| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by omohayek: 11:06pm On Nov 30, 2015 |
TheGoodJoe:
We built refineries in the past. I think Shell built the Port Harcourt refinery. What we need is a complete action plan to propel companies like these to support the building process. And what exactly do you think happened to those refineries? Gowon passed his "indigenization" decree which enriched a few Nigerian cronies at the cost of driving away foreign investment, which is why we are where we are today! The only action plan needed is to get the Nigerian government out of the refined petroleum business entirely, which will kill four birds with one stone: it will incentivize foreign direct investment into the sector, it will remove a huge source of corruption in Nigerian politics, it will remove the market distortions which damage alternative means of transportation such as rail, and it will free up scarce government revenue for much more important tasks, such as education, infrastructure, basic healthcare and policing. 1 Like |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by wordychap: 11:49pm On Nov 30, 2015 |
Remove subsidy?
Then what happens when crude oil price goes up? Cost of basic commodities skyrockets or d govt. reintroduces subsidy right?
leave d subsidy and solve d problems causing d scarcity of PMS!
U can never tell with Nigerians; the artificial problems they'll create on subsidy removal. |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by omohayek: 12:48am On Dec 01, 2015 |
wordychap:
Remove subsidy?
Then what happens when crude oil price goes up? Cost of basic commodities skyrockets or d govt. reintroduces subsidy right?
leave d subsidy and solve d problems causing d scarcity of PMS!
U can never tell with Nigerians; the artificial problems they'll create on subsidy removal. How exactly are these problems going to be solved when the fuel subsidy itself is one of the reasons why there's a shortage of refined petrol and kerosene? Do you realize that there are no such shortages for other petroleum products which aren't regulated? http://tribuneonlineng.com/node/21814As for the idea that unsubsidized oil prices will cause the cost of basic commodities to rise, the absence of fuel causes the exact same problem: time has value, and if people have to wait in the sun for days to buy limited amounts of petrol, the costs will be passed down the line to consumers. If you're really worried "artificial problems", you should be begging for these subsidies to go. That price caps and subsidies cause shortages and distort markets, while offering windfall profits to only a few well-connected insiders, is something taught in any Economics 101 class. https://en.wikipedia.org/wiki/Price_controlsAnyone who thinks there is any meaningful solution to Nigeria's fuel shortages other than total deregulation needs to read up on the history of the Soviet Union, North Korea, Cuba or any other country where governments tried to set prices for basic necessities. If you want to pretend that the Nigerian government can afford to dish out artificially cheap fuel, you must be prepared to waste a lot of your time pretending that said fuel will be easily available. Meanwhile, money that could have been spent on vaccinating millions of children, sending them to school and building good roads will be funneled to fuel "connected" marketers so they can buy more homes in London's Kensington and Mayfair. 3 Likes |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by Excuzeme: 1:34am On Dec 01, 2015 |
dgalon:
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.
If #89+ was the open market price in back then when Crude was being sold for around $60/barrel, is there any justification for asking for ANY SUBSIDY TODAY, when crude is being sold for around $41/Barrel .... or is the open Market price of PMS still the same #89+.....that we are still paying #87 at the pump?
Barcanistas' analysis is hogwash and only illiterates like him jump at such pedestrian conclusions.
Fuel scarcity as of today, is the handiwork of "Economic Saboteurs", some of whom are driven by sheer Greed, .....while some are driven by their sole intent of giving this Govt a bad name. |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by Excuzeme: 1:41am On Dec 01, 2015 |
omohayek:
And what exactly do you think happened to those refineries? Gowon passed his "indigenization" decree which enriched a few Nigerian cronies at the cost of driving away foreign investment, which is why we are where we are today!
The only action plan needed is to get the Nigerian government out of the refined petroleum business entirely, which will kill four birds with one stone: it will incentivize foreign direct investment into the sector, it will remove a huge source of corruption in Nigerian politics, it will remove the market distortions which damage alternative means of transportation such as rail, and it will free up scarce government revenue for much more important tasks, such as education, infrastructure, basic healthcare and policing. Stop these lazy mentality!
Since 1999, virtually every problematic sector of the Nigerian economy has been hinged on "Foreign Investors" coming to dump their cash and invest in such sectors, as long as we continue to increase the "cost" of such service to the populace!...... before the sector can develop!
Truth is nothing like that is ever going to happen! Foreign investors are not silly and stupid!
At best, their will be "short-term" profit-takers who are no different from the 419 economist and political jobbers that hinge the development of the sectors, on such phantom investors, in the first place!
Govt simply needs to take the bull by the horns, build at least two brand-new refineries and then lease them out to the private sector, to run and pay the Govt back it's investment, with some profit.
That is how it is done in saner climes. 3 Likes |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by omohayek: 9:03am On Dec 01, 2015 |
Excuzeme:
Since 1999, virtually every problematic sector of the Nigerian economy has been hinged on "Foreign Investors" coming to dump their cash and invest in such sectors, as long as we continue to increase the "cost" of such service to the populace!...... before the sector can develop!
Do you not see the irony of you writing this on an internet forum that you can only browse because private foreign investors were willing to pay for fiber to be run down the West African coast, and other private investors stepped in to correct decades of NITEL failure? Excuzeme:
Govt simply needs to take the bull by the horns, build at least two brand-new refineries and then lease them out to the private sector, to run and pay the Govt back it's investment, with some profit.
That is how it is done in saner climes. Oh really? Which climes might those be? America? The UK? Japan? Where, exactly? Because nowhere in Europe, North America or East Asia will you find governments capping fuel prices and subsidizing its sale to consumers. How about bringing some facts to the table, instead of simply asserting that your wishes are facts? Your wanting fuel to be artificially cheap will not magically make it so, government or no government. It's shocking how ignorant of basic economics so many "educated" Nigerians are, and how tenaciously they cling to "government" as the solution to everything despite having so much experience with government corruption and ineptitude. In any case, even if the Nigerian government were run by Singaporean bureaucrats, where exactly do you expect it to find the money to build new refineries when it can't even cover its current outgoings from its incoming revenue - thanks in large part to the fuel subsidy you love so much. |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by Hakagure: 3:49pm On Dec 15, 2015 |
Normally I dont like paid commentators, but when I do.. I enjoy The artist formerly known as Barcanista. |
| Re: Fuel Scarcity: It Is Time For Fuel Subsidy To "Rest In Peace" by ajepako(f): 4:36pm On Dec 15, 2015 |
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 Nice one Tonye.. 
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