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What Is Fuel Subsidy? - Business - Nairaland

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Does Fuel Subsidy Benefit The Average Nigerian? / PART 1: NIGERIAN OIL INDUSTRY AND FUEL SUBSIDY: FACTS, MYTHS & HIDDEN TRUTH / Failure To Remove Fuel Subsidy Will Lead To Economy Collapse – GEJ (1) (2) (3) (4)

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What Is Fuel Subsidy? by Nairalandi(m): 9:44am On Dec 16, 2011
pls who can tell me in summary what FG meant by fuel subsidy.
Re: What Is Fuel Subsidy? by Seun(m): 11:54am On Dec 16, 2011
They pay distributors to buy fuel at the prevailing prices per liter (120 naira and above) and sell at 65 naira.
Re: What Is Fuel Subsidy? by page9: 10:43am On Dec 17, 2011
Seun, that is a lay man definition.

Subsidy is a way to hand over Nigerian to the cabal!

Pls read further to understand

A former U.S ambassador to Nigeria once said "Nigeria is blessed with all kinds of resources you can think of but the country is afflicted with bad,insincere and corrupt leadership".

These afflictions over the years are graually affecting the followers.

Now,we are fast having bad,insincere and corrupt followers. You can see poverty written all over some people even when they are financially comfortable. They call it "Survival Strategies".

I call it "Poverty of the mind" also known as" extreme greed" it defies economic logic that the more of something you have, the less the value you attached to it.But the greed in them will always take control.

People both in leadership and followership want to acquire and acquire wealth through corrupt means to the detriments of everyone and the country at large.

While I really would not want to subscribe to mass revolt because of attendant bloodshed that it could lead to, I do not think the Nigeria system and sructure as currently constituted and these present crops of politician(regardless of party affiliation) can give us the Nigeria of our dream except we find a means to get rid of them.

The few activist we know before joining politics are singing different tunes now that they are in corridors of power.

Oshiomole fought Military government and 2nd coming of obasanjo administration vehemently over this fuel Subsidy.Channels TV-lagos was fond of showings his analysis of artificial fuel subsidy. But what do we have now that he is in a better position to convince his colleagues in the Governors forum who were the first to support the removal because they want more money to steal!

No one is talking about the Corruption in NNPC. Why the refineries can't work? Where all the monies spent on the refineries since 1999 has gone? The landing cost template for imported Petroleum products? How PPRA headed by former PDP chairman and close confidant of Obasanjo-Ahamadu Alli  allocates licences?

In 2008-2009 when crude oil was at its highest- $145, Zenon oil was selling a litre of diesel at N65. But for about 2yrs now that the price has gradually come down to about $100 per barrel, one would expect a decline in diesel price locally, but the reverse is the case. As we speak,diesel sells for  N155-N160 per litre in Lagos!


I have a twin priviledge of being an economist and works within the oil industry. Most commentators about subsidy removal are ignorant of the key issues and I just laugh when people make uninformed comments.

Deregulation in itself is not a bad idea if there is a free market entry and exit. You may discover that some people may sell good quality imported pms, diesel and AGO at a price far cheaper than what NNPC can sell locally refined petroleum products here!

If you don't believe, good quality imported cement is cheaper than locally produced cement.Same applies in most industries because of poor infrastructures such as power thereby adding to local cost of production.

But a situation where only few people "Cabal" are allowed to do certain business and import certain essential items, such as petroleum products, Sugar etc. then what you will have is Monopoly, price-fixing and profiteering as it is the case with the petroleum products importers now.

What the Jonathan led govt is trying to do is to hand-over Nigerians to the so called "Cabal".

Most people think the "Cabal" will loose out if the subsidy is removed! But the contrary will be the case. In actual fact, the cabal will make more money because they can sell at any agreed fixed price among themselves.Once upon a time, Zenon oil was selling diesel at a far more reasonable price of N65 per litre  when crude oil was $145 but the cabal has since fixed it above N150. Just like what is happening in diesel market-fixed!

Same will apply to PMS and kerosene.

Rather than solve the real problem of corruption in the system, do a shake-up in the entire oil and gas industry including institutions like NNPC and DPR, address questions early asked about why our refineries are not working and allow anybody to bring in petroleum products without any licenses (as long as the standard quality is imported).
The last point may be difficult because I am a witness to how the cabal sometimes uses the the DPR & customs to muscle competitors who intend to import similar products and sell cheaper.

In the long run, Nigerians will have to determine their collective fates
Re: What Is Fuel Subsidy? by ajadek(m): 9:52pm On Dec 17, 2011
Man, u av a point.let nnpc just give me bond/bg.i will bring in pms @#50 per to jet point with nnpc standard,if they will nt muscle custom and dpr againts me, let gej/nnpc give everybody licence to bring in petroleum product with specification,suply and collect ur money,let their be a competition,
Re: What Is Fuel Subsidy? by Krucifax(m): 1:31pm On Dec 19, 2011
@ Poster to get a more descriptive answer you'll need to put the question in more context. However this is a basic explanation,in points.

1. The average Nigerian does not have a lot of spending power.

2. Imported fuel is sold at an International benchmark price(i.e our importers are paying the same for it as the other foreign nations)

3. It is not cheap(i.e almost unaffordable for the average Nigerian at the benchmark price)

4. However the fuel is subsequently sold at a very marked down price here so the average Nigerian can buy it.

5. The fuel importer regardless has to make a profit.Government meets the importers shortfall(i.e subsidy)

6.The government essentially pays these importers gigantics sums of money to make up for the loss they would otherwise have made at selling at marked down prices.

Therefore if subsidies are reduced the price of fuel subsequently MUST go up to make up.

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