Nigeria's labour unions have called for a nationwide strike on Monday over the government's removal of fuel subsidies.

Protesters have been out in parts of the country complaining that the rise in petrol prices has severely affected their cost of living.

In its defence, the government says that the billions of dollars in savings will be spent on infrastructure and development.

One man who has backed the calls for the removal of the subsidy is the governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi.

"Subsidies should be subsidies for production and not for consumption," he told the BBC's Focus on Africa programme.

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I will like Sanusi to explain how this subsidy compares with the waste in Government in terms of high wages

What a joke. Sanusi does not want to lose his high and mighty job, that gives him time to write ridiculous air articles.

For Sanusi to support the subsidy removal , the government might have a point

frosbel:

For Sanusi to support the subsidy removal , the government might have a point

do not be deceived,all about the west.

@frosbel

Very very funny, apparently, ur support for GEJ is higher than your religious bigotry.

frosbel:

For Sanusi to support the subsidy removal , the government might have a point

Frosbel, as much as I esteemed all your religious posts,
I lost all that respect for u the day i read your support for this subsidy removal.

What exactly do you stand for sir?

Kx:

Frosbel, as much as I esteemed all your religious posts,
I lost all that respect for u the day i read your support for this subsidy removal.

What exactly do you stand for sir?

I stand for fairness, equity and justice.

I am not sure how you came to the conclusion that I support the removal of the entire subsidy.

My stance is this, that the subsidy is removed in small stages with a move to the next stage only possible if there is evidence of economic growth and improvement in the lives of the ordinary man.

Thanks.

Foolish man.

useless man, does he buy fuel. i wish he's a poor man & he must surely be poor in his nxt world

If Sanusi has supported subsidy then there's a rethink.

if only nigerians would take away sentiment then they will understand that fuel subsidy does not help us. the removal of fuel subsidy by GEJ has restore my faith in the man.

Sanusi is a reknowned Economist, he is a Marxist and and an activist. If you listen to him, you will learn a lot. PMS subsidy must go, even though I pay high for PMS it helps the Nigeria Economy and galvanise development as well as curb capital flight.

frosbel:

For Sanusi to support the subsidy removal , the government might have a point  

Yes of course the government does have a point. The problem is not the subsidy removal but where the proceeds will end i.e the problem is the intent and credibility. This is a government that has depleted the reserve without anything to show for it. They leave extravagant and wasteful life, yet asking us to tighten oir belt while they loose theirs. The NASS self is another hole that is draining the nation. The problem is credibility and trust. The Nigerian especially gej gov has never been known to use public funds for infrastuctural development but to divert to private accounts.

Lets not be fooled.
This guy is not talking about removing subsidy to build refineries with the proceeds no.
They want to share the proceeds among the 3 tiers of govt.
They are not thinking about u, your kids and the children yet born.
They only care about their usual PDP share the money.

http://www.proshareng.com/news/15923

Is it this?

Here, SLS shares his convictions and presents a holistic insight into the reality about the Nigerian economy, governance, corruption, the growing gap between the rich and the poor, the challenges to sustainability, the need for the recalibration of the current debate and concerns about the decision taken to remove the subsidy on PMS.


The Case for Subsidy Removal
QUOTE - As a Nigerian and an economist, I often take positions on economic matters and this position is one I have had for years long before coming in to the Central Bank. I have also taken time to explain this position on several occasions and criticised government for not doing this before now.


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 Obama’s 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 generators, 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 drive 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 President 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 Nigerian 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 countries 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 selling 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 mentioned above is at 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? The answer is simply because growth gains are not evenly distributed. Personal income is skewed towards people in the oil industry, Telecoms, 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 UK’s highest exports to Nigeria are petroleum based 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 one 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 the 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’ countries. When the 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. Oil, Telecoms, finance and real estate are not employment intensive. So everyone becomes a civil servant as the economy cannot create jobs. In the 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?  This is the real debate we should be having.


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 i.e. 1 barrel for every 80+ citizens daily. Govt share of revenues is 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 daily, 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 out of its fiscal savings and not borrowing to pay.


We are like a poor man with a rich neighbour. The neighbour builds a good house, buys several cars, eat expensive food, travel abroad every year and still have huge balances in several 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, you don't have the money so you go to another bank; borrow enough to pay the first bank’s principal plus interest and also fund the continuation of the lifestyle. It continues till you can't borrow anymore and the bank throws you 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 are 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. Further, 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 off unnecessary and wasteful 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. UNQUOTE

Production is not complète until it reaches d final consumer. SANUSI is confused. whether particular commodity is subsidized at early stage or later stage of production does not matter, what matter is to tackle d corruption that is making it ineffective.

Eagle1:

http://www.proshareng.com/news/15923
Diesel which is critical to manufacturing and employment creation is not subsidized as the subsidy was removed years ago by President Obasanjo.

The so called deregulated diesel now sells for over N150/litre.

Can Sanusi kindly tell us how many refiners of diesel the deregulation of diesel has attracted to Nigeria?
Can he tell us how the price of diesel has fared since it was deregulated as they are saying that the price of PMS will fall with time like that of GSM?
Can he now tell us that the deregulation of diesel has put an end to the importation of the product especially as importation heavily affects the value of the local currency,the naira vis a vis the forex?

Fix old and build new refineries, no body will be wasting time debating subsidy because it will die a "natural death"
Otherwise, just like GEJ stated that Nigerians should live with Boko Haram, Nigerian govt should live with fuel subsidy since they lack the will to fight corruptionin the oil sector and every other sectors.

Kx:

The so called deregulated diesel now sells for over N150/litre.

Can Sanusi kindly tell us how many refiners of diesel the deregulation of diesel has attracted to Nigeria?
Can he tell us how the price of diesel has fared since it was deregulated as they are saying that the price of PMS will fall with time like that of GSM?
Can he now tell us that the deregulation of diesel has put an end to the importation of the product especially as importation heavily affects the value of the local currency,the naira vis a vis the forex?

Fix old and build new refineries, no body will be wasting time debating subsidy because it will die a "natural death"
Otherwise, just like GEJ stated that Nigerians should live with Boko Haram, Nigerian govt should live with fuel subsidy since they lack the will to fight corruptionin the oil sector and every other sectors.

Exactly, apart from one small refinery in Ahoada rivers where diesel is being refined i see no difference yet. so far, deregulation hasnt worked for Diesel, why do they think it will work for pms. Honestly, i dont think these guys fully understand how our economy works.

xanadu333:

useless man, does he buy fuel. i wish he's a poor man & he must surely be poor in his nxt world

he said he doesnt.

It seems that many intelligent Nigerians (NOI and SLS ) will loose the respect Nigerians have for them because of this subsidy

Slippery Sanusi, @ the town hall debate did anyone of them mention generator consumption? No, 'cause they can't face the truth.

one of the ministers even said in one of 'em interviews that we cannot say people that use generators are part of the masses (if you own a generator u must be rich), which goes to show us that these guys ain't in sync with the reality on ground.

SLS is just another bare-faced propagandist opportuned to be in a position for which he is barely qualified. His argument is just another hollow attempt at justifying squeezing the populace dry while they revel in more comfort. Talks about industrialisation are off key remarks that should be disregarded. Now, in one breadth, he admits in-efficiency in govt but does not believe in tackling the root cause of the inefficiency. Rather the people should pay because the people at the helms of affairs are corrupt.

Kx:

The so called deregulated diesel now sells for over N150/litre.

Can Sanusi kindly tell us how many refiners of diesel the deregulation of diesel has attracted to Nigeria?
Can he tell us how the price of diesel has fared since it was deregulated as they are saying that the price of PMS will fall with time like that of GSM?
Can he now tell us that the deregulation of diesel has put an end to the importation of the product especially as importation heavily affects the value of the local currency,the naira vis a vis the forex?

Fix old and build new refineries, no body will be wasting time debating subsidy because it will die a "natural death"
Otherwise, just like GEJ stated that Nigerians should live with Boko Haram, Nigerian govt should live with fuel subsidy since they lack the will to fight corruptionin the oil sector and every other sectors.

Bros, u cant refine diesel without refining other products such as pms, so since pms which is highest in demand remain regulated, the refining market remains unattractive.

zinosleek:

if only Nigerians would take away sentiment then they will understand that fuel subsidy does not help us. the removal of fuel subsidy by GEJ has restore my faith in the man.

No one is against the removal of subsidy!
GEL need to approach it with common sense and can avoid these protests in the first place. We should not be in our graves because GEJ need to remove the fuel subsidy. U will see clear lack of planning on the part of the FG, GEJ should have put in place various programs to reduce the impact of absolute removal before even bringing the idea on the table in the first place.

Let Nigerian see the programs all over, then u can easily sway some sections of the country to support the program or there should be a planned phased approach in removing fuel subsidy, the current style by GEJ is silly and do not show enough good conceived careful approach.

What you get is total disapproval frm every corner in the country! The shock on the common man is killing , this is no longer PAIN.

I expect GEJ to come up with impact analysis of such removal on the common man and practical programs that will address
galloping prices of common food items; rent; high transport cost; high medical bills, cst of doing business for small scale enterprises;school fees etc etc. And not all these rubbish 1600 buses that they intended to provide and have not even delivered!

Their focus is basically on the savings, you have to consider both sides of the equation.
U shld do your maths and give a breakdown of how u intend to spend N18,000.00 minimum wage in a place like Lagos.  Its just a death warrant, pple will fall and die on the street as a result of hunger!

Basically; you can have a good idea but carrying your constituents along in its implementation is a different agenda!

I seem to be getting the clearer pictures now. Chritain largard visited Nigeria and said Sanusi lamido sanusi is the most brilliant man in the nation, when she didn't sample what I have upstairs! What's criteria to single one man out in 160million people and say he's d most intelligent.
Christain largard from IMF
Okonjo iwaela with world bank policy
Sanusi Cbn Governor, goodluck Nigerian president should underdtand am not against subsidy removal, am against the same system, with the same extravegant politcians! You can't continue to pour water in a basket. Its not done. Dis na naija.

seeing that our e.c.a is low if not dry,p.d.p are only lookin for a pocket to drain.d e.c.a has been their only pocket and since 2015 is gonna b bloody and their claim to wantin to have all 36 states,they need fund.ask ursef,where does p.d.p gets its fundin from?d likes of dangote,otedola,adenuga are major sponsors of their party.removing subsidy is just creating an avenue for em to steal more funds for politickin.i Zap.i.n.g hate them all.mtchew

[color=#000099][/color]
this very man said that he can't remember wen he fueled his car's last on ait and stv. So he must support becos he doesn't buy fuel, Stupid idiot

Sanusi must be an Orthodox Economist. I've never been game with most of his policies and several of his policy summersaults. Him mentioning that it is diesel that bothers on economic growth in Nigeria smirks of sheer ignorance. The strength of Nigeria's SMEs/Informal economy is huge. Most homes in urban and rural areas use generators powered by petrol, not diesel. Most small businesses use generators powered by petrol, not diesel. Not everyone has cars. And who said Government shouldn't subsidise production by discounting crude oil to private refineries in Nigeria as against fuel subsidy to the importers? Has GEJ not spent more than 18months which is the timeline for setting up a refinery as was done with Port Harcourt Refinery? How come Sanusi's CBN that knows and understand corruption cannot check the over 1.7trn Naira that gets laundered out of Nigeria every year and the figure is higher than the fuel import subsidies?

I am personally not against deregulation, my issue is with how it's been done.
Put some fundamentals in place, then remove subsidy.

Something like:
1, Fix (or even sell) government refineries
2, Give private oil companies that already have refinign licences 2 years to complete their refineries(I know those that have started their refineries already, only slow-paced because it is not profitable under subsidy regime)
3, Issue more refining licences
4, Give a timeline for removal, say 30 months i.e June 2014.
5, At the expiration of 2 years deadline, withdraw licence from oil companies with refining licence but don't build refine
6, By this time, local production would have shot up to meet demand or close to it
7, Importation of petroleum products can the be banned after 1 year, say December 2014.
This is the phased deregulation I expect.

Sanusi promised chicken and egg business till today no chicken, no egg islamic banking dying by itself. of-course he has no choice than to support his boss or otherwise he will lost the his job.

@Ayoobscom, Zinosleek, Leomax, Frosbel, Gists, Funkymallam, tanx 4findin it expedient to have a rethink concerning dis subsidy stuff. Someone said SLS only want to protect his job by supporting d policy, is it not d same SLS, dat stood in front of NASS and boldly and candidly told dem dey wia taking 25% of d annual budget? If he did not care about his job security, y would he care now? Wen Okonjo Iweala pleaded for d forgiving of our N40bn debt from paris friends club, didn't she do it selflessly 4d good of Nigeria? Y would she not want d good of Nigerians now? Someone should give me one reason y we shouldn't trust d duo? Wen these world renowned economists tells us dis is wat we have to do to avoid going d way of greece and d likes, we still doubt dem,who den can we trust? Instead of protesting, wat we should be doing now is dialoging wit d govt on how to use dis fund to be raised and how to monitor its strict implementation. If dia be need 4protesting, it should be 4massive pay cut 4political office holders and strict trial of ex and present corrupt govt officials. Lets Rise above hate and sentimental thinking and approach to sensitive issues

frosbel wrote:

For Sanusi to support the subsidy removal , the government might have a point

And I'm agreement with frosbel yet a second time!
Subsidised prices are poisoned gifts, people.
Remember Cuba with the Russian supported sugar prices.