Nigeria’s subsidies
End them at once!
The president will be a brave man if he fulfils his promise to end cheap petrol
Dec 31st 2011 | LAGOS | from the print edition
PETROL subsidies are thought to cost Africa’s second-largest economy $7 billion a year—and Nigeria’s president, Goodluck Jonathan, says it is a priority for him to get rid of them in 2012. But most Nigerians think cheap fuel is the only benefit they get from living in an oil-rich country. As the prospect of life without subsidies looms, queues at petrol stations are lengthening, strikes are threatened and tension is rising.

Nigeria churns out 2m barrels a day (b/d) but imports almost its entire refined-fuel needs, owing to decades of mismanagement and corruption that have left its refineries to rot. Subsidies keep the pump price at $0.41 a litre but if Mr Jonathan has his way, this could rise to $0.74, in a country where most people live on less than $2 a day.

Successive governments have tried and failed to deregulate fuel imports. Mr Jonathan may show more backbone. But despite promises of safety nets to protect the poor and the need for new infrastructure and for improvements to the ragged electricity supply, Nigerians fear that the money saved by cutting fuel subsidies will be swallowed up by political fat cats.

The fuel subsidy drains cash from the state. The government has revealed that the chief beneficiaries are the 100-odd companies owned by Nigeria’s richest people, including Oando, the country’s largest indigenous private oil-and-gas firm, which alone netted $1.4 billion. The subsidies also highlight the tortuous ways of the Nigerian National Petroleum Corporation (NNPC), which has deliberately overestimated the cost of importing refined products and then pockets what is left over. The NNPC admitted in parliament that it could not account for 65,000 b/d of crude oil it should be refining, worth $7m a day at today’s price.

The government’s chronic failure to build working refineries has benefited middlemen. Imported petrol is siphoned off by third parties who take advantage of the cheap fuel in Nigeria, then smuggle it over the border to neighbouring countries where unsubsidised fuel costs three times Nigeria’s price. Billions of dollars earmarked for renovating refineries has vanished over the years. The country’s four refineries barely function: fine for those with political connections who make fortunes from imported fuel. If Mr Jonathan stops the scam yet keeps ordinary people calm, it will be a triumph.

http://www.economist.com/node/21542197

If you are spending 7 billion a year on fuel subsidy and 1.4 billion alone goes to Oando, then how on earth can this be a sensible policy for uplifting the common man?

Damn.

So of this 7 billion, Oando and the rest take their share, Benin, Cameroon, Niger Republic take their cut.

How much does the average guy actually see. 10%? 20%?

that is the thing. The masses have not been seeing the full benefits of the subsidy as they should.

I blame the Jonathan govt. for not doing a better job of explaining to the masses why subsidy must be removed. I suggest that whatever projects that will be done using subsidy money should be clearly stated with a sign. Since they failed at explaining why subsidy should be removed, they better be very transparent with how the money is spent.

BTW, lest anyone try to tribalize this. . .

There are several other prominent companies (including Capital Oil) who also make money from the fuel subsidy.

Everyone enjoys making money, regardless of tribe. So let's not use this to say that one group is holy and another is not.

They are in pet. importation business and normally in it to make money,its not their business to man our borders,that's government job and it has failed woefully in this regard.
If they cannot prove that Oando and co are involved in cross border smuggling then trying to create a boogey man out of them is just a distraction.
Maybe the government should start handing cash to individual Nigerians so that these 100 scapegoats wouldn't get free money anymore.

A wasteful  government in a dysfunction system as ours cannot tell me they want to save money.
These vandals cannot be trusted.

The is issue here is not removal of subsidy - But a lax border control or proper accounting process be it NNPC or Customs. Why not tackle that first rather burden the already stressed masses. The only person this policy favours are still the Oil importers. So what has the government solved.

Ufeolorun:

They are in pet. importation business and normally in it to make money,its not their business to man our borders,that's government job and it has failed woefully in this regard.
If they cannot prove that Oando and co are involved in cross border smuggling then trying to create a boogey man out of them is just a distraction.
Maybe the government should start handing cash to individual Nigerians so that these 100 scapegoats wouldn't get free money anymore.

A wasteful  government in a dysfunction system as ours cannot tell me they want to save money.
These vandals cannot be trusted.

Thank you. Like I tell many of pro-subsidy removal friends, while d argument makes economic sense, it is dismisses d reality of Nigeria and ignores d elephant in the room. Most importantly it shows a govt that does not have it priorities straight, and for me any govt that does not have its priorities in good order, can't convince me to have faith in it until it first gets its priorities in order.

ekt_bear:

If you are spending 7 billion a year on fuel subsidy

Here is the thing. the cost of fuel subsidy was actually less than 300 billion NGN previously. How did it become N1.3 Trillion? ? ? ?

Some one is telling a profound lie here.

The economist is not telling us anything new 'm sorry! The FG is empowered to arrest, prosecute and jail anyone who committs any economic crime against the state! They claim much of the PMS is stolen across the border, hey! get the border locked up then. The FG arguements sound so silly in the face of the power and might at her disposals. It is easy to take the face value numbers and screame high heaven with it, but look beneath those numbers and ask yourself some pertinent questions like these ones:

How come during the Obj regimes, fuel subsidy was N390 roughly and remained so until GEJ took over with an astronomical increase of N1tn?

If the present refinaries on 60% utilization can meet domestice production, why then is the government not making serious effort to get them to work?

How much does it cost our neighbour to import their own PMS and it fuel cheaper in these neighbouring countries than it is currently in Nigeria? cheaper in relative terms as per economy of each country!

I agree with govt's position on the "economics" of subsidy removal, insofar as the monumental fraud can be stopped. However, our leaders cannot tell us to tighten our belt, why they fail to lead by example. You cannot tell me to pay double for transportation while you pay nothing. You can't expect me to fold my arms, watch and suffer while govt continues to allocate 72 percent of the budget to itself.

My point is, if govt expects this subsidy removal to sit well with Nigerians, they must be prepared to lead by example. Take drastic pay cuts. Reduce the humongous amounts for unnecessary overheads. Remove some unnecessary ministries and parastatals (like Min of Niger Delta and NDDC) and free up funds for much-needed capital spending to alleviate the suffering of the people.

But as long as govt continues to portray itself as wasteful, profligate, uncaring and inconsiderate, the people will continue to resist them, and for good reason.

HNosegbe:

I agree with govt's position on the "economics" of subsidy removal, insofar as the monumental fraud can be stopped. However, our leaders cannot tell us to tighten our belt, why they fail to lead by example. You cannot tell me to pay double for transportation while you pay nothing. You can't expect me to fold my arms, watch and suffer while govt continues to allocate 72 percent of the budget to itself.

My point is, if govt expects this subsidy removal to sit well with Nigerians, they must be prepared to lead by example. Take drastic pay cuts. Reduce the humongous amounts for unnecessary overheads. Remove some unnecessary ministries and parastatals (like Min of Niger Delta and NDDC) and free up funds for much-needed capital spending to alleviate the suffering of the people.

But as long as govt continues to portray itself as wasteful, profligate, uncaring and inconsiderate, the people will continue to resist them, and for good reason.

Spot on,

First of all The Economist have gotten their facts wrong. The fuel subsidy had never cost the government $7 billion until last year when GEJ ran for elections. This development alone begs the question as to what exactly did govt do to incur such an outrageous cost. The Economist will do well to write a well researched article to inform themselves and foreigners about the real issues at stake here and not and rehash views that a dishonest Nigerian govt would have everyone believe.

The truth is this Jonathan's government is not serious and very lazy as well!

The argument has been that government needs more money. How come each time government needs money, its oil price that must go up? What about all those talks about plans to diversify our economy that we have been hearing (from both military and democratically elected governments) for decades now? How about the President and other political office holders going on civil servant's wage? If they think Civil servants can survive on that minimum wage, then they shouldn't have a problem earning same at least for a sacrifice to move the country forward.

Besides all these, government is so irresponsible and shameless to say that it cannot manage just four refineries! Since when did we all know this? Why haven't they sold off the refineries to a consortium of these so called cabals and let them run it if they are the same people sabotaging TAM efforts? Why is nobody among the present and ex-directors of NNPC in jail for the fraud uncovered there??

Government prefers to rape the defenceless masses than take a decisive step to nip the problem in the bud. The problem with our oil and gas sector as with every sector in this country is corruption. No amount of savings from subsidy will improve the quality of lives in this country if corruption is not decisively dealt with.

ekt_bear
Northeast Odualand
Posts: 8650

Offline

Re: The Economist On Naija Fuel Subsidies
« #1 on: Today at 08:46:57 AM »
If you are spending 7 billion a year on fuel subsidy and 1.4 billion alone goes to Oando, then how on earth can this be a sensible policy for uplifting the common man?

Damn.

So of this 7 billion, Oando and the rest take their share, Benin, Cameroon, Niger Republic take their cut.

How much does the average guy actually see. 10%? 20%?

Exactly, my point on this issue. Clearly, Nigerians have been living a false life. We welcome the committee set up to monitor the use of the money for Nigerians or na me go lead protest.

Bliss4Lyfe:

Exactly, my point on this issue. Clearly, Nigerians have been living a false life. We welcome the committee set up to monitor the use of the money for Nigerians or na me go lead protest.

Look the same Nigerians that delibrately designed a subsidy scheme to favour their pockets are still the ones in charge of these 'imaginary' savings and you expect them to spend it wisely?

Look, GEJ administration have fizzled out nearly $16bn in revenues from Excess crude and have you seen a road or hospital completed by this administration 9 months they would go and show you projects already appropriated for yesteryears as what they used the money for! The bottom line is, DO NOT trust this government, it's a government of liars, cheats and those that trade in deceit

The question I would ask the economist is how much does the American and European Government spend on Social Securities for his people.

The problem with Nigeria's fuel subsidy is management and the pervasive corruption in our system.

There is no form of social security for the youths and neither the aged in our society.

How much did Companies such as KBR make from the War America engaged in.Please we have a total failure of leadership.Countless country all over the world subsidize their fuel price.If Brazil,China has listened to IMF and World Bank they would not be growing at their present rates.

Please compare the new PPPRA template with the Old one if it does not smack of a huge fraud.What it means now is the Government would no longer subsidize th Marketers but the people


PPPRA PRODUCT PRICING TEMPLATE PMS
Based on Average Platts' Prices for the month of December, 2011
Average Exchange Rate of the NGN =N= to US$ for the Month of December, 2011

PMS
$/MT Naira/Litre

1 Cost Element;
2 C + F 951.68 113.38
3 Trader's Margin 10.00 1.19
4 Lightering Expenses (SVH) 33.17 3.95
5 NPA 5.25 0.63
6 Financing (SVH) 21.52 2.56
7 Jetty Depot Thru' Put Charge 6.72 0.80
8 Storage Charge 25.18 3.00
9 Bridging Fund 49.10 5.85
10 Marine Transport Average (MTA) 1.26 0.15
11 Admin Charge 1.26 0.15
12 Maximum Indicative Benchmark Depot Price 1,105.14 131.66
13
14 Distribution Margins:
15 Retailers 38.61 4.60
16 Transporters (NTA) 25.10 2.99
17 Dealers 14.69 1.75
18 Subtotal Margins 78.40 9.34

19 Taxes
20 Highway Maintenance -
21 Government Tax -
22 Import Tax -
23 Fuel Tax -
24 Subtotal Taxes

25 Maximum Indicative Benchmark Open Market Price 1,183.54 141.00


OLD PPPRA PRODUCT PRICING TEMPLATE PMS
Based on Average Platts' Prices for the month of November,2009
Average Exchange Rate of the NGN =N= to US$ for the Month of November, 2009

PMS
$/MT Naira/Litre
1 C + F 735.85 83.80
2 Lightering Expenses (SVH) 33.49 3.81
3 NPA 10.50 1.20
4 Financing (SVH) 17.07 1.94
5 Jetty Depot Thru' Put Charge 7.02 0.80
6 Storage Charge 26.34 3.00
7 Landing Cost 830.29 94.55

Distribution Margins
8 Retailers 40.39 4.60
9 Transporters 24.15 2.75
10 Dealers 15.37 1.75
11 Bridging Fund + MTA 34.69 3.95
12 Admin Charge 1.32 0.15
13 Total 115.91 13.20

14 Total Cost 946.20 107.75
15 **Ex-Depot 490.87 55.90
16 Under/Over Recovery (42.75)
17 Taxes
Highway Maintenance -
Government Tax -
Import Tax -
Fuel Tax -


18 Retail Price 570.78 65.00

X-factoria:

The truth is this Jonathan's government is not serious and very lazy as well!

The argument has been that government needs more money. How come each time government needs money, its oil price that must go up? What about all those talks about plans to diversify our economy that we have been hearing (from both military and democratically elected governments) for decades now? How about the President and other political office holders going on civil servant's wage? If they think Civil servants can survive on that minimum wage, then they shouldn't have a problem earning same at least for a sacrifice to move the country forward.

Besides all these, government is so irresponsible and shameless to say that it cannot manage just four refineries! Since when did we all know this? Why haven't they sold off the refineries to a consortium of these so called cabals and let them run it if they are the same people sabotaging TAM efforts? Why is nobody among the present and ex-directors of NNPC in jail for the fraud uncovered there??

Government prefers to violation the defenceless masses than take a decisive step to nip the problem in the bud. The problem with our oil and gas sector as with every sector in this country is corruption. No amount of savings from subsidy will improve the quality of lives in this country if corruption is not decisively dealt with.

This is the problem some of us have and will continue to have with GEJ. In so far as he wants to pander to or abet corruption, perhaps because he is sponsored by it, then we are not going anywhere and his Presidency will be a failure. This is why some of us resisted the candidacy of GEJt begin with. We did not want a President who would be dead on arrival via being sponsored into power by those who need corruption to thrive everywhere so that affairs remain "business as usual". Well, this is precisely what has happened. Our greatest fears are now coming to pass with how the President is firmly averting his gaze away from the AGIPs and jobbers to fix his stare on overburdened Nigerians.

Gbawe:

[b]This is the problem some of us have and will continue to have with GEJ. In so far as he wants to pander to or abet corruption, [/b]perhaps because he is sponsored by it, then we are not going anywhere and his Presidency will be a failure. This is why some of us resisted the candidacy of GEJt begin with. We did not want a President who would be dead on arrival via being sponsored into power by those who need corruption to thrive everywhere so that affairs remain "business as usual". Well, this is precisely what has happened. Our greatest fears are now coming to pass with how the President is firmly averting his gaze away from the AGIPs and jobbers to fix his stare on overburdened Nigerians.

So on this thread we are in agreement that the fuel subsidy is not the main concern but corruption? Well, let us now be active citizens via demanding infrastructure for subsidies from this government. By the time we make good with demands they will have no money left for their extra pockets. 

Bliss4Lyfe:

So on this thread we are in agreement that the fuel subsidy is not the main concern but corruption? Well, let us now be active citizens via demanding infrastructure for subsidies from this government. By the time we make good with demands they will have no money left for their extra pockets. 

I'm sure you are fully aware that what you have said there is rife with wishful thinking. What kind of demands are we all going to make for infrastructure that haven't been made before? The subsidy continuing forever is not good but outright removal is even more harmful. What we should demand now is the reversal of this insensitive policy!

Bliss4Lyfe:

So on this thread we are in agreement that the fuel subsidy is not the main concern but corruption? Well, let us now be active citizens via demanding infrastructure for subsidies from this government. By the time we make good with demands they will have no money left for their extra pockets. 

Corruption cannot be extricated from fuel subsidy as things currently stand. One has become the other and vice versa. If subsidy has traditionally hovered around N300 billion, what else other than corruption accounts for subsidy rising drastically and disgracefully to N1.4 trillion in 2011 under GEJ?

Is it not obvious that, by commission or omission, the Government of GEJ is corrupt or at worst unable to tackle corruption i.e one of the biggest problem of Nigeria? Fuel subsidy would be affordable and not so much of an issue if it was still around N300 billion and not abused by corruption under GEJ to give an unacceptable amount of N1.4 trillion. There are certainly pertinent questions we must ask before we back GEJ to throw the baby out with the bath water.

ekt_bear:

If you are spending 7 billion a year on fuel subsidy and 1.4 billion alone goes to Oando, then how on earth can this be a sensible policy for uplifting the common man?

Damn.

So of this 7 billion, Oando and the rest take their share, Benin, Cameroon, Niger Republic take their cut.

How much does the average guy actually see. 10%? 20%?

This is an absurd post - the alleged 1.4 billion mostly goes to the foreign refineries producing the petrol and to the banks taking their interest on the loans Oando uses to buy the product in the first place.

Apart from a reasonable profit margin (which will still exist after deregulation) the rest goes to the shipping merchants and depot owners due to the inefficiencies in Nigeria's transportation system. Those people will continue to get their money, but instead get it directly from the people's pockets.

I'd expect better from you ekt bear.

Then why on earth is the article using language like "netted 1.4 billion"? Emphasis on netted?

It does make more sense for this figure to reference revenue rather than profit, since Oando isn't a large enough company to net that much profit a year. At least judging from a recent quarterly report.

Still, the question remains. How much of the fuel subsidy actually reaches the common man? It doesn't seem likely that a large fraction of this pie goes where it is intended.

You people are funny sef! why else do you think they sent Ngozi from World Bank? And the fisherman's son would rather make his people's lives miserable than to dare disobey the capitalists whose interests 'The Economist' protecting.

Thank you sir.

but my question is, how does the removal subsidy benefit the ordinary Nigerian while that sum removed on the pump price now is  being paid by the masses, in order words, the importers losses nothing as that which thy has lost in the government (subsidy) is now being provided by the hungry Nigerians.

who owns OandO sef?
I heard it belongs to tinubu.
How true is this?
If so thats why ACN doesn't want subsidy removed

It is unconvincing if there was anything like subsidy in the first place. If there was Nigerians had no business buying fuel at 50naira/per litre. The litany of fuel subsidy to better the lot of Nigerians is another ploy by govt at taxing the little rays of sunshine out of Nigerians. They need the citizens to unknowingly fund their extravagancy (corruption) after depleting the treasury during the last elections brouhaha. There was NEVER any subsidy.

Nigerians, white man will spit on your tongue, you will call it sugar. Who knows better The economist or nigerians in the know (of which the op is not among) who knows what the corrupt governent and their cronies is upto?

Deep Sight:

Here is the thing. the cost of fuel subsidy was actually less than 300 billion NGN previously. How did it become N1.3 Trillion? ? ? ?

Some one is telling a profound lie here.

lol.  nigeria could never afford to spend trillions on its citizens.
I even question the N 300 billion quote. which kain subsidy. there was never a subsidy! at least I don't believe it.

---
beneficiaries of Nigerian wealth have always been a few rich.  
even as the mass are now paying double (or triple) to buy fuel. the rich will continue to get richer in naija.

this is an example of what might happen to the supposed "subsidy" money
our whole surplus federal reserve was depleted in a period of months!!!
https://www.nairaland.com/nigeria/topic-807631.0.html

OK_2_NV:

who owns OandO sef?
I heard it belongs to tinubu.
How true is this?
If so thats why ACN doesn't want subsidy removed

Anyway you are entitled to your opinion.  

A statement by Sanusi made in a yahoo group



''I am not complaining about insults I am used to that. I just believe that an insult is not an argument and when people resort to personal abuse they have run out of logic.
>
> But to then go beyond me and extend it to my dead grandfather and his "descendants" ie my late father his siblings etc I think goes beyond the pale. As a Nigerian-and as an economist-i can take a position on economic matters and this position is one I have had for years even before coming in to the central bank. I have also explained the position on several occasions and criticised government for not doing this before. In 2010 at a public hearing in the House of Reps on the 25pct saga I alerted the nation of what I considered a potential big scam around subsidies and urged for its removal. No one paid attention. The economics is very clear to me. That it is unpopular is also understandable. The British public is unhappy with Tory budget cuts. The Greeks went on riot over austerity. Italian parliamentarians came to blows before Berlusconi was thrown out of office. The US congress is yet to approve Obamas tax increases.
>
> Economic decisions-by definition-ALWAYS must involve a cost or an opportunity cost since for them to qualify as economic they must involve a choice in resource allocation among competing uses. An enlightened debate is one that weighs the pros and cons of removing subsidy and continuing with it.
>
> Removing it has costs in terms of nigerians paying more for PMS-which by the way is not the fuel for genrators, power plants, production facilities, heavy duty goods transportation trucks and even luxury buses. It is fuel used by the middle class and car owners to drove around town and from city to city not to employ workers and produce goods and services. Diesel which is critical to manufacturing and employment creation is not subsidized as the subsidy was removed years ago by obasanjo. Nigerians said nothing then because it was blue collar workers that got retrenched by factories. Those speaking now on the internet and facebook and twitter and newspapers are not workers but middle class elite who use PMS in their smart cars so let's stop all the ideological pretence. This is not about elite and masses but an intra-elite discourse.
>
> I will summarise the issues and I write as a Nigerrian economist and public intellectual not as a public servant:
>
> 1. I am a strong advocate for subsidies if they are for production and not consumption, and if they benefit the poor and not middle men and rent seekers. The US government subsidizes cotton and wheat farmers and nigeria spends its reserves importing wheat from america and keeping american farmers employed. The OECD countried pay subsidies to cattle farmers. Today Promasidor imports powdered milk from New Zealand and packages in nigeria using our foreign exchange while we have cattle. WAMCO imports milk from the UK and adds water and tins it and calls it "production" of Peak milk. We use our forex to import petroleum products and keep refineries and jobs open in europe. Meanwhile precisely because of market distortions there can be no private sector investment in refineries since no one can make profit seling at the regulated price unless we are going to provide private refineries with crude for next to nothing. Certainly no one can purchase crude at market price, refine it and sell at N65 without huge losses so this explains why there are no private refineries.
>
> 2 what I mention above is the heart of the problem with government economic policy which needs to be changed. The economy since SAP is one that supports imported consumption and not local production, perpetuating dependency, non inclusive growth and insecurity. Why is it that the economy is growing at 7pct annually but the people are getting poorer. Because growth gains are not evenly distributed. Personal income is skewed towards people in the oil industry, telecomms, high finance, stock market, real estate and yes civil servants and politicians who feed on corruption. We produce crude oil but import petroleum products (today the UKs highest exports to nigeria are petroleum products). We have a large cotton belt but import textiles from china (thus keeping their subsidized factories open and jobs in china). We are the world's number 1 producer of cassava but import cassava starch from europe. We have a huge tomato belt in kadawa, jigawa and chad basin but are the world's largest importer of tomato paste-from China and Italy. We can produce rice but we import rice from Thailand and India-most of it from grain reserves that have been in stock for over 5 years, I can go on and on
>
> 3. If above is clear then it is evident that this trajectory can only lead to disaster. We will continue to spend our resources promoting growth and employment in our trading partners. Terms of trade shift against us, we can only have foreign reserves because by the good grace of God we have Oil which will be exhausted soon and with new discoveries may become so cheap it loses value. We don't create any value added jobs as the only real production is peasant farming. Oill, telecomms, finance and real estate are not employment intensive. So everyone becomes a civil servant as the economy cannot create jobs. Result? In 2012 budget out of a total N1.8tr recurrent expenditure for the executive arm N1.6tr is on personnel costs not overheads. To reduce this you have to cut salaries or pensions or retrench civil servants. This is the classic trajectory of underdevelopment, de-development and de-industrialisation.
> 4. For the above reasons I am a strong proponent of structural reform and this begins from the fiscal framework. The limited resources of government should be allocated to supporting production-especially if we are running a budget deficit. We cannot keep borrowing to support conspicuous consumption. To support a job creating economy we need to fund power, transportation infrastructure, market infrastructure and access, technical and vocational education etc. We need to build rice processing plants, produce starch and cassava flour and ethanol, process our tomato and milk locally, regenerate our textiles firms (which used to employ 600,000 workers but now employ 30,000!), refine our own crude etc. We cannot even begin to do this if 30pct of govt expenditure is on fuel subsidy, if out of the balance 70pct is recurrent spending, 10pct is debt service, 10pct goes to the niger delta and only 10pct is capital expenditure. So it is about a choice-what do we spend money on and how do we allocate resources?
> 5. We often compare ourselves to other oil producing countries like saudi arabia. What are the facts? With a population of over 160m we produce 2mbpd ie 1 barrel for every 80+ citizens daily. Govt share of revenues if like 50pct of every barrel so it is effectively a barrel for 160 citizens. Saudi Arabia with a 24m population produces over 8mbpd or one barrel for every 3 citizens. In fact in 2010 the nearest OPEC country to nigeria in production per capita was Algeria with a barrel for 30 and algeria is more gas than oil.
>
> With one barrel for 3 citizens dailt saudi arabia is able to provide infrastructure, education, healthcare and social safety nets and have huge savings. It can provide subsidised fuel at a total cost that is a fraction of its savings and even export refined products. It is paying for subsidies ouy od its fiscal savings and not borrowing to pay. We are like a poor man with a rich neighbour. The neighbour buids a good house, buys several cars, eat expensive food, travel abroad every year and still have huge balances in sevral current accounts. Then you choose to live that lifestyle and mortgage your house, take an overdraft from the bank to finance it. Next year it is time to repay the bank, u don't have the money so u go to another bank, borrow enough to pay the first bank principal plus interest and also fund the continuation of the lifestyle. It continues till u can't borrow anymore and the bank throws u and your family out of your house and you lose everything. A responsible father would have long since faced reality and told his family he doesn't earn as much as his neighbour and expectations need to be moderated if they to keep their roof. Of course the children won't be happy at not going to Hawaii for summer and having to take public transport rather than own cars like their neighbour's children. Maybe they will even abuse the father behind his back and call him a miser. That is the cost of leadership.
>
> Finally: removing subsidy is not a silver bullet that solves our economic problems. And there is a huge trust deficit that government has to address. Government needs to investigate subsidy payments and punish any violations of extant guidelines. It needs to cut on unnecessary and waste ful expenditure. It needs to fight corruption and show seriousness in that. It needs to deliver on capital projects, power and infrastructure including irrigation, farm-level storage and agri-processing. These are all valid issues that are to be taken IN ADDITION to and not in place of subsidy removal.

blacksta:

The is issue here is not removal of subsidy - But a lax border control or proper accounting process be it NNPC or Customs. Why not tackle that first

rather burden the already stressed masses.  The only person this policy favours are still the Oil importers. So what has the government solved.

Well stated my brother.

The experts at the economists also think the way I do on this subject. I guess that makes the writers of the article "GEJ fans" as some have suggested. Lol