So, at the end of the day, the question being asked by fuel subsidy supporters is


WHY CAN'T THE GOVERNMENT STOP FUEL SMUGGLING.?

It is a good question, and one I agree with myself. The APC government, and precceding governments have failed in this regard. APC in particular was voted in on change mantra...and all they could do was close the borders (throwing out the baby with the bathwater, and it DID NOT WORK at all.

Well, the first reason why is that smugglers are not all 'Rich Hausa-Fulani dudes moving their tankers to Niger Republic' ...it is Nigerians of all tribes and regions, and Nigerians from rich to poor who do it. Stopping them would involve a full fledged war of the kind we cannot fight well or win.

(Or we find money and bulid the ulitmate border wall...and shoot anyone carrying jerrycans across the border...not going to work).


But the thing is, countries who subsidise , ALL have smuggling issues.

Below is part of a reply to someone on another thread...but I am putting it here, with some edits and additions.

nairalanda1:




You can never stop smuggling once you subsidise fuel. And Nigeria is not the only country. This causes much of the inflation, and as NNPC chair once said, a tanker taken across the border earns N30m in one trip.

Libya sells fuel below N50 a liter, and has a problem. They have even resorted to using airstrikes on smugglers. As recently as last month.

Venezuela too, for years

Iran too subsidises fuel and has a smuggling problem as well.

Angola has cheap fuel, and a big smuggling problem too

See, another reason why we have to remove fuel subsidy. This is one case where we really do have to throw out the baby with the bathwater.


Bonus: Libya bombs fuel smugglers



DISCLAIMER

I do not support this APC government, or the one before it, or the PDP governments before it. Nigeria is a poor country, and I do not feel that, subsidy removal nothwistanding, this government has the gumption to make the hard decisions we need to become a stronger nation economically.

I also do not work for any oil company, or in anyone;'s propaganda department. My views on fuel subsidy have been formed over the last 12 years , ever since I got woken up in 2011 by GEJ's propaganda adverts on fuel subsidy and why it was useless.

nairalanda1:
So, at the end of the day, the question being asked by fuel subsidy supporters is


WHY CAN'T THE GOVERNMENT STOP FUEL SMUGGLING.?

It is a good question, and one I agree with myself. The APC government, and precceding governments have failed in this regard. APC in particular was voted in on change mantra...and all they could do was close the borders (throwing out the baby with the bathwater, and it DID NOT WORK at all.

Well, the first reason why is that smugglers are not all 'Rich Hausa-Fulani dudes moving their tankers to Niger Republic' ...it is Nigerians of all tribes and regions, and Nigerians from rich to poor who do it. Stopping them would involve a full fledged war of the kind we cannot fight well or win.

(Or we find money and bulid the ulitmate border wall...and shoot anyone carrying jerrycans across the border...not going to work).


But the thing is, countries who subsidise , ALL have smuggling issues.

Below is part of a reply to someone on another thread...but I am putting it here, with some edits and additions.




See, another reason why we have to remove fuel subsidy. This is one case where we really do have to throw out the baby with the bathwater.


Bonus: Libya bombs fuel smugglers



DISCLAIMER

I do not support this APC government, or the one before it, or the PDP governments before it. Nigeria is a poor country, and I do not feel that, subsidy removal nothwistanding, this government has the gumption to make the hard decisions we need to become a stronger nation economically.

I also do not work for any oil company, or in anyone;'s propaganda department. My views on fuel subsidy have been formed over the last 12 years , ever since I got woken up in 2011 by GEJ's propaganda adverts on fuel subsidy and why it was useless.

Good.
But pls why did you say GEJ's adverts on subsidy was a 'propaganda' & useless?

goldenarrow:

Good.
But pls why did you say GEJ's adverts on subsidy was a 'propaganda' & useless?

1.Propaganda is not necessarily a negative term all the time. (Also, being a bit sarcastic there).

2.Useless in that context refers to subsidy, not to the propaganda messages.

It’s the government’s duty to protect our borders

All developed and developing responsive nations have ways they are subsidizing their citizens consumption

Even some countries have free public transportation systems for their citizens and you guys should quit defending bad policies that will only end up benefiting the initiators of the policies

Just mark my word, the so call money saved in the process will end in private pockets

ican2020:
It’s the government’s duty to protect our borders

Which they have done by basically taking away the advantage that the smuggler had...artificially low nigerian PMS prices.

Yes, they should protect the borders. But the smuggling thing was not just big men, it was small people...hundreds of them, carrying petrol in small amounts...across many points in the borders.

The only way that such could be stopped was by building large border walls, manning everywhere with armed soldiers, and so forth...and even then, the profit earned from smuggling is such that people can be bribed by smuggler, and the smuggler goes home with a substantial profit.

Finally, no country that subsidises fuel has been able to stop smuggling. Even Saudi has a problem with fuel smuggling. If no country has been able to stop it, why should Nigeria be different?

APC has failed, but at the same time, let us also be realistic too.Sometimes stopping crime means making it difficult to commit crime indirectly.

When Obasanjo became president, he increased price of fuel and promised to use the proceeds to fix our roads upgrade our infrastructure and they also told the world that fuel is cheaper than bottled water

The issue of bad eggs among us transporting the fuel to our neighboring countries also came up

The question now is how many infrastructures did Obasanjo and others who came after him provided for Nigerians

We have all refused to learn from history cause we prefer to do the same dance the same way year in year out, regime in regime out and expect to get different result

That’s is pure insanity

ican2020:


All developed and developing responsive nations have ways they are subsidizing their citizens consumption

Even some countries have free public transportation systems for their citizens and you guys should quit defending bad policies that will only end up benefiting the initiators of the policies

Just mark my word, the so call money saved in the process will end in private pockets

1.First, not all developed and developing countries are subsidising their citizens consumption. Even those that do so, don't do the explicit subsides that we do (US pays subsides to its refineries, not the end consumer)

2.Second, subsides are paid directly from tax income over there, not from the oil income as we do here in Nigeria

3.Third, we don't earn enough money to pay for subsides. Our earnings from oil are enough for a country of less than 15 million , not the 200 million plus we are.

4.There is no such thing as free public transport. Public transport abroad is mostly paid for by taxation again. Our tax to gdp ratio is too low to pay for free public transport....which is why the debt management office has recently advised the government to improve tax collection.

5.Yes they chop the money because most of us spend too much time kvetching, rather than using democracy to actively hold leaders to account.

6.A problem with our subsidy is that the cost of production goes up every year as does cost of transport. With it goes the cost of subsidy. As a result, if we kept the subsidy, by this time next year, the cost of keeping fuel at N195 or less could be all our revenue plus borrowed money.

What really leads to Smuggling is insincerity, bad faith, greed, lack of real initiative and very poor policies that are based on satanic mind set

Until majority of Nigerians decides to use their brains positively and differently, Nigeria will never go forward

ican2020:
When Obasanjo became president, he increased price of fuel and promised to use the proceeds to fix our roads upgrade our infrastructure and they also told the world that fuel is cheaper than bottled water

The issue of bad eggs among us transporting the fuel to our neighboring countries also came up

The question now is how many infrastructures did Obasanjo and others who came after him provided for Nigerians

We have all refused to learn from history cause we prefer to do the same dance the same way year in year out, regime in regime out and expect to get different result

That’s is pure insanity

Obasanjo also removed toll gates...which was really a bigger problem than his partial removal of fuel subsidies. That cut income for road repairs and upgrades. (In the sane countries you were praising above, money for road repairs is raised from tolls on the road).

Again, we don't have a lot of good things because all our leaders , Obasanjo especially, ran economies based on oil revenue....which is enough for a nation of less than 15 million...not the 160m we were at 2006, or the 220 million we are now.

If we want better infrastructure...we have to earn more money, and it starts by removing subsides, attracting foreign investment, fighting corruption at all levels, and basically making the hard choices now.

Not pretending things be cheap.

ican2020:
What really leads to Smuggling is insincerity, bad faith, greed, lack of real initiative and very poor policies that are based on satanic mind set

Until majority of Nigerians decides to use their brains positively and differently, Nigeria will never go forward

Nope, the fact is , fuel was costing N490 in Benin(as an example) in April this year, while it cost N195 here.

Any smuggler can just take some fuel across the border, and earn big cash.

Greed , yeah, driuves it



But, the real problem with fuel subsides is the fact that the production and transport cost of fuel rises year in and year out....and we need to spend a larger amount of our revenue...until we have to reduce costs by rasing prices, and partially removing subsides...or the fuel subsidy cost would grow larger than our revenue, and even amount borrowed.

Take a look at the image below...it shows subsidy cost as a percentage of our revenue from 2010-19. Focus on 2010 to 2012, and 2014-17. Note that when there was fuel price increases, subsidy costs fell like magic...in 2012, fuel went up to N97 from N65, and 2015, fuel went up from N87 t0 N145......

nairalanda1:


1.First, not all developed and developing countries are subsidising their citizens consumption. Even those that do so, don't do the explicit subsides that we do (US pays subsides to its refineries, not the end consumer)

2.Second, subsides are paid directly from tax income over there, not from the oil income as we do here in Nigeria

3.Third, we don't earn enough money to pay for subsides. Our earnings from oil are enough for a country of less than 15 million , not the 200 million plus we are.

4.There is no such thing as free public transport. Public transport abroad is mostly paid for by taxation again. Our tax to gdp ratio is too low to pay for free public transport....which is why the debt management office has recently advised the government to improve tax collection.

5.Yes they chop the money because most of us spend too much time kvetching, rather than using democracy to actively hold leaders to account.

6.A problem with our subsidy is that the cost of production goes up every year as does cost of transport. With it goes the cost of subsidy. As a result, if we kept the subsidy, by this time next year, the cost of keeping fuel at N195 or less could be all our revenue plus borrowed money.

In four years time, Nigeria will sink deeper into more economic crisis until we are ready to use Nigeria’s wealth to work for Nigeria
Nigeria is over blessed by God almighty,?
Don’t let anyone deceive you, the wealth we have in Nasarawa & Plateau States only is more than enough to fix West Africa
What we lack is the will to turn things around and one’s that will issue is resolved, our story will change within few months
I need to take a walk cause we are not ready to move forward

ican2020:

In four years time, Nigeria will sink deeper into more economic crisis until we are ready to use Nigeria’s wealth to work for Nigeria
Nigeria is over blessed by God almighty,?
Don’t let anyone deceive you, the wealth we have in Nasarawa & Plateau States only is more than enough to fix West Africa
What we lack is the will to turn things around and one’s that will issue is resolved, our story will change within few months
I need to take a walk cause we are not ready to move forward

The problem is, what do we use the raw materials we have for?

See, like I said, I don't back any of our politicans because none of them have a policy where we can use our raw materials to develop manufactured goods and services for the world....that is how rich countries make money.

We have been in economic crisis for as long as I can remember...because we sell raw materials...whose prices we do not control. Like now, we need oil to be at $130 and above to earn enough for our needs. But oil prices are not set by us most of the time.

We also do not collect enough tax...largely because most of us are poor. That is understandable...as most Nigerians won't be able to pay tax the way they do in the developed world...but that leads to a situation where we rely too too much on oil money...which is not even enough for 20 million people, talkless 200 million plus people.

At the end of the day, something had to give. If we kept paying subsides...and please, I am not excusing any corrupt leader, I am not praising tinubu, or cursing Obi, or whoever...just stating fact....it would eventually have outstripped our income, and then we would have had to really overborrow...and right now, we don't have the GDP to sustain any borrowing.

We are not the masters of our destiny right now

nairalanda1:


The problem is, what do we use the raw materials we have for?

See, like I said, I don't back any of our politicans because none of them have a policy where we can use our raw materials to develop manufactured goods and services for the world....that is how rich countries make money.

We have been in economic crisis for as long as I can remember...because we sell raw materials...whose prices we do not control. Like now, we need oil to be at $130 and above to earn enough for our needs. But oil prices are not set by us most of the time.

We also do not collect enough tax...largely because most of us are poor. That is understandable...as most Nigerians won't be able to pay tax the way they do in the developed world...but that leads to a situation where we rely too too much on oil money...which is not even enough for 20 million people, talkless 200 million plus people.

At the end of the day, something had to give. If we kept paying subsides...and please, I am not excusing any corrupt leader, I am not praising tinubu, or cursing Obi, or whoever...just stating fact....it would eventually have outstripped our income, and then we would have had to really overborrow...and right now, we don't have the GDP to sustain any borrowing.

We are not the masters of our destiny right now

Oga all your analysis is rubbish if corruption is not fought, subsidy or no subsidy, the result will be the same - FAILURE

Brendaniel:


Oga all your analysis is rubbish if corruption is not fought, subsidy or no subsidy, the result will be the same - FAILURE

Yeah, we can fight corruption, and we should, but at the end, government cannot do anything about the cost of producing and transporting one liter of fuel

Fighting corruption only saves up some cash, and slows the rate of decline...but the cost of producing and transporting fuel is something we can co nothing about.

And as it rises, so does the cost of subsidy.....

If we stopped corruption and looting, and smuggling, maybe we delay subsidy removal by a further two years.

P.S : We ain't the masters of our destiny right now, because right now we are spending most of our revenue on the subsidy, even if we minus the losses from smuggling.

nairalanda1:


Yeah, we can fight corruption, and we should, but at the end, government cannot do anything about the cost of producing and transporting one liter of fuel

Fighting corruption only saves up some cash, and slows the rate of decline...but the cost of producing and transporting fuel is something we can co nothing about.

And as it rises, so does the cost of subsidy.....

If we stopped corruption and looting, and smuggling, maybe we delay subsidy removal by a further two years.

P.S : We ain't the masters of our destiny right now, because right now we are spending most of our revenue on the subsidy, even if we minus the losses from smuggling.

Oga everything is you said is still rubbish if corruption is not fought because the end result will still remain failure,

It is like a child who is very brilliant and read very well for his exam and he was given money to buy Biro and pencil he will use to write the exam a day before the exam, only for him to use the money to buy drinks and went into the exam hall without a pen or pencil and couldn't write anything throughout the exam.

He will fail, so whether he read or he did not read or he was brilliant or dull in academics, at that point it means nothing, because even the dullest student there with a pen will still score higher than him.

Brendaniel:


Oga everything is you said is still rubbish if corruption is not fought because the end result will still remain failure,

It is like a child who is very brilliant and read very well for his exam and he was given money to buy Biro and pencil he will use to write the exam a day before the exam, only for him to use the money to buy drinks and went into the exam hall without a pen or pencil and couldn't write anything throughout the exam.

He will fail, so whether he read or he did not read or he was brilliant or dull in academics, at that point it means nothing, because even the dullest student there with a pen will still score higher than him.

Yeah, you keep using the word failure, because you think I am defending corruption.

I am not, and let me reiterate myself again....corruption has to be gone.

But corruption is not the main issue with subsides....it is a symptom even.

The main issue with subsidy is simple...so long as the cost of production and the cost of transport rises, so does the cost of subsidy.

Crruption happens because

1.The price fixing allows easy smuggling.

2.Free money, regardless of whether NNPC is working or not...provides opportunites for corruotion

But even minusing corruption, so long as costs of production rises, as well as cost of transport, the eventual end is that subsides will rise higher than the revenue we earn.

So, it had to go man. That's why all the three candidates all said subsidy should go. At the rate it was going...we were going to run out of money to pay for the thing.

Man, fuel is expensive.

nairalanda1:


Yeah, you keep using the word failure, because you think I am defending corruption.

I am not, and let me reiterate myself again....corruption has to be gone.

But corruption is not the main issue with subsides....it is a symptom even.

The main issue with subsidy is simple...so long as the cost of production and the cost of transport rises, so does the cost of subsidy.

Crruption happens because

1.The price fixing allows easy smuggling.

2.Free money, regardless of whether NNPC is working or not...provides opportunites for corruotion

But even minusing corruption, so long as costs of production rises, as well as cost of transport, the eventual end is that subsides will rise higher than the revenue we earn.

So, it had to go man. That's why all the three candidates all said subsidy should go. At the rate it was going...we were going to run out of money to pay for the thing.

Man, fuel is expensive.

Still rubbish, the end result is still failure because Tinubu is not tackling corruption, the end product = FAILURE

The problem is not the subsidy because it is corruption that even brought the subsidy in the first place... why not tackle the corruption and see the subsidy go away by itself...

The best way to cure sickness is by finding the cause of that sickness and tackling it, corruption is the cause of subsidy, take away corruption and subsidy dies...

Brendaniel:


Still rubbish, the end result is still failure because Tinubu is not tackling corruption, the end product = FAILURE

The problem is not the subsidy because it is corruption that even brought the subsidy in the first place... why not tackle the corruption and see the subsidy go away by itself...

The best way to cure sickness is by finding the cause of that sickness and tackling it, corruption is the cause of subsidy, take away corruption and subsidy dies...

Well, ending it here.

From what you have said here, you don't understand what a subsidy is, or why it came into place, and why it is damaging to our economy.

That's why you don't get what I am saying.

I'll drop this here. Also know this, I still agree with you that we should fight corruption.

The way that subsidy, being the difference between the price paid by the consumer and the cost of supply is implemented in Nigeria is that the Federal Government fixes the pump price for gasoline and then pays the difference between that and the open market price.

Currently, the cost of supply of PMS is around N396 per litre. However, the same litre of fuel is sold to consumers at N165 per litre at the pump. Now, using the definition above, every litre of fuel consumed by Nigerians is subsidised by the Federal Government by at least N231.


Source: Reflections on fuel subsidy regimen , The Guardian , 14 AUGUST 2022. Available online.

nairalanda1:


Well, ending it here.

From what you have said here, you don't understand what a subsidy is, or why it came into place, and why it is damaging to our economy.

That's why you don't get what I am saying.

I'll drop this here. Also know this, I still agree with you that we should fight corruption.

Oga stop talking rubbish, I understand fully what subsidy is, and what you quoted under is still another rubbish, the reason why refineries are not working is because of corruption, leave all the prices you are quoting because it is total nonsense when corruption is involved, the government does not need to spend a dime to subsidize fuel and it will available and very affordable for Nigerians if only they do the right thing, that is why I said the payment of cash for subsidy in the first place is because of corruption...

Brendaniel:


Oga stop talking rubbish, I understand fully what subsidy is, and what you quoted under is still another rubbish, the reason why refineries are not working is because of corruption, leave all the prices you are quoting because it is total nonsense when corruption is involved, the government does not need to spend a dime to subsidize fuel and it will available and very affordable for Nigerians if only they do the right thing, that is why I said the payment of cash for subsidy in the first place is because of corruption...

You do not understand what a subsidy is.

That's why you are calling my comment rubbish.

Good morning.

P.S : And stop being abrasive. This is a website, not your life.

nairalanda1:


You do not understand what a subsidy is.

That's why you are calling my comment rubbish.

Good morning.

P.S : And stop being abrasive. This is a website, not your life.

Subsidy
A subsidy or government incentive is a type of government expenditure targeted towards individuals and households, as well as businesses with the aim of stabilising the economy. It ensures that individuals and households are viable by having access to essential goods and services while giving businesses the opportunity to stay afloat and/or competitive.

https://www.wordnik.com/words/subsidy

Oga you are still talking rubbish, I've known you for a while here from all your previous monikers like Subsidywise and so on and you keep talking rubbish and I'm telling you that corruption is the major problem not subsidy, remove corruption and the subsidy will go if not whether they remove subsidy or not, both the government, policies or what ever they implement will always head in one direction = FAILURE

Brendaniel:


Subsidy
A subsidy or government incentive is a type of government expenditure targeted towards individuals and households, as well as businesses with the aim of stabilising the economy. It ensures that individuals and households are viable by having access to essential goods and services while giving businesses the opportunity to stay afloat and/or competitive.

https://www.wordnik.com/words/subsidy

Oga you are still talking rubbish, I've known you for a while here from all your previous monikers like Subsidywise and so on and you keep talking rubbish and I'm telling you that corruption is the major problem not subsidy, remove corruption and the subsidy will go if not whether they remove subsidy or not, both the government, policies or what ever they implement will always head in one direction = FAILURE

Yeah you are right, and I showed you how it works /is done in Nigeria

And calm down, this your use of the word rubbish makes you look like a teenager.

nairalanda1:


Yeah you are right, and I showed you how it works /is done in Nigeria

And calm down, this your use of the word rubbish makes you look like a teenager.

And I'm telling you that it is being done in a corrupt way, subsidy in itself is not a bad if it is done rightly but that is not even the problem here in Nigeria, corruption is what brought subsidy in the first place, tackle that and see subsidy go away.....


Using the word rubbish is because I'm very angry with you, your persistence with the nonsense narrative of subsidy, if you channeled the same energy into the fight against corruption it would be different because I know all your narrative is only going to bring FAILURE if it is adopted without fighting corruption, so why won't I call it rubbish if in the end will still produce FAILURE

Brendaniel:


And I'm telling you that it is being done in a corrupt way, subsidy in itself is not a bad if it is done rightly but that is not even the problem here in Nigeria, corruption is what brought subsidy in the first place, tackle that and see subsidy go away.....


Using the word rubbish is because I'm very angry with you, your persistence with the nonsense narrative of subsidy, if you channeled the same energy into the fight against corruption it would be different because I know all your narrative is only going to bring FAILURE if it is adopted without fighting corruption, so why won't I call it rubbish if in the end will still produce FAILURE

And if subsides go away, prices still go up.

So, at the end, same result.

p.s: You people should stop taking this site serious.

nairalanda1:


And if subsides go away, prices still go up.
So, at the end, same result.

p.s: You people should stop taking this site serious.

The price should not go up as much as it is if they do the right thing, why should we still be importing fuel as at 2023, the cost freight alone then commissions at various level of the sale and delivery will jack the price up for something we can locally refine here, see I have done petroleum business before and I know how everything works from sales of crude to refining and sales again to trucking, if you know the chains of commissions in the entire process from extraction to where the consumer fills it in his tank, you will marvel, the longer the distance, chain and process and delivery the more the commission, you now imagine sending crude oil abroad then bring it back, I've done the business both locally and internationally, Nigerians are been defrauded big time, corruption is the major problem..

Brendaniel:


The price should not go up as much as it is if they do the right thing, why should we still be importing fuel as at 2023, the cost freight alone then commissions at various level of the sale and delivery will jack the price up for something we can locally refine here, see I have done petroleum business before and I know how everything works from sales of crude to refining and sales again to trucking, if you know the chains of commissions in the entire process from extraction to where the consumer fills it in his tank, you will marvel, the longer the distance, chain and process and delivery the more the commission, you now imagine sending crude oil abroad then bring it back, I've done the business both locally and internationally, Nigerians are been defrauded big time, corruption is the major problem..

Anyway, at the end, NNPC is fixing its refineries, Dangote is getting his refinery working, and so forth

nairalanda1:




Anyway, at the end, NNPC is fixing its refineries, Dangote is getting his refinery working, and so forth

something they have been fixing since 2015 and you believe them , last year alone they still allocated 1.5 billion dollars to fix the port harcort refinery, that it will be ready by June this year or so, June is almost finishing, do you know how much they've spent since 2015, billions of dollars the Dangote refinery I don't see it as a saviour either, The same way Dangote's cement is not cheap is the same way the petrol might be, Once Dangote is monopoly he takes full advantage of it...

nairalanda1:


Yeah you are right, and I showed you how it works /is done in Nigeria

And calm down, this your use of the word rubbish makes you look like a teenager.

I'm sorry if my rubbish word was harsh, I'm just angry, Nigerians have suffered too much and some don't even know, the deceit is too much....

Brendaniel:


something they have been fixing since 2015 and you believe them , last year alone they still allocated 1.5 billion dollars to fix the port harcort refinery, that it will be ready by June this year or so, June is almost finishing, do you know how much they've spent since 2015, billions of dollars the Dangote refinery I don't see it as a saviour either, The same way Dangote's cement is not cheap is the same way the petrol might be, Once Dangote is monopoly he takes full advantage of it...

In this case, there is reason to believe they are serious this time, as a side effect of subsidy removal is that domestic refining becomes profitable again.

nairalanda1:


In this case, there is reason to believe they are serious this time, as a side effect of subsidy removal is that domestic refining becomes profitable again.

Oga, they are not serious, the same set of people who have been in charge are the same set of people now.... Nothing new

Brendaniel:


Oga, they are not serious, the same set of people who have been in charge are the same set of people now.... Nothing new

Well, this time, they are.

I expect more licenced private refineries to take up the licences and start working...because right now they would be able to get loans to start work.

nairalanda1:


Well, this time, they are.

I expect more licenced private refineries to take up the licences and start working...because right now they would be able to get loans to start work.

Well you can have faith in this present government, for me I don't .....