Nigeria is not benefitting from the high price .........

/
High revenue, high subsidy.

Net profit== zero.

Solution: Local refineries need to be operational. Otherwise, Nigeria is just moving in a circle.

/

What we export outweighs what we import. Nigeria is a blessed country with huge natural resources but these bastards called politicians won't allow us enjoy our natural privileges. That is why all of them are nursing longtime ambitions as if Nigeria is their career.

blackpanda:
The problem is that subsidy will wipe it off. As price of oil increases so does the price of importation of fuel. So it's not really a gain. This is why govt wanted to end subsidy. But the immediate pain on Nigerians will be too much.

LOOTING MODE ACTIVATED by the useless govt of self serving thieves and BLOODTHIRSTY TERRORISTS!

More revenue for thieves called leaders.
More suffering for the populace who might be faced with higher cost of imported petroleum products.

blackpanda:
The problem is that subsidy will wipe it off. As price of oil increases so does the price of importation of fuel. So it's not really a gain. This is why govt wanted to end subsidy. But the immediate pain on Nigerians will be too much.

Oh! So rising price of oil is a curse yet you lot endlessly vilified GEJ while harping on big earnings during his time? Did GEJ not pay more subsidy? So how did he manage to keep our economy afloat, with a single-digit inflation and a USD exchanging for N187?

InvertedHammer:
/
High revenue, high subsidy.

Net profit== zero.

Solution: Local refineries need to be operational. Otherwise, Nigeria is just moving in a circle.

/

...but you took to the streets in an ill-informed politically-motivated "Occupy Nigeria" protest when GEJ wanted to end the fraud called subsidy.

Minjim:



https://punchng.com/oil-soars-above-93-nigerias-revenue-prospects-brighten/?utm_source=telegram&utm_medium=social

Would this translate into improving the value of naira against dollar and bring down inflation in the prices of food commodities in real terms? Our government will soon start spewing trash.....mtheww

blackpanda:


Why can't u guys think Smh

Are you new to Nigeria system of government or you are just arriving the country

As for me I am not rejoicing

1.We will become more dependent on oil. I can see APC busy rejoicing now.

2.The money is still below our fiscal breakeven....of $133 per barrel, so whatever happens, we STILL HAVE TO TAKE LOANS.

3.Due to the prolonged drop in oil prices, we won't have enough cash because..

For instance, if there is a decline in oil prices and oil revenue, the lagging and collapsing non-oil export sector will not be able to compensate for the drop in oil revenue while domestic demand for the non-traded goods and imports remain sticky. Consequently, the country will be forced to borrow from the international financial market to compensate for the decline in oil revenue. Over time, external debts will increase and so will the debt service obligations. Even when oil prices go up later and there is another round of oil windfall, it is difficult to correct the earlier damage or distortions created by the initial or previous oil windfall. In some cases, the oil exporting country may be forced to adopt some form of structural adjustment program (SAP) to correct such distortions or imbalances. Some of these SAPs are painful and may increase the prevalence, depth and severity of poverty

Sourcer: Managing the dutch disease in Nigeria, 2004

4.We are also still paying subsidy, so that's more money down the hole.

5.APC government, no matter how much they are not PDP, still has no idea about how to make us a developed country. No removal of subsidy, no industrial development, and we still have security issues galore.


To sum up, it is bad news for the economy...and anyway...oil prices are projected to go down even further. That they are high now is largely because Ukraine. And Ukraine. Eventually, the Americans and Russians will come to a deal, and we would be back to square one.

In 1991, oil prices went up, and we had a windfall...gulf oil windfall. By 1993, the money was gone, and we even had a deficit budget.

Nigeria has to industrialize. APC better wake up to reality.

Can we stop borrowing now?

InvertedHammer:
/
High revenue, high subsidy.

Net profit== zero.

Solution: Local refineries need to be operational. Otherwise, Nigeria is just moving in a circle.

/

We have to remove subsidy now. We are spending a lot on debt reservicing because our debt is so high due to prolonged oil price crash from 2014, till last month.

But the thing is, Nigerians want low fuel prices, government does not want to remove subsides, because politics, and because fuel prices are low, not many people want to invest in refining at home ( unless your name is Dangote, and you have the collateral to get loans from banks like he did)..since subsidized prices means no profits.

Even with domestic refining, fuel isn't going to reach lower than 200 naira. I doubt Dangote is going to sell below international price since he has loans to pay back. But our addiction to cheap fuel means that he probably will, and then when the refinery collapses because of 'low prfit' we would be back again to square one.

danngnews:
Can we stop borrowing now?

Lol, you guys don't know why we are borrowing.

Oil prices have been in a crash since 2014. And since 2015, they have never even been above 90 dollars per barrel...until this month.

Meanwhile, our fiscal breakeven oil price (google it) has gone up from $122 in 2012, to 139 in 2017 and 133 in 2020. Oil prices have been consistenty below 80 dollars since 2015 and as low as 30 dollars or less in 2016 and 2020.

As a result, we take loans, or we starve. Simple.

And the loans have to be paid back....

Plus since we want fuel at cheap prices, we pay a subsidy. And the amount spent on subsides is rising, even if we end corruption, and end stealing, and end smuggling, the fact is, we cannot control the rising cost of production...so subsidy rises...which is why subsidy rose from N1 trillon a few years ago to over N3 trillion now (see why government wants subsidy gone?)

Until we become an industrial economy,and start earning more of our revenue in tax, and stop relying solely on oil, we will forever be a borrower. Oil prices are never where we want them

AntonVince:


...but you took to the streets in an ill-informed politically-motivated "Occupy Nigeria" protest when GEJ wanted to end the fraud called subsidy.

Most Nigerians, even GEJ loyalists then , opposed subsidy removal...because all they saw was N65 per liter was now N140 per liter.

I was never a GEJ supporter, but I saw the light then, and supported subsidy removal...but most people, even with all the explanation by NOI, SLS and company, refused to do so.

Nigerians have consistently opposed subsidy removal since 1993, when it was proposed to us that it had to go. The defence many used then is the defence many use now. Subsidy is what we 'benefit' from government.

Amsure most Buhari supporters too oppose subsidy removal now...which is why he made the bad decision to keep it recently. Well, we are all going to pay for it.

There is no brightening prospects here. Now they have to pay more under cost recovery (subsidy)

blackpanda:
The problem is that subsidy will wipe it off. As price of oil increases so does the price of importation of fuel. So it's not really a gain. This is why govt wanted to end subsidy. But the immediate pain on Nigerians will be too much.

This one is confusing crude oil for pms.
That word "wipe off," is misleading and poor for this context.

The net effect will be a positive revenue, more money for FG.

Urchman200:
i thought apc was blaming pdp for not saving when their was price boom? Why is price boom a cause for apc when Buhari and his supporters thought it was a blessing for Jonathan?

You get time explaining to person wey dem don use his brain for sacrifice for long , e nor fit everly get sense again, the stupidity don turn trademark

AK481:

This one is confusing crude oil for pms.
That word "wipe off," is misleading and poor for this context.

The net effect will be a positive revenue, more money for FG.

The problem is that as prices of oil goes up, so does the cost of producing fuel.

That means that for NNPC to keep fuel at N163 per liter, it has to increase the amount of money it needs from government in subsidy...which means that the subsidy cost increases (as seen recently...NNPC subsidy costs have risen from 1.2 trillion in 2019 to 3 trillion now).

And in case you have forgotten, years of low oil prices=loans taken=loans have to be paid back. (In December, we used our entire oil revenue for the month for loan servicing)

If we want to see more of the money, either NNPC reduces its subsidy cost, meaning it takes less money...and prices rise to N200 and above per liter at the pump, or it removes subsidy completely, and prices go up to N300 per liter (as postulated)

adecz:



Nothing to smile about, because
fuel subsidy payments will cancel out
any gains.

The subsidy increases in direct proportion
to the increase in crude oil prices.

That is buharinomics for you..☹️☹️☹️

The reason why subsidy payments increase is because the cost of production increases...so government has to pay more.

When oil prices dropped to $24 in 2020, that's when the cost of selling fuel went down to 124 naira per liter, because it did not cost too much to make one liter of petrol, as it would now that oil is at $93, which means that either we let fuel price rise with the oil price, or we pay more in subsidy costs to keep the pump price low.

If Buhari pays less in subsidy, but refuses to increase the pump price, the oil industry would sustain even more severe losses.

There is a cold reason why NNPC 's subsidy costs have jumped up this year. Rsiing oil prices.

blackpanda:
The problem is that subsidy will wipe it off. As price of oil increases so does the price of importation of fuel. So it's not really a gain. This is why govt wanted to end subsidy. But the immediate pain on Nigerians will be too much.

Another wise post from some one who gets it.

But the thing is, it is still good economics to end subsidy.

If we had ended the thing in 2012, when we had high oil revenues, we could have been reaping the benefits by now. But we did not, and here we are.

Pain or no pain, we have to remove subsidy. We can't continue like this.

backbencher:


The problem is that as prices of oil goes up, so does the cost of producing fuel.

That means that for NNPC to keep fuel at N163 per liter, it has to increase the amount of money it needs from government in subsidy...which means that the subsidy cost increases (as seen recently...NNPC subsidy costs have risen from 1.2 trillion in 2019 to 3 trillion now).

And in case you have forgotten, years of low oil prices=loans taken=loans have to be paid back. (In December, we used our entire oil revenue for the month for loan servicing)

If we want to see more of the money, either NNPC reduces its subsidy cost, meaning it takes less money...and prices rise to N200 and above per liter at the pump, or it removes subsidy completely, and prices go up to N300 per liter (as postulated)

I used the word net effect to make my position clear.

Let's do some maths.
1.7million barrel x 97 x470 in naira =revenue
If landing cost of pms is 300,(300-165)x30 million =subsidy

Assumptions:
We consume 30million litters per day which I think it's a lie

Racoon:
More looting galore because this will not stop the Buhari government from borrowing neither will it stop the fuel subsidy corruption.

1.Low oil prices since 2014 means we had to borrow. This is not a defence of Buhari, but a statement of fact.

2.Subsequently, we still have to service the loans

3.Subsidy has to go to end the subsidy corruption. Once you stop someone from making profit by forcing low prices on them, they will resort to underhanded means to earn money. That's the problem with subsides.

4.And we need a government that would find ways to end our reliance on oil and oil alone

Urchman200:
i thought apc was blaming pdp for not saving when their was price boom? Why is price boom a cause for apc when Buhari and his supporters thought it was a blessing for Jonathan?

don't ask BMC blackpanda too many questions. His brain may collapse. The last question he answered was from their media director. No go squeeze person brain

Codeye:
Hope they will take advantage

We want to hear from the Ministers,now that China is not ready to lend money, whether we still go to the European to borrow now that Oil Prices is rising!
We are still asking- how much do we make as Income and how much are our Expenses,as a Nation!
This simple Economics theory is what the Ministers- Finance, Works and Transportation are yet to tell Nigerians and why borrowing at all- whether Sukkuk or any Local Borrowing!

AK481:

I used the word net effect to make my position clear.

Let's do some maths.
1.7million barrel x 97 x470 in naira =revenue
If landing cost of pms is 300,(300-165)x30 million =subsidy

Assumptions:
We consume 30million litters per day which I think it's a lie

1.Your 30 million is not true. We were consuming 40 million by 2014, and by now it is up to 80-90 million.

2.As an aside, a lot of the inflation in consumption comes from smuggling. Nigeria has pump prices at N163, while all our neighbours sell fuel above N350, oil producers like Niger and Chad included. And smuggled Nigerian fuel is a hit in all those countries...even as far as Ghana self.
(In my opinon, we are consuming 50 million-80 million. High populaiton , poor power supply are the reasons. )

3.We are still servicing debts from the loans we have been taking since 2009.....and we take those loans because ......oil prices are and have never been where we want them to be. Plus, the oil price crash from 2014 to last month too has been very terrible.

4.All these impact our available revenue

5.As cost of crude rises, the cost of producing fuel from that crude will rise...or there would be no money to pay the people who bring out our crude. (Once the cost of the raw materails rises, the product would rise).

Subsides cover the difference between the cost of producing crude and the cost at the pump. If we do not pay high enough, there would be losses, and the oil industry would collapse...unless the government allows pump price to increase to a level where it can pay subsidy easily.

So, it does not matter your calculations. rISING subsidy costs plus debt servicing eats it up.

blackpanda:
The problem is that subsidy will wipe it off. As price of oil increases so does the price of importation of fuel. So it's not really a gain. This is why govt wanted to end subsidy. But the immediate pain on Nigerians will be too much.

dumbass as usual...

Always looking to shift post. If wicked Nigerians like you, Tinubu, Wole Soyinka and Tunder Bakare etc had allowed GEJ remove subsidy in 2012 we wouldn't be were we are. This administration talking about subsidy removal means none of you of have integrity.

Tueh

backbencher:


The reason why subsidy payments increase is because the cost of production increases...so government has to pay more.

When oil prices dropped to $24 in 2020, that's when the cost of selling fuel went down to 124 naira per liter, because it did not cost too much to make one liter of petrol, as it would now that oil is at $93, which means that either we let fuel price rise with the oil price, or we pay more in subsidy costs to keep the pump price low.

If Buhari pays less in subsidy, but refuses to increase the pump price, the oil industry would sustain even more severe losses.

There is a cold reason why NNPC 's subsidy costs have jumped up this year. Rsiing oil prices.

The whole point is that we should
be refining our crude oil, period❗️❗️

Buhari identified the importance of
this point during his presidential
campaign, when he promised to fix
the refineries & build new ones, a
promise he has woefully failed as he
even allowed functional one he met
to fail.

Imagine a situation where we are
using the equivalent of 20% of our
National budget to pay subsidy & we
have and maintain an agency called NNPC❗️❗️

adecz:



Nothing to smile about, because
fuel subsidy payments will cancel out
any gains.

The subsidy increases in direct proportion
to the increase in crude oil prices.

That is buharinomics for you..☹️☹️☹️

Exactly!
This ''Buharinomic' theory that states that ''the fuel subsidy increases in direct proportion to the crude oil prices'' was never heard of during previous administrations.
Still wondering how they were able to develope such a wonderful theory, despite their glaring cluelessness

adecz:



The whole point is that we should
be refining our crude oil, period❗️❗️

Buhari identified the importance of
this point during his presidential
campaign, when he promised to fix
the refineries & build new ones, a
promise he has woefully failed as he
even allowed functional one he met
to fail.

Imagine a situation where we are
using the equivalent of 20% of our
National budget to pay subsidy & we
have and maintain an agency called NNPC❗️❗️

GEJ in 2010 promised us three new refinereis (and even signed a deal). In 2011, there were 60 licences issued for refineries.

(I'm not doing GEJ vs Buhari, so hang on)

The reason why those three refienres were not built, and why most of those licences were not taken up, except for 5 (and 20 that are still active)..is simple.

Subsidy.

Subsidy means that government would be setting the price at which you sell oil/crude to 'help poor Nigerians', while they pay money ...the actual subsidy...to cover the loss.

The problem is

1.The rate at which cost of production rises , it does so at a rate that subsidy money cannot cover it adequately

2.Government cannot pay subsides because they don't have enough money from crude oil revenues to do so...because crude oil revenues are never high enough for the country.....due to fluctuating oil prices, and due to the fact that oil prices are below our fiscal breakeven

So, no one is going to build a refinery, (and we lost our four refinereis ) because the losses won't justify it. It does not matter how many times we build refinereis, they need to make profit on a continous basis for maintenance, expansions and upgrades, or they would all break down. Even dangote refinery.

Subsidy.

Macphenson:
, oil price is now close to $100/ barrel.

The excuse you have been giving for the failure of a president is that oil price is low.

Thank God no corrupt one to buy bra.

backbencher:


Lol, you guys don't know why we are borrowing.

Oil prices have been in a crash since 2014. And since 2015, they have never even been above 90 dollars per barrel...until this month.

Meanwhile, our fiscal breakeven oil price (google it) has gone up from $122 in 2012, to 139 in 2017 and 133 in 2020. Oil prices have been consistenty below 80 dollars since 2015 and as low as 30 dollars or less in 2016 and 2020.

As a result, we take loans, or we starve. Simple.

And the loans have to be paid back....

Plus since we want fuel at cheap prices, we pay a subsidy. And the amount spent on subsides is rising, even if we end corruption, and end stealing, and end smuggling, the fact is, we cannot control the rising cost of production...so subsidy rises...which is why subsidy rose from N1 trillon a few years ago to over N3 trillion now (see why government wants subsidy gone?)

Until we become an industrial economy,and start earning more of our revenue in tax, and stop relying solely on oil, we will forever be a borrower. Oil prices are never where we want them

You are defending failure and blaming anyone or anything but this government.

Is your more secured since Buhari took over government? Do you now buy food stuff cheaper? Do you now access cheaper health facilities?

Take umahi of ebonyi state for example, with one of the smallest allocation, he has been doing wonders in his state without blaming anyone.

Tell me one area of your life that have improved since Buhari took came to power.

AK481:

This one is confusing crude oil for pms.
That word "wipe off," is misleading and poor for this context.

The net effect will be a positive revenue, more money for FG.

Smh. You are export raw materials and importing finished products, and u still think u will make profit Naija schools have failed us o