More Fresh Air, I Guess.

HERE were hints yesterday that petrol (Premium Motor Spirit) may sell for about N120 per litre, if fuel subsidy is withdrawn.

Finance Minister Mrs Ngozi Okonjo-Iweala has said the removal of fuel subsidy next year is inevitable – to keep the economy afloat and rebuild infrastructure.

The hint on the new pump price emanated from a fact-sheet presented to select leaders of four political parties at a Monday night meeting with President Goodluck Jonathan at the Presidential Villa, Abuja.

The document, which The Nation obtained last night, states that subsidy must go, in the interest of the nation’s future and the masses.

Mrs Okonjo-Iweala, however, unveiled some safety nets being planned by the government to ameliorate the effects of the withdrawal of the subsidy.

She said between 2006 and 2011, the nation spent N3,655.17 trillion to subsidise fuel. The cash is 30 per cent of the total expenditure, 118% of the capital expenditure and 4.18% of the GDP.

“Subsidy does not get to the poor; the middle and upper classes are the real beneficiaries. It is clearly unsustainable,” said the Minister.

“Subsidy in 2011 alone so far is over N1.3trillion, which is higher than our capital budget. Evidence shows that the price of fuel in Nigeria is below both the African and international average.

“Nigeria, with its large population and small oil base, is comparatively poor, compared to other oil producers.

“Compared to other oil producing countries, Nigeria has a significantly lower GDP per capita; substantially less oil revenue per capita and greater social.

“With total crude oil production of approximately 2.5million barrels per day, Nigeria has a significantly lower GDP per capita. Nigeria’s GDP per capita is around $1200 per year, with over 167million in population.”

“Therefore, we must rethink our approach to managing our scarce resources to provide services to Nigerians. We will be better off using the amount spent on subsidy to target poorer groups and big infrastructure projects.”

Mrs Okonjo-Iweala hinted on what the pump price might look like next year, if the subsidy is removed.

She said: “Under the current downstream sector structure, prices are not determined by demand and supply. Pump price of PMS is fixed at N65 per litre by the government.

The landing cost of a litre of PMS is about N123 per litre, based on an average crude oil price of US$113.98pb. To this, add the cost of distributing, bridging and profit margins of N15.72 per litre. This results in effective cost of N139/litre.

“In 2012, the landing cost of a litre of PMS is estimated at N104/litre, based on a crude oil price of US$90pb. To this add the cost of distributing, bridging and profit margins of N15.72/litre. This results in effective cost of N120 per litre.

“Fuel subsidy is what is paid by government to keep prices below free market. The subsidy causes distortions that result in huge economic costs such as rent-seeking behaviour and smuggling.

“The amount of subsidy equals to the difference between the consumer pump price of fuel versus the total cost of producing or importing. The price of petrol is N65 per litre, but actual cost of supply is N139 per litre. And projected at N120 per litre in 2012.

“This means that currently for every one litre of petrol purchased at the official price of N65, government contributes N73. Presently, only petrol and kerosene enjoy government subsidy. Diesel has already successfully been deregulated.”

The Minister, who is also co-ordinating the economy, made in-depth submissions on why the removal of subsidy has become necessary.

She said: “Subsidy is a major fiscal and financial burden on the nation. From 2006 -2011, about N3.7trillion was spent on subsidy.

“In 2011, N1.348trillion was spent between January and October and it is expected to reach N1.436trillion by the end of the year. This represents 30 per cent of total Federal Government Expenditure; 118% of the capital budget; and 4.18% of GDP.

The breakdown of fuel subsidy in the past five years is as follows:

She added: “The large increase observed in 2011 is as a result of (i) increased crude oil price from US $81.25 per barrel(pb) to $US 113.98pb; (b) exchange rate movements; (c) larger volumes consume(about 35m litres per day); and (iv) N150billion of kerosene carried over from 2009 and 2010.

The minister listed six benefits of deregulation.

She said: “Deregulation implies limited intervention by government; it allows for better regulation and transparency; allows for free operation activities in the sector; attracts new investors into the market and it increases competition and promotes overall higher productivity; reduces scarcity by ensuring adequate supply of petroleum products; and similar success story to the telecommunication sector.”

The Minister also reeled out social safety nets in the pipeline for Nigerians, if the subsidy is removed.

These are:

•Launching of Subsidy Reinvestment and Empowerment Programme (SURE);

•Maternal and child health services;

•Public works/youth employment programme;

•Urban mass transit scheme

•Vocational training schemes; and

•High-profile infrastructure projects: Roads and rail; water resources, power; refineries (with private sector).

She said: “Structures have been developed to guarantee adequate oversight, accountability and implementation of the various projects.

“To ensure effectiveness, efficiency and delivery, high powered committee of eminent Nigerians to monitor revenue proceeds and proper implementation and use of the amount saved. Members with proven integrity will be drawn from the Nigerian youth, women groups and civil society organisations.”

http://www.thenationonlineng.net/2011/index.php/news/28923-petrol-may-cost-n120.html

This is it. Ngozi, you have my support. Fire down baby!!!

I lost respect for Okonjo when she said removing subsidy will stop smuggling, as if the prices of fuel will not go up in neighboring countries, also, who is responsible for guarding the borders or do they move these fuel in jerry cans?

-Okonjo-Iweala defends proposal -Parties keep
Jonathan waiting
THERE were hints yesterday that petrol (Premium
Motor Spirit) may sell for about N120 per litre, if fuel
subsidy is withdrawn.
Finance Minister Mrs Ngozi Okonjo-Iweala has said
the removal of fuel subsidy next year is inevitable –
to keep the economy afloat and rebuild
infrastructure.
The hint on the new pump price emanated from a
fact-sheet presented to select leaders of four political
parties at a Monday night meeting with President
Goodluck Jonathan at the Presidential Villa, Abuja.
The document, which The Nation obtained last night,
states that subsidy must go, in the interest of the
nation’s future and the masses.
Mrs Okonjo-Iweala, however, unveiled some safety
nets being planned by the government to ameliorate
the effects of the withdrawal of the subsidy.
She said between 2006 and 2011, the nation spent
N3,655.17 trillion to subsidise fuel. The cash is 30
per cent of the total expenditure, 118% of the capital
expenditure and 4.18% of the GDP.
“Subsidy does not get to the poor; the middle and
upper classes are the real beneficiaries. It is clearly
unsustainable,” said the Minister.
“Subsidy in 2011 alone so far is over N1.3trillion,
which is higher than our capital budget. Evidence
shows that the price of fuel in Nigeria is below both
the African and international average.
“Nigeria, with its large population and small oil base,
is comparatively poor, compared to other oil
producers.
“Compared to other oil producing countries, Nigeria
has a significantly lower GDP per capita;
substantially less oil revenue per capita and greater
social.
“With total crude oil production of approximately
2.5million barrels per day, Nigeria has a significantly
lower GDP per capita. Nigeria’s GDP per capita is
around $1200 per year, with over 167million in
population.”
“Therefore, we must rethink our approach to
managing our scarce resources to provide services to
Nigerians. We will be better off using the amount
spent on subsidy to target poorer groups and big
infrastructure projects.”
Mrs Okonjo-Iweala hinted on what the pump price
might look like next year, if the subsidy is removed.
She said: “Under the current downstream sector
structure, prices are not determined by demand and
supply. Pump price of PMS is fixed at N65 per litre by
the government.
The landing cost of a litre of PMS is about N123 per
litre, based on an average crude oil price of US
$113.98pb. To this, add the cost of distributing,
bridging and profit margins of N15.72 per litre. This
results in effective cost of N139/litre.
“In 2012, the landing cost of a litre of PMS is
estimated at N104/litre, based on a crude oil price of
US$90pb. To this add the cost of distributing,
bridging and profit margins of N15.72/litre. This
results in effective cost of N120 per litre.
“Fuel subsidy is what is paid by government to keep
prices below free market. The subsidy causes
distortions that result in huge economic costs such
as rent-seeking behaviour and smuggling.
“The amount of subsidy equals to the difference
between the consumer pump price of fuel versus the
total cost of producing or importing. The price of
petrol is N65 per litre, but actual cost of supply is
N139 per litre. And projected at N120 per litre in
2012.
“This means that currently for every one litre of
petrol purchased at the official price of N65,
government contributes N73. Presently, only petrol
and kerosene enjoy government subsidy. Diesel has
already successfully been deregulated.”
The Minister, who is also co-ordinating the economy,
made in-depth submissions on why the removal of
subsidy has become necessary.
She said: “Subsidy is a major fiscal and financial
burden on the nation. From 2006 -2011, about
N3.7trillion was spent on subsidy.
“In 2011, N1.348trillion was spent between January
and October and it is expected to reach N1.436trillion
by the end of the year. This represents 30 per cent of
total Federal Government Expenditure; 118% of the
capital budget; and 4.18% of GDP.
The breakdown of fuel subsidy in the past five years
is as follows:
She added: “The large increase observed in 2011 is
as a result of (i) increased crude oil price from US
$81.25 per barrel(pb) to $US 113.98pb; (b) exchange
rate movements; (c) larger volumes consume(about
35m litres per day); and (iv) N150billion of kerosene
carried over from 2009 and 2010.
The minister listed six benefits of deregulation.
She said: “Deregulation implies limited intervention
by government; it allows for better regulation and
transparency; allows for free operation activities in
the sector; attracts new investors into the market
and it increases competition and promotes overall
higher productivity; reduces scarcity by ensuring
adequate supply of petroleum products; and similar
success story to the telecommunication sector.”
The Minister also reeled out social safety nets in the
pipeline for Nigerians, if the subsidy is removed.
These are:
•Launching of Subsidy Reinvestment and
Empowerment Programme (SURE);
•Maternal and child health services;
•Public works/youth employment programme;
•Urban mass transit scheme
•Vocational training schemes; and
•High-profile infrastructure projects: Roads and rail;
water resources, power; refineries (with private
sector).
She said: “Structures have been developed to
guarantee adequate oversight, accountability and
implementation of the various projects.
“To ensure effectiveness, efficiency and delivery,
high powered committee of eminent Nigerians to
monitor revenue proceeds and proper
implementation and use of the amount saved.
Members with proven integrity will be drawn from
the Nigerian youth, women groups and civil society
organisations.”

@topic

It is inevitable and necessary that petroleum subsidy should go in the best interest of infrastructural development. And indeed the poor hardly benefit from the the subsidy.

wow, we no go gree oooo, we no go gree.
ngozi iweala, we no go gree
pdp we no go gree
jonathan badluck, we no go gree
obj criminal, we no go gree
we no go gree ooooooooo
we no go gree

It is inevitable and necessary that petroleum subsidy should go in the best interest of infrastructural development. And indeed the poor hardly benefit from the the subsidy.

@point b,
since u believe that story, u can believe anything.
jonathan said some people are benefiting from the fuel subsidy and to make us believe him, let us know those benefiting and tell us why. stop them and let us living our normal lives. why are u not asking for refineries? if this govt has good intentions, let them fix our refineries and no one will talk about subsidy.
how on earth do u want to believe that what all our resources can not do for us, only fuel subsidy money will do it.
let us face realities abeg.

One question though - Will the removal of the subsidies automatically reduce the jumbo pay of our lawmakers?

From her calculation, fuel should cost N139 per litre, why dont they just get there at once
since the health of the economy comes b4 the health of the citizenry?

1025:

wow, we no go gree oooo, we no go gree.
ngozi iweala, we no go gree
pdp we no go gree
jonathan badluck, we no go gree
obj criminal, we no go gree
we no go gree ooooooooo
we no go gree
@point b,
since u believe that story, u can believe anything.
jonathan said some people are benefiting from the fuel subsidy and to make us believe him, let us know those benefiting and tell us why. stop them and let us living our normal lives. why are u not asking for refineries? if this govt has good intentions, let them fix our refineries and no one will talk about subsidy.
how on earth do u want to believe that what all our resources can not do for us, only fuel subsidy money will do it.
let us face realities abeg.

Frankly, it should not be the job of government to build refinery. I think government should intensify effort is selling off those refinery to private companies. But the can only be profitable to them if the subsidy is removed.

The fuel subsidy is a snag and a big distraction, and indeed a big waste. The earlier it is dispensed with the better for all of us.

Obasanjo sold the refineries through the BPE, Yar Adua came and reversed the sale, Jonathan is still thinking of what to do.

otokx:

Obasanjo sold the refineries through the BPE, Yar Adua came and reversed the sale, Jonathan is still thinking of what to do.

I can imagine.

Now he is being pressured to spend millions attempting to fix it.

For every million he spend trying to fix it, vested interest will spend at least 3 times, to frustrate the repairs.

The refineries are better off sold as scraps - saves everyone the headache of chasing shadows.

Ngozi i am fully behind you, those corrupt idiots have really deal with us so bad.

She can say dat again since she will not buy it

Did she just say that the poor does not benefit from the subsidy This woman has no clue of what she's talking about.
Practically speaking one of the main determinants of the price of products (Gari, Yam, Clothes etc) in the market is the fuel price. If fuel price goes up, cost of transportation goes up and subsequently the market price goes up.
I'm so disappointed

I weep for this country. see the frolicsome excuses she's giving for removing the subsidy and what the returns would be used for as if this is the first time we are hearing this political crap. @ 120naira, with no electricity and roads riddled with holes, the masses are in for worse times. ppl cant send their kids to skul again, transportation cost would increase, housing, robbery, etc. its a pity

When they were busy looting the nation dry during their campaign, did it not occur to them that we will all suffer. God dey and He will surely come to our aid from these merciless vultures.
God do take our cause in your most kind and supportive way as you have always done to those that seek your intervention, it is a difficult time that only you can show us the way forward against these devils! Amen.

PointB aka Beaf you can continue with your misdirection but you are fast losing audience and there will definitely be judgment day.

wow!
i am surprised that my fellow nigerians are in support of removal of fuel subsidy.

even my poor grandmother at home is benefiting from fuel subsidy. she transports her goods to the market, she recieves goody goodies for her up keep from her son who is managing and huslin in the city.

what happens to the citizeens if fuel is 120, how can the common man move around and surviv with a double hike in prizes of all goods. these government functinaries dont even know what it takes to fill ur fuel thank. this is bulllshit

bring it on,we are ready

This is complete nonsense. So Ngozi you have joined them abi?
How can an increase in petrol pump price bring less hardship to the poor and average Nigerian. Let's not forget that immediately the subsidy is removed prices of everything will hike, food,transport fares,infact everything. And these are they things an average Nigerian needs to survive.

She can do wateva she likes. D only oil rich country dat imports its oil. We shld pay N120 4 a locally refined crude abi? it wil nt affect d poor in da country eh? No prblm. Harvard university indeed.
Didnt d presido say we shld patronise made in 9ja goods, wat of refined in 9ja crude oil.?
I remembered and retweeted her speeches durin d senate screenin where she didnt support d removal becos of lack of infastructures in place. Things have change i guess.
ALL IS WELL.

Was no this same woman under obj government who said some students paid 50k annual house rent around Agbowo ( A community around university of Ibadan ) so by implication a bed space in a university hostels should go for nothing less than 20k per session.
She just does not understand what takes to be poor. Having born with sliver spoon in her mouth, she has lost contact with present reality with poor majority in Nigeria.
May God help her and her paymaster. All I know is that Nigeria will never progress with the subsidy removal. Ours is a leadership problem not subsidy.

Ngozi Okonjo-Iweala and GEJ will soon bring out the anger in us. We have blood and our bloods will speak very soon. We are waiting for the subsidy removal to take place then this nation might boil. This woman does not leave in Nigeria and hence have no idea of the problems we are facing.

Why is it that whenever the govt wants to decieve her citizens they will be promising urban mass transport? Govt officials have move from stilling millions of naira to billions. Have we caught any thief? (NO).

They now buy properties in billions of naira in Abuja and subject the masses to huge rents. Rent in Abuja is now been compared to Paris.Only God can save Abuja citizens from this harsh rents. what are we living for? This same people are most celebrated in or churches and mosques cos they pay big tithes and donates builings.

Nigerians have to wake up and tell GEJ and his cabals that enough is enough.

WE SAY NO TO SUBSIDY REMOVAL.

I support fuel subsiidy removal. The stress will affect everyone initially but with time, the forces of demand and supply and a robust competition will bring prices down. Private refineries will only come in when it is profitable in Nigeria ie when subsidy is removed.we need to be more reasonable on dis issue. Continue feeding a cabal fat or suffer a little and benefit later. It is food for thought.

They can all talk, when are their families are not based in Nigeria!!!!! how would she feel what an average man would feel!!!!

Why are they removing subsidies here and there. Lagos has just removed that of education in the state now fed is removing the subsidy on petrol without proper planning.

OBJ might be right that mass revolt is on the making.

Ejiné:

One question though - Will the removal of the subsidies automatically reduce the jumbo pay of our lawmakers?

and the jumbo of the executives too

I have never taken any of these world bank apologists serious and will not start now.

PointB:

Frankly, it should not be the job of government to build refinery. I think government should intensify effort is selling off those refinery to private companies. But the can only be profitable to them if the subsidy is removed.

The fuel subsidy is a snag and a big distraction, and indeed a big waste. The earlier it is dispensed with the better for all of us.

Man I can't believe the first paragraph of your statement.it should not be governments job to build refineries?then who's job,the citizens or foreign investors eh?who collects taxes from the people,of what are taxes paid meant for?can't you see these BASTARDS in government 'and that starts with mr president' are not interested in salvaging this country but only to enrich themselves and live nothing behind for the generations to come?.they keep saying the money govt is paying on refined products is so much,if the products are refined here and more refineries are in place then do we need to import at all?or can stupid jonathan come out public and say to build more refineries and reduce importation of refined products not possible.He dare not and can't. its just an option they're not interested in.And I know Ngozi would have given him many other options for his administration to generate and utilize the generated revenue for "building and supporting infrastructures" as there popular slogans goes.let me give u an example,where does all the BILLIONS of generated revenue from customs goes to?what about tax generated from sic exisiting infrastructures like PHCN?just to mention a few.
The overhead these bastards spends in terms of allowances,estacodes,salaries,bonuses etc can if cut to half could support any infrastructures they are singing about to build.NIGERIA is in the hands of the CORRUPT and as such A FAILED STATE.

we can't eat our cake and still hv it, , if u are expecting good infrastructure, this is the price everyone gonna pay.

and Kerosene will cost N500/litre. Gas N6000. This is just the begining. After some months they will come back again and tell you, we need to review the cost that Petrol should be N200.
Those that are supporting seems to be born 5 years ago and dont know anybit about Nigeria. WHY CANT GOVRN PROVIDE SOFT LANDING BEFORE INCREMENT FIRST. I AM LAUGHNG IN SUFFERING AND REVOLUTION

ibelab:

we can't eat our cake and still hv it, , if u are expecting good infrastructure, this is the price everyone gonna pay.

SENSELESS AND BRAINLESS TALK. WHAT IS GOVERNMENT DURING WITH 30% REMOVED FROM MY SALARY EVERY MONTH, WHAT IS GOVERNMENT DOING WITH IMPORTATION FEE AT TINCAN ISLAND EVERYMONTH( N3 Billion). what did government did with the increment of crude sales during the arab revolution.
Problem is once someone think in a direction in Nigeria,the other 100millions think towards that direction and that is the reason for no technological improvement and infrastructure develpment.
SO only removal of fuel subsidy can safe nigeria. This is a dumb and unintelligent statement.