per day. (See Oct 20 publication of Daily Trust)

I believe that the N99.9/N100 per litre is not so much for Nigerians to pay in order to end the madness and fraud associated with the fuel subsidy. It is a better option than financing the fraud perpetrated by marketers in the name of subsidy. It is better for the market to be open and regulated than condoning the act of hoarding the product aimed at panic buying at ridiculous price. Did I say it will also save the government N619million daily and N18.58billion monthly? Yes, that's what will happen. The N18.58billion that will be saved monthly will go a long way in financing capital infrastructures(especially the refineries), as well as empower the security of pipelines and other facilities.

Today, Nigerians are being subjected to paying N150 to N300 per litre for 'subsidised' petrol plus wasting manhour in petrol station simply because of some marketers' greed. It is time to separate the goats from the yam(thanks to our GEJ's Goat and Yam theory). Let us see which marketer will deliberately hoard and sabotage his own business in an environment of stiff competition when there is no hope of 'free' government money.

To members of the two main political camps(APC and PDP) that are always quick at uttering words such as "e be like say them don pay dis barcanista" "shey barcanista don port to APC?", I want to remind you all that Nigeria is not not just about PDP and APC fanaticism. I may have my own financial challenge but I have never benefited a kobo from any politician. My position is necessitated on the need for a progressive opposition and better Nigeria that we all will be proud to live in and call our own. Abeg, nobody pay barcanista shi-shi, and I am not interested in patronising any group for selfish gain




May God Bless Us All and Bless Nigeria

finally the political scientist has spoken
i always knew, they are the reason for all this.
atrocious avarice and heartless capitalist

The fourth problem is that of blackmail. What led to the fuel scarcity in April/May this year? The marketers after being paid N350billion, N31 billion and N154billion, came up with another N200billion request for payment. Their claim was that N159billion (of the N200billion) was for "exchange rate differential". The government said they won't pay until they verify the claim, the next day booooooooom! Fuel scarcity. As usual, Nigerians curse the government instead of looking at the issue.

Ajala needs to read this....... Barcanista always on point.... My PDP brother

dgalon:
finally the political scientist has spoken
i always knew, they are reason for all this.

The fourth problem is that of blackmail. What led to the fuel scarcity in April/May this year? The marketers after being paid N350billion, N31 billion and N154billion, came up with another N200billion request for payment. Their claim was that N159billion (of the N200billion) was for "exchange rate differential". The government said they won't pay until they verify the claim, the next day booooooooom! Fuel scarcity. As usual, Nigerians curse the government instead of looking at the issue.

I am not a conspiracy theorist. I have been wondering if there is any relationship between opposition to TSA and the recent fuel scarcity...

This has been my opinion, from time.
Especially since I learnt that the Nigerian Government spends #10.58 (The Punch Newspaper of November, 18yh, 2015, pg 21), almost eleven naira to subsidise each little of the premium motor spirit.

Now we are buying the gas for well over a #100, whereas, the official pump price is #87.

So what is the use of the subsidy.

Regardless of the fact that President Buhari, the APC, the NLC had castigated President GEJ for attempting to remove fuel subsidy which was for the good of the generality of Nigeria and Nigerians,

I think President Buhari should be bold enough to eat his vomit and throw away the subsidy.

Not possible

A socialist government is meant to resign or seek fresh mandate if it can't implement the primary campaign promises.

Buhari can't just jettison the key promise that brought him to power.

The downfall of Jonathan started with the attempted complete removal of petroleum subsidy (deregulation of downstream sector) in January, 2012 and this created the platform for strong opposition to the said PDP inhumane government notwithstanding that it was a well thought out policy and the best for the country.


Removal of fuel subsidy should only be implemented if it is part of any political party campaign talking point for which Nigerians voted the party into power.

Time to take Nigerian electorates for granted is over.

IsraeliAIRFORCE:
Not possible

A socialist government is meant to resign or seek fresh mandate if it can't implement the primary campaign promises.

Buhari can't just jettison the key promise that brought him to power.

Any social program that doesn't benefit the target, and even add more to their problem is not a social program.

Yes, Buhari came with lots of social promises that we all admit is impossible to implement considering the resources at our disposal. That has been established!

But how do we explain a subsidy scheme that should suppose to reduce financial burden on the massed but instead add more to the masses and the treasury?while fuel without subsidy is pegged at N100 per liter, fuel with subsidy is sold at N150 to N300 per litre plus wasted manhour. So you see, he has no choice but to implement the removal.

Barcanista almost lost his natural endowment to wailing!
I'm really happy for him that he could find himself back before it gets late!
You are really on point, and it shows you ain't just criticising, rather you are critiquing for the benefits of Nigerian Masses and out of patriotism!
I pray other Wailers follow your footstep!



Together (Progressives and Wailers) we can make it work!
Nigeria shall rise again!

Geraraheremehn:
Op what are you saying?? The junketeer in chief said he doesn't know what subsidy entails and your saying he should remove it are you a learner??



P.s : Buhari is a bloody terrorist...my fellow people of Maltina

How will your comment solve the problem at at hand?
Think like the OP!

Too long! Couldn't bring myself to read it.

Opinedecandid:
This has been my opinion, from time.
Especially since I learnt that the Nigerian Government spends #10.58, almost eleven naira to subsidise each little of the premium motor spirit.

Now we are buying the gas for well over a #100, whereas, the official pump price is #87.

So what is the use of the subsidy.

Regardless of the fact that President Buhari, the APC, the NLC had castigated President GEJ for attempting to remove fuel subsidy which was for the good of the generality of Nigeria and Nigerians,

I think President Buhari should be bold enough to eat his vomit and throw away the subsidy.

The difference between now and 2012 is that the difference between the pump price and open market price as at then was N75 per litre. That means Nigerians were subjected to morre than a 100% increase cost for the product without paliative. The case as at today is different as the difference in price is N12, while the marketers defraud Nigerians into paying 50% to 300% more than the open market price.

adeyemi2015:

How will your comment solve the problem at at hand?
Think like the OP!

My moniker is 4 u.

These is what happens when u buy 50litres of fuel @ #200/litre and your grandma pour it away and use it to fetch water

TonyeBarcanista:

Any social program that doesn't benefit the target, and even add more to their problem is not a social program.

Yes, Buhari came with lots of social promises that we all admit is impossible to implement considering the resources at our disposal. That has been established!

But how do we explain a subsidy scheme that should suppose to reduce financial burden on the massed but instead add more to the masses and the treasury?while fuel without subsidy is pegged at N100 per liter, fuel with subsidy is sold at N150 to N300 per litre plus wasted manhour. So you see, he has no choice but to implement the removal.

Nigerians should determine official policy of the government on social matters.


Planned Parenthood is a campaign issue in USA and so should "official" subsidy removal be in Nigeria.

The mandate should come from the electorates.

*NB: I have always supported complete deregulation and subsidy removal and will still defend it as the best policy to checkmate the cabals from riping off Nigerians.

StuntingBlack:
In light of your vivid opinion about subsidy, what Nigerians now seek for is A WAY OUT, NOT A WAY TO.
As an 'acclaimed' analyst, I think its probably more appropriate enlisting some of the ways Buhari can deal with the current situation and help stabilize fuel price. I doubt most PDPs with take this from you.

Mr TonyeBarcanista, we need a way out but most of us here still find it hard accepting that stoping the subsidy thing is a right step. How about you list practical ways of dealing MORE DIRECTLY with the problem

What ways do you mean? I am not an apostle of quick fix. I believe in strategic solution. I also believe in the Goat and Yam Theory, proposed by Jonathan in tackling problem like this.

As it is today, I am not sure if 60% of Nigerians have bought fuel for N87 per litre for a cummulative 6months in this 2015. It is either one artifical scarcity or the other by marketers just to cause panic buying, where the product will be sold for N150, N300, or even N500 per litre. Arresting and prosecuting some of these fraudsters seem not to be working. The practical solution is separating the goat from the yam ie removing subsidy. The government regulatory bodies will only ensure that nobody takes advantage of the masses while fixing our refineries and allowing the product sell at open market rate. The market isn't a monopolistic one, there is bound to be competition among players which will influence the price... Just like the Cement industry.

TonyeBarcanista:

The difference between now and 2012 is that the difference between the pump price and open market price as at then was N75 per litre. That means Nigerians were subjected to morre than a 100% increase cost for the product without paliative. The case as at today is different as the difference in price is N12, while the marketers defraud Nigerians into paying 50% to 300% more than the open market price.

I'm on your side.
The subsidy has to go.

But since it's easier and cheaper, with attendant glowing benefits to reduct the subsidy now. Then it should happen now.

IsraeliAIRFORCE:



Nigerians should determine official policy of the government on social matters.


Planned Parenthood is a campaign issue in USA and so should "official" subsidy removal be in Nigeria.

The mandate should come from the electorates.

*NB: I have always supported complete deregulation and subsidy removal and will still defend it as the best policy to checkmate the cabals from riping off Nigerians.

Bros, you will agree with me that the way Nigerians approach issues is different from our American counterparts. They are more enlightened than we are. It is the job of the elite and the government to push for favorable policies and enlighten the masses on the impact it will have in their lives. Some people don't know what subsidy is, they only know that government just de increase fuel price anyhow

The practical and possible solution is the use of "Fuel Voucher" which will be redeemable by every Nigerian electorate with INEC PVC. If you can't use yours then sell it to others.

Remove the damned subsidy and issue a "15 litres" pms quota per voter on presentation of INEC Card every month

TonyeBarcanista:

Bros, you will agree with me that the way Nigerians approach issues is different from our American counterparts. They are more enlightened than we are. It is the job of the elite and the government to push for favorable policies and enlighten the masses on the impact it will have in their lives. Some people don't know what subsidy is, they only know that government just de increase fuel price anyhow

The long term solution is for Nigeria to refine sufficient crude locally and if possible, strategise to become an exporter of refined petroleum products. That Nigeria exports crude and cant even find buyers for her crude at this time; and is importing refined product so heavily, is a scandal, sham, scam and shame that should have long entered the Guinness book of world records!. Apart from security and perhaps infrastructure, availability and affordability of PMS, DPK and AGO is the minimum key performance indicator (KPI) that we should use to assess any government in this country.

Difficult decision to make by the ruling party. They still remember how they forced the last government through mass protest to dump the subsidy removal despite the fact that they knew that the intention of the government is best for the country.
Coming back this early to talk of the the same issue will certainly worsen their already low rating.

Opinedecandid:


The subsidy has to go.

Gbam!

Lalasticlala, OAM4J, Mynd44, Afam4eva and Obinoscopy

TonyeBarcanista:
For about two weeks or more Nigerians have been wailing and crying over the scarcity of Premium Motor Spirit(PMS) otherwise known as petrol or 'fuel'. Since the whole drama started, I've been silently observing reactions of people. Most commentaries on the issue were more centred on the effect of the problem and not the problem itself or the solution to the problem. Even prominent Sai Buhari fans were not left out. How do we address a problem when our interest is on the symptoms and not the problem? What is the problem of this fuel scarcity? What is the solution? This I shall address in this article.

The Problem? Petrol Subsidy Is...
Every year, a large chunk of our scarce resources is spent on subsidising 48 million liters per day just to 'relieve the masses burden'(in quote). According to the fmr minister of finance Ngozi Iwaela, Nigeria spent a whopping N2.3 TRILLON in 2011(yes, N2.3trillion) in the name of petrol subsidizing the product at N80 per liter(while the masses buy @N65 per liter). Between 2012 and 2014, Nigeria spent an average of N1trillion every year on this subsidy payment. As at today, Nigeria is made to cough out N619 million everyday to PMS marketers in the name of subsidy payment. Yet, how many Nigerians buy this product at the subsidised rate of N87 per litre despite the exorbitant amount paid to marketers?

The problem is not just the exorbitant amount paid on subsidy, there is also the problem the fraud and manipulation perpetrated by petrol marketers and their friends/allies in government that shortchange the public. These marketers will always file payment invoice to the government even when some of them don't supply the said product. In fact, it is an open secret that some of them divert the product to neighbouring countries and still file for claims of payment.

There is the third problem of sabotage by marketers and their accomplices. They deliberately hoard some of the product so as to sell them above the approved price(like what is being experienced) after creating artificial scarcity and panic buying in order to make more money. Instead of buying at the approved price of N87/ltr, the masses are forced to pay between N150 to N300 per litre for the same product. This loss is different from the billions of public fund that the marketers directly shortchanged the government. In addition to this, valuable manhour is wasted on filling station queues by citizens that want to buy the product.
This is the reason behind the present scarcity of the product that we are experiencing for over two weeks.

The fourth problem is that of blackmail. What led to the fuel scarcity in April/May this year? The marketers after being paid N350billion, N31 billion and N154billion, came up with another N200billion request for payment. Their claim was that N159billion (of the N200billion) was for "exchange rate differential". The government said they won't pay until they verify the claim, the next day booooooooom! Fuel scarcity. As usual, Nigerians curse the government instead of looking at the issue.

A painful part of it is that nobody get convicted for the aforementioned crimes. In fact, the goats are quite aware that irrespective of the yam they eat, nothing will happen to them.

The Past Administration Missed It...
Let us recall that before the 'subsidy removal' in January 2012, the open market price of petrol was N138.59 per liter. The government was paying N73 per litre on subsidy while the masses were made to pay N65 per liter. The government of Jonathan on January 1, 2012 would later remove the subsidy completely because "it cannot be sustained" as claimed by the government. Protest and agitation ensued. The masses argument was that a 100% rise in the price of the product without palliative to ease the attendant suffering will only increase their suffering. The government on the other hand maintained that the subsidy can't be sustained. Eventually, there was a compromise. The masses were to pay N97 per litre while the government pay N41 per litre for the subsidy.

As God will have it, the open market price of the product dropped to N89.84 per liter in January 2015. A price lower than the subsidised N97 per litre as at then. The government was presented with an opportunity to end the subsidy regime while Nigerians will be paying N89.84 per litre for the product, a price lower than even the 'subsidised' product of N97/ltr as then was. The government instead chose to keep the subsidy by reducing the price of the product to N87/ltr. Let me quote the PPPRA's Executive Secretary, Farouk Ahmed


Was there any wisdom in keeping the subsidy at N3 per liter at a point when Nigerians can pay N90 per litre, a price lower than the then subsidised rate of N97 per liter? It is my opinion that Jonathan's government missed it.

The Solution? Subsidy Should Rest In Peace
As at July 2015, the landing cost of petrol was estimated at N123 per litre, while the open market cost of the product was pegged at N138 per litre. This means the government paid N51.6 per litre at N87/ltr pump price, ie spending N2.8Billion daily to service the subsidy of 48million litre per day.

As at September 10, the landing price of the product dropped to N93.93 per litre while the open market price was put at N109.42 per litre. With the pump price at N87 per litre, Nigeria is coughing out N22.42 per litre to service the subsidy and costing us N1.07billion daily on 48 million litre. (See Sept 10 publication of GUARDIAN)

As at October 20, the expected open market price of petrol was pegged at N99.9 per litre. Meaning we pay N12 per litre on subsidy at N87 per litre pump price. That is N619.2 million on 48 million litre per day. (See Oct 20 publication of Daily Trust)

I believe that the N99.9/N100 per litre is not so much for Nigerians to pay in order to end the madness and fraud associated with the fuel subsidy. It is a better option than financing the fraud perpetrated by marketers in the name of subsidy. It is better for the market to be open and regulated than condoning the act of hoarding the product aimed at panic buying at ridiculous price. Did I say it will also save the government N619million daily and N18.58billion monthly? Yes, that's what will happen. The N18.58billion that will be saved monthly will go a long way in financing capital infrastructures(especially the refineries), as well as empower the security of pipelines and other facilities.

Today, Nigerians are being subjected to paying N150 to N300 per litre for 'subsidised' petrol plus wasting manhour in petrol station simply because of some marketers' greed. It is time to separate the goats from the yam(thanks to our GEJ's Goat and Yam theory). Let us see which marketer will deliberately hoard and sabotage his own business in an environment of stiff competition when there is no hope of 'free' government money.

To members of the two main political camps(APC and PDP) that are always quick at uttering words such as "e be like say them don pay dis barcanista" "shey barcanista don port to APC?", I want to remind you all that Nigeria is not not just about PDP and APC fanaticism. I may have my own financial challenge but I have never benefited a kobo from any politician. My position is necessitated on the need for a progressive opposition and better Nigeria that we all will be proud to live in and call our own. Abeg, nobody pay barcanista shi-shi, and I am not interested in patronising any group for selfish gain
May God Bless Us All and Bless Nigeria

It would be a very good idea to stop the subsidy payments now since its removal wouldn't affect the pump price of petrol really much. However, that will be a very difficult task for the APC to do because of the inevitable backlash from the opposition. I totally support this suggestion though, subsidy should be removed and marketers should be closely regulated/monitored, else they would simply form a cabal, hoard the products and then extort billions from Nigerians.

IsraeliAIRFORCE:
Practical and possible solution is the use of "Fuel Voucher"

Remove the damned subsidy and issue a "15 litres" pms quota per voter on presentation of INEC Card every month

That will open another window of monumental fraud from marketers diverting the product on behalf of people to some other people faking PVCs just to get more vouchers. At present, we have little or no checks in the system.

Let subsidy just go, the government should revive the refineries so as to be able to satisfy local demand. With time, the price will drop significantly!

Fuel subsidy will rest in peace by the time the OPA (offshore processing agreement) of the 445,000 domestic crude oil allocation become operational.

Federal Govt is already planning subsidy removal next year. They are only bothered about the reactions of Nigerians.

Though, I didn't support the protests against GEJ in 2012, but it was totally wrong to remove subsidy then as the price will kill us.

Now is the appropriate time to do it without affecting the masses cos we are already buying it more than that amount.

zik4ever:
The long term solution is for Nigeria to refine sufficient crude locally and if possible, strategise to become an exporter of refined petroleum products. That Nigeria exports crude and cant even find buyers for her crude at this time; and is importing refined product so heavily, is a scandal, sham, scam and shame that should have long entered the Guinness book of world records!. Apart from security and perhaps infrastructure, availability and affordability of PMS, DPK and AGO is the minimum key performance indicator (KPI) that we should use to assess any government in this country.

That's why the subsidy have to go...

TonyeBarcanista:

That will open another window of monumental fraud from marketers diverting the product on behalf of people to some other people faking PVCs just to get more vouchers. At present, we have little or no checks in the system.

Let subsidy just go, the government should revive the refineries so as to be able to satisfy local demand. With time, the price will drop significantly!

Iran uses it and it's quite effective as the ATM.

Why is there no such fraud in the use of Bank ATM?

obailala:

It would be a very good idea to stop the subsidy payments now since its removal wouldn't affect the pump price of petrol really much. However, that will be a very difficult task for the APC to do because of the inevitable backlash from the opposition. I totally support this suggestion though, subsidy should be removed and marketers should be closely regulated/monitored, else they would simply form a cabal, hoard the products and then extort billions from Nigerians.

They would or they have been doing it? As for the opposition's backlash, I am sure it won't fly when we consider the benefit to the masses.

IsraeliAIRFORCE:


Iran uses it and it's quite effective as the ATM.

Why is there no such fraud in the use of Bank ATM?

That's because Iran have tight anticorruption laws, a better justice system and a better monitoring system. Also, they have both the infrastructure and technology which we don't have.

Most importantly, their attitude to fraud isn't like ours.