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Increase Petrol Price By 85 Kobo Every Week For 3 Years - Politics (2) - Nairaland

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Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by debosky(m): 5:56pm On Jan 15, 2012
Quite a stupid idea - Why sell this week when I can wait four weeks and get a GUARANTEED higher price?

What you may get is phased scarcity - Importer A imports today at x price, waits 4 weeks and makes the extra money (claiming he sold at the cheaper price and collecting subsidy) while Importer B imports 4 weeks later and keeps his stock to make the extra profit and then it goes on in repetition.

As long as there is a short term opportunity to exploit the system to fleece the government it will be exploited. Anything shorter than an annual or at best half yearly price increase will be exploited.

A country where there is blatant price exploitation can never implement such a program.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Ibime(m): 5:59pm On Jan 15, 2012
An unwise suggestion.

I would import millions of barrels of PMS and put in storage for 1 year.

At the end of one year, I would get an extra (0.85k x 52) = N44.20 per litre.

That is 70% return in one year (on my original price of N65 + N44.20 I have gained by hoarding PMS for the year)

I would do the same the following year and the year after, guaranteeing 70% returns for the next 3 years. No other business would give me such returns.

All this would do is create extreme fuel scarcity for the next 3 years as fuel importers will hoard fuel waiting for the price to rise.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Nobody: 6:02pm On Jan 15, 2012
Seun, did you just suggest that
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by dustydee: 6:03pm On Jan 15, 2012
shocked shocked Bad economics. Try again.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by folahann(m): 6:03pm On Jan 15, 2012
I guess the poster is a webmaster. He should stick to what he does best.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by freecocoa(f): 6:06pm On Jan 15, 2012
Huh? And what is this doing on the front page?
Muki ban seun for a while please till he is delivered of his baby. undecided
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Ibime(m): 6:10pm On Jan 15, 2012
Hey Debo, you beat me to it.

This is the reason why GEJ sneaked the price in like a thief in the night cos if he announced April 1st deadline, the marketers woulda just hoarded petrol until April when they could make a killing.

The scenario we just painted shows why anything short of a vigorous fight against corruption will always fail, a situation which rendered GEJ's Government dead on arrival. So much for "continuity" as the OP was preaching during election time. There is no getting past the fact that any Government who is soft on corruption is a cancer to the Nigerian people.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by aljharem(m): 6:11pm On Jan 15, 2012
Ibime:

Hey Debo, you beat me to it.

[size=15pt]This is the reason why GEJ sneaked the price in like a thief in the night cos if he announced April 1st deadline, the marketers woulda just hoarded petrol until April when they could make a killing.[/size]

The scenario we just painted shows why anything short of a vigorous fight against corruption will always fail, a situation which rendered GEJ's Government dead on arrival. So much for "continuity" as the OP was preaching during election time. There is no getting past the fact that any Government who is soft on corruption is a cancer to the Nigerian people.

Yes I noticed that as well and it was a good move. still has not addressed the issue for the protest though
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Seun(m): 6:14pm On Jan 15, 2012
Quite a silly idea - Why sell this week when I can wait four weeks and get a GUARANTEED higher price?
God question.  Imagine that under normal conditions, you're supposed to buy at 1000 liters at 55 Naira and sell at 65 Naira for a guaranteed profit of 10 naira per liter or 10,000 naira.  If you hoard the fuel for one month, you'll be able to sell at 68.4 naira or 13,400 naira profit.  So you'll make a bit more.  But the problem for you is that you would have made 100,000 naira during that same month by turning over your inventory 10 times instead of hoarding the fuel.  Hoarding is not worth it unless you can make more than what you would have made by selling normally. And a gradual increase in price over a long period of time minimizes the amount you can make by hoarding relative to the cost of hoarding.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by whirlweend(m): 6:23pm On Jan 15, 2012
^^^. The dealer will definitely not be selling just 1000L at the end of the month but he will aggregate his whole supply for the month and sell by the fifth week.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Ibime(m): 6:23pm On Jan 15, 2012
Seun:

God question.  Imagine that under normal conditions, you're supposed to buy at 1000 liters at 55 Naira and sell at 65 Naira for a guaranteed profit of 10 naira per liter or 10,000 naira.  If you hoard the fuel for one month, you'll be able to sell at 68.4 naira or 13,400 naira profit.  So you'll make a bit more.  But the problem for you is that you would have made 100,000 naira during that same month by turning over your inventory 10 times instead of hoarding the fuel.  Hoarding is not worth it unless you can make more than what you would have made by selling normally. And a gradual increase in price over a long period of time minimizes the amount you can make by hoarding relative to the cost of hoarding.

Simple. . . you simply delay the process by a month and still turn inventory 10 times over the following month. . . and the following month. . . and so on and so on. . . you simply running on -1 month purchase schedule. . .
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Iolo(m): 6:26pm On Jan 15, 2012
@ibime,

You can't realistically hoard petrol for a year. Too many reasons to consider. For one, nearly all importers transact with loans. This means they want to pay back as soon as possible while acquiring less charges/interests etc both from the lenders end and from the storage side too. And then the gains would be inconsequential given your mate who sold @ market rates without hoarding would have turned over more products and sold more too.

Hoarding over 85k is not realistic. Maybe N3 and above. And never over long periods.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Nobody: 6:34pm On Jan 15, 2012
A question has been bugging my mind as regards this subsidy issue. Now let's imagine that the theory of price crash that ngozi and co postulated when deregulation takes place will occur to our fuel prices. Wont this petrol that will now sellsfor a cheaper price in our country after deregulation be smuggled to neighbouring countries by these greedy marketers? Remember the govt has said they cant stop smuggling!
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Thatdave(m): 6:34pm On Jan 15, 2012
kossynerule:

Seun your idea is very brilliant and wonderful.u really did your homework I must say.this issue is now past d issue of subsidy/deregulation.what we are now asking 4 is 2 revamp old refineries or build new ones,arrest d so called faceless cabals and prosecute dem,24 hour power supply,cutting down d cost of running d government, etc.is dat 2 much 2 ask 4?.dey want us 2 make sacrifices 4 d greater good while they can't even bear 2 reduce dia salaries and allowances by 25 percent.so Seun save d maths class 4 another day

LWSMD : laugh wan subsidize me die.

@Seun please listen.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by DAY12(m): 6:35pm On Jan 15, 2012
@OP.

Brilliant opinion buh dis can't work in our system!

It just can't! [img]http://www.sympato.ch/smileys/Duel.gif[/img]
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Thatdave(m): 6:36pm On Jan 15, 2012
Seun:

God question.  Imagine that under normal conditions, you're supposed to buy at 1000 liters at 55 Naira and sell at 65 Naira for a guaranteed profit of 10 naira per liter or 10,000 naira.  If you hoard the fuel for one month, you'll be able to sell at 68.4 naira or 13,400 naira profit.  So you'll make a bit more.  But the problem for you is that you would have made 100,000 naira during that same month by turning over your inventory 10 times instead of hoarding the fuel.  Hoarding is not worth it unless you can make more than what you would have made by selling normally. And a gradual increase in price over a long period of time minimizes the amount you can make by hoarding relative to the cost of hoarding.

This economics can only work in video game!
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Nobody: 6:48pm On Jan 15, 2012
Seun are u rich? Please I want to know how well nairaland pays you.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by BabaEleko(m): 6:49pm On Jan 15, 2012
Seun is on drugz
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by manny4life(m): 6:54pm On Jan 15, 2012
Chei,

Seun, how did you calculate this your inflation rate, geez that's a wrong calculation o,  Why the cumulative calculation?

The moment I read that part about from N141 to N198 due to inflation, I already knew this was a BIG FLAW. For the record, if it's 13%, then inflation stays the same and does not change.

@topic,

Reducing @ 85kobo won't make any further sense because Nigeria no longer use kobo (perhaps on paper) but not in reality (money exchange). Nevertheless, the idea is flawed somewhat with little or no effect both on the people and the govt. Reducing every week is time consuming, involving and tedious as opposed to a phased approach for instance every  quarterly or bi-annual or even annual reduction. As for the hoarding, we already know that's inevitable, I strongly believe in the demand and supply of economics. If people have greater access to importing it (supply), the demand will be sufficient or even more which will lead to little or no hoarding from marketers.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by 989900: 7:10pm On Jan 15, 2012
With this theory me self go turn "cabal", you don't have to be a genius to start stockpilling.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Nobody: 7:15pm On Jan 15, 2012
Seun:

God question.  Imagine that under normal conditions, you're supposed to buy at 1000 liters at 55 Naira and sell at 65 Naira for a guaranteed profit of 10 naira per liter or 10,000 naira.  If you hoard the fuel for one month, you'll be able to sell at 68.4 naira or 13,400 naira profit.  So you'll make a bit more.  But the problem for you is that you would have made 100,000 naira during that same month by turning over your inventory 10 times instead of hoarding the fuel.  Hoarding is not worth it unless you can make more than what you would have made by selling normally. And a gradual increase in price over a long period of time minimizes the amount you can make by hoarding relative to the cost of hoarding.

Good one. major importers of fuel use loan facility to run the business. An increase of N1 per week is reasonable as long as enough fuel is available to avoid scarcity. But if major importers form a cartel, it ll make mockery of the whole stuff.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by ufot(m): 7:21pm On Jan 15, 2012
My suggestion is that the government should at least have tried a gradual elimination like Seun said. Why is everyone attacking Seun without any suggestions? we all need to change our mind set and be a little positive. The government has not done a thing in years and then all of a sudden they try to "build Rome in a day"? WTF
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by nairaman66(m): 7:23pm On Jan 15, 2012
Terrible calculation with far reaching effects! I insist the common will not be responsible for this Subsidy/Fraud Scheme!
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by silibaba: 7:25pm On Jan 15, 2012
i totally disagreed with seun.

it wont work shey u know all human beings are opportunist.

on the long run the price of commodity will be higher than when the subsidy is removed once
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Toks2008(m): 7:25pm On Jan 15, 2012
Lets face it.

We all know there is a subsidy been paid by Feceral government which is as a result of gross incompetence and corruption over the years.

We also know that the subsidy been paid can not be over 500billion  naira even with increase in demand and never 1.3trillion plus as claimed by the federal government.

We also know that what we have in nigeria government system is carbalocrazy and not democracy.

In view of all these and to foster a way forward, N90 or N100 will be too much but we can manage.

With N90 or 10n per litre, we will now understand that no subsidy is paid any longer and we now have added tax infused in the pricing to ensure we get infrastructures that ought to be a normal duty of a responsible government.

We can't continue the protest by holding on to 65N even when we know that is the ideal stand, it is now our duty to ensure that the proceeds made from subsidy removal is judiciously spent,
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by debosky(m): 7:26pm On Jan 15, 2012
Seun:

God question.  Imagine that under normal conditions, you're supposed to buy at 1000 liters at 55 Naira and sell at 65 Naira for a guaranteed profit of 10 naira per liter or 10,000 naira.  If you hoard the fuel for one month, you'll be able to sell at 68.4 naira or 13,400 naira profit.  So you'll make a bit more.  But the problem for you is that you would have made 100,000 naira during that same month by turning over your inventory 10 times instead of hoarding the fuel.  Hoarding is not worth it unless you can make more than what you would have made by selling normally. And a gradual increase in price over a long period of time minimizes the amount you can make by hoarding relative to the cost of hoarding.

Your argument is dead in the second line - under 'normal' conditions. There's nothing normal about the current system in Nigeria.

Not only will the importers hoard for their guaranteed additional profit, they'll sell some of the scarce hoarded product at inflated prices on the black market.

Only the big marketers who aren't interested in locking down their capital will desist from outright hoarding, but even some of their distributors will divert the product for black market sales.

Using your example, I import 1000 litres, sell 500 on the black market at 70 naira and sell the rest a month later - there's still a lot of room for short term profits here. The folk who are doing the damage are 'briefcase companies' which just get import licenses on a whim to make a quick buck.

A gradual GUARANTEED change in price will lead to a 3 year shortage when people make a killing due to hoarding and black market sales.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by jumboo: 7:27pm On Jan 15, 2012
and who says international oil prices won't fall to $60 before the year runs out?
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Nobody: 7:30pm On Jan 15, 2012
jumboo:

and who says international oil prices won't fall to $60 before the year runs out?

Nope. If anything, there ll be an increase from the perspective of US-Iran crisis alone.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Rad1cal: 7:37pm On Jan 15, 2012
Can't work cool .
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by Pukkah: 7:40pm On Jan 15, 2012
The bottomline of this thread is that subsidy, if it exists and there's sense in removing it, should be withdrawn in a gentle, humane, and non-destructive manner.

Which economy can absorb a sudden and astronomical increase in the price of a crucial product? Such a thoughtless and tactless removal can only throw the economy into instability and chaos.

@OP, your suggestion is a good academic exercise and would run into major hitches in practice.
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by KINGwax(m): 7:47pm On Jan 15, 2012
DAY11.:

@OP.

Brilliant opinion buh dis can't work in our system!

It just can't! [img]http://www.sympato.ch/smileys/Duel.gif[/img]
it can't work in any system. But maybe in mars sha,
Re: Increase Petrol Price By 85 Kobo Every Week For 3 Years by sholasys: 7:50pm On Jan 15, 2012
This is a good idea which is workable. Either reduction in phase or by weekly increase if the government are committed to the project and really want to cushion the impact on the masses. I see hoarding as a RISK to the idea which can be mitigated. Task force can be setup to go round check/monitor hoarding marketers and bring them to book. it might not be 100% perfect but will serve the masses better. GHANA have done this before, they have remove subsidy in  jan of the sm years nw

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