[b][/b]

valacious: When partial subsidy was removed, i didnt see any partial SURE programme, now when full subsidy is removed would we have the so called palliatives or full SURE program? I dont trust this govt.

This is the fundamental problem- WE DON'T TRUST OUR LEADERS. Until government can show us they are trustworthy by taking the steps I itemised earlier, subsidy removal just won't fly with the average Nigerian.

BlackPikiN: The governor of the Central Bank of Nigeria (CBN), Lamido Sanusi in an interview with Reuters on Friday in New York said [size=20pt]that the current system of subsidizing fuel prices is unsustainable.[/size]
The governor of the Central Bank of Nigeria, Lamido Sanusi said that a sharp fall in oil prices could spell big trouble for the country.

Mr Sanusi, a former banker who specialized in risk management and who is allied with Finance Minister Ngozi Okonjo-Iweala in the push for reforms, is pushing for the complete removal of the system of subsidizing fuel.
The government tried to scrap the subsidies but backtracked after widespread protests earlier this year and partially reinstated them.

Mr Sanusi also said that a sharp fall in oil prices could spell big trouble for Nigeria.

“I am trained to think in terms of ‘what if’ and that’s the mindset I bring to my job. What happens if oil prices go to $50 a barrel? It’s happened before.”

Asked how low oil prices would need to fall before they pose a risk to Nigeria, Mr Sanusi said a decline to around $85 or $90 a barrel – from around $120 now – could lead to a shortfall in projected revenues and higher budget deficits, if Nigeria’s oil output does not increase.

“So I don’t think the headline numbers alone would justify a change in monetary stance from where we are today,” he said.

The CBN governor said the government should spend no more than the N880 billion for subsidies in 2012 earmarked in the budget signed by Nigerian President, Goodluck Jonathan on Friday.

“I would simply like to see that the government does not pay a penny more than that, no matter what happens,” he said.

Mr Sanusi also said that a sharp fall in oil prices could spell big trouble for Nigeria.

texazzpete:

This quoted post above is an excellent example of an 'educated illiterate'.

Sanusi is NOT complaining about not being able to pay subsidies if oil prices crash to say $50. He is concerned that we do not have any meaningful savings to cushion the devastating effects of such a price shortfall, and is pushing for a reduction in Government expenditure on subsidies which should lead to increased savings.

Smh.

Now you come up with the nonsense you wrote above pretending to have knowledge on what you have no clue about. I have highlighted the different areas of Sanusi's statements and clearly he is definitely concerned about govt paying more for more for subsidy in 2012 than budgeted for. And he is clearly speaking from 2 sides of his mouth.

That I have no savings does not mean that I would not do what I have budgeted for! The budget is based on a benchmark of $72, yet he is saying the entire budget could be at risk even if the crude price drops to $85, now tell me which voodoo economics is that? The only way our budget could be at risk at $85 would be that the excess money that could be saved into the SWF, the govt of the day has some hidden plans for it, and therefore they are concerned that the money would not accrue or would not be enough.

I am not easily hoodwinked by stories, I look beyond the surface, especially at the numbers. Read the entire interview again and check how many times he mentioned fuel subsidies and how many times he mentioned savings. You indeed are an educated illiterate, knowing nothing but covering up with grammar.

The Farouk Lawan-led panel, according to sources, learnt that while the country’s daily fuel consumption is about 30 million litres, operators of the fuel subsidy regime consistently laid claims to 60 million litres per day, thus paying out subsidy almost in excess of 100 per cent.

http://www.guardiannewsngr.com/index.php?option=com_content&view=article&id=83436:storm-gathers-over-subsidy-probe-oil-chiefs-may-face-trial-&catid=1:national&Itemid=559

how well have they cleaned up this mess?

Akainzo:



Now you come up with the nonsense you wrote above pretending to have knowledge on what you have no clue about. I have highlighted the different areas of Sanusi's statements and clearly he is definitely concerned about govt paying more for more for subsidy in 2012 than budgeted for. And he is clearly speaking from 2 sides of his mouth.

That I have no savings does not mean that I would not do what I have budgeted for! The budget is based on a benchmark of $72, yet he is saying the entire budget could be at risk even if the crude price drops to $85, now tell me which voodoo economics is that? The only way our budget could be at risk at $85 would be that the excess money that could be saved into the SWF, the govt of the day has some hidden plans for it, and therefore they are concerned that the money would not accrue or would not be enough.

I am not easily hoodwinked by stories, I look beyond the surface, especially at the numbers. Read the entire interview again and check how many times he mentioned fuel subsidies and how many times he mentioned savings. You indeed are an educated illiterate, knowing nothing but covering up with grammar.

Your attempt at changing the goal posts is as obvious as it is laughable. Go and re-read your initial post...you made it clear that your understanding of this discussion from Sanusi was that 'the FG would not be able to pay subsidy at $50 per barrel'. I rightly called you out on that brainless assumption of yours.

If you had showed consistent use of your brain cells and posted your much more sensible concerns on talks of 'deficit' at $85 per barrel, I never would have had cause to doubt the quality of your education. I enjoin you to summon the required courage to admit that your initial post was brainless. That is the first step to your redemption

Una go soon start blaming GEJ. The people behind the recent subsidy removal are coming out small small and majority are the Northerners. But they will all blame GEJ

texazzpete:

Your attempt at changing the goal posts is as obvious as it is laughable. Go and re-read your initial post...you made it clear that your understanding of this discussion from Sanusi was that 'the FG would not be able to pay subsidy at $50 per barrel'. I rightly called you out on that brainless assumption of yours.

If you had showed consistent use of your brain cells and posted your much more sensible concerns on talks of 'deficit' at $85 per barrel, I never would have had cause to doubt the quality of your education. I enjoin you to summon the required courage to admit that your initial post was brainless. That is the first step to your redemption

You have shown again that you still lacked comprehension abilities, you know the words but are lost with the meanings. Below is my original post that you initially replied to.

Akainzo: That part about the country being in trouble should oil prices drops got me cracking up.

Has SLS forgotten that if oil prices crashes to $50, then there would be no need to pay subsidy. Or is he telling us that the government would pay subsidy irrespective of the actual price of crude

Now let me analyze for you, in simple language to make it easier for you to understand.

If SLS does not want to pay anything more than the 880 Billion earmarked for fuel subsidy in 2012, then his cause is helped by the price of crude crashing to $50 since the amount of subsidy is then reduced to almost non-existent that Nigeria should not be in trouble due to fuel subsidy payments.

If the price of crude drops to $85, while the 2012 budget is based on $72, then Nigeria would still not be in trouble of a deficit as we are still earning higher than our budgeted figure. However, there would be little in the excess crude account (or Sovereign Wealth Fund as SLS wants it) for the FGN to spend as they may want, but it does not mean they would not have excess money since they can make savings from the amount saved from not paying fuel subsidies.

If the price of crude crashes to $50 however, SLS should not bother about fuel subsidy as that would not be his problem but the deficit that even the 880Billion earmarked for subsidy would not be able to plug. Thus he should not have been hammering on total fuel subsidy removal as if that is the major spend item that would ensure that a crash to $50 does not impact the economy or the 2012 budget implementation.

Hope I have painted to you what I captured in that my small reply that your little brain couldn't understand.

texazzpete:

This quoted post above is an excellent example of an 'educated illiterate'.

Sanusi is NOT complaining about not being able to pay subsidies if oil prices crash to say $50. He is concerned that we do not have any meaningful savings to cushion the devastating effects of such a price shortfall, and is pushing for a reduction in Government expenditure on subsidies which should lead to increased savings.

Smh.

You know I wanted to reply him last night but heck, I have to go to work this morning so no time for argument. I so dislike SLS and his policies, but unfortunately, a lot of people do not get SLS argument which I agree with him.

donclemo:

DONT EVER COMPARE NIGERIA AND USA NOT EVEN IN DREAMS........... local government, state government and federal government can't even provide the basic amenities na income dem wan generate ..... even common light we no get but small countries dey get 24 hour light

I wasn't comparing, alj_harem asked a question, look at his questions, besides, I made well know in few parts of my post that unfortunately, my post doesn't reflect Nigeria.

Beaf: Sanusi is correct. No nation can survive on an import dependent mono-economy.

However what I would like to see is a well planed strategy involving the LG's, states and FG to diversify the economy and move firmly toward true federalism. It is understood that GEJ has some proposals for true federalism with the constitution amendment committee, but these things need to be rushed through.

Well said!

Beaf:

Exactly! For me, its an opposition party like ACN actually defining true federalism as meaning greater dependence on the FG through increased awuf money that really gets my goat. Why go through all the motions and hypocritical soundbytes to make a na'ked bid for awuf?
Everybody across the board is casting beady eyes on a piece of awuf oil loot.

Nigeria really lacks leadership at state and LG levels. Aside from Akpabio who is spending 83% of his budget on capital projects, there doesn't seem to be anyone remotely interested in in developing the cadres of govt that are directly responsible to the people.
We might mention the likes of Lamido, Chime, Amaechi, Fashola and Oshiomole, but none comes remotely close to the bar Akpabio has set.

I feel a lot of pain from realising that most people do not even have a clue about what their LG and state govt reponsibilities to them are, talkless of them having the slightest understanding of the cogs that make the wheel of development spin.

I pity the way this country is shaping to turn out in the next decade or so when oil is projected to lose market importance.

Fair enough, but whats the point developing greater income from certain sources at the state level if the larger percentage of it will revert to the Federation under the laws? What does the constitution say on monies sourced from mineral wealth for example?

I think the first step towards encouraging greater local income generation will be to fix the laws to make certain that the localities have the first bite on what they create - whilst a minimalist tax thereon reverts to the Federation. If any.

No amount of fuel subsidy removal will translate to any changes if CORRUPTION is not tackled first. FULL STOP

Nigeria is set for a show down between the supports of the systems encouraging laziness and the others....

The subsidy won't be a greater problem for Nigeria if the price of oil drops. I don't know why Sanusi keeps saying this. If the price of crude oil drops, the cost of providing the fuel subsidy will drop by a similar percentage. If the oil price rises, it will also go up.

Seun: The subsidy won't be a greater problem for Nigeria if the price of oil drops. I don't know why Sanusi keeps saying this. If the price of crude oil drops, the cost of providing the fuel subsidy will drop by a similar percentage. If the oil price rises, it will also go up.

Seun,
The key to what Sanusi is saying is evident in this quote from the OP

Mr Sanusi also said that a sharp fall in oil prices could spell big trouble for Nigeria.

“There will be a very bad day and a lot of gnashing of teeth [size=14pt]if the oil price crashes and we haven’t saved a thing[/size],” he said

It is fairly obvious that Sanusi is not saying Subsidy payments will be crippling for Nigeria if the oil price drops. He is saying a very large drop in oil price will catch a Nigeria with little savings unaware. Hence the 'we haven't saved a thing' part.

Sanusi is talking about the current opportunity cost of the subsidy (reduced savings) and not any future subsidy payments at a low oil price.

Akainzo:

You have shown again that you still lacked comprehension abilities, you know the words but are lost with the meanings. Below is my original post that you initially replied to.



Now let me analyze for you, in simple language to make it easier for you to understand.

If SLS does not want to pay anything more than the 880 Billion earmarked for fuel subsidy in 2012, then his cause is helped by the price of crude crashing to $50 since the amount of subsidy is then reduced to almost non-existent that Nigeria should not be in trouble due to fuel subsidy payments.

If the price of crude drops to $85, while the 2012 budget is based on $72, then Nigeria would still not be in trouble of a deficit as we are still earning higher than our budgeted figure. However, there would be little in the excess crude account (or Sovereign Wealth Fund as SLS wants it) for the FGN to spend as they may want, but it does not mean they would not have excess money since they can make savings from the amount saved from not paying fuel subsidies.

If the price of crude crashes to $50 however, SLS should not bother about fuel subsidy as that would not be his problem but the deficit that even the 880Billion earmarked for subsidy would not be able to plug. Thus he should not have been hammering on total fuel subsidy removal as if that is the major spend item that would ensure that a crash to $50 does not impact the economy or the 2012 budget implementation.

Hope I have painted to you what I captured in that my small reply that your little brain couldn't understand.

You STILL don't get it, you dolt!
Sanusi is not talking about any 'cause being helped' if oil prices drop. He is not talking about subsidy payment if the per barrel cost of crude oil drops to $50. What he worries about (AS CLEARLY STATED IN THE ARTICLE) is that the $50 per barrel scenario does not occur and meet a Nigeria with little savings to cushion the shock.

I have no idea how you're reading this article. If you have issues comprehending written English, I cannot help you.

Beaf: What is wrong with people demanding that their states and LG's actually function and generate wealth as occurs the World over?
There is nothing stopping the states and LG's from doing so.

The question has to be asked if most Nigerians have been so traumatised by oppression that they have lost the use of their brains. Failing this as a reason, then the question becomes if most Nigerians are mentally and physically lazy.

I am sick and tired of hearing id!otic arguments for our continued dependence on oil.

Guy, leave that thing. Na your grammar (wey you no even fit speak well) the man on the street go chop if fuel hits N150 per litre?

texazzpete:

You STILL don't get it, you dolt!
Sanusi is not talking about any 'cause being helped' if oil prices drop. He is not talking about subsidy payment if the per barrel cost of crude oil drops to $50. What he worries about (AS CLEARLY STATED IN THE ARTICLE) is that the $50 per barrel scenario does not occur and meet a Nigeria with little savings to cushion the shock.

I have no idea how you're reading this article. If you have issues comprehending written English, I cannot help you.

Just like Seun pointed out to you, you are the one not getting it. You want us to use the one single statement he made in the course of the entire interview as the basis. But you would rather that I, or others, do not draw any reference from the many statements he made regarding 'fuel subsidy'! Haba!

Now tell me, where in the entire interview did he mention the any other types of subsidy, or is fuel the only thing Nigeria subsidizes? Where in the entire interview did he mention government reducing its spending without relating it to fuel subsidy? or the wastage in the NA is not a spend or does not need to be reduced? Or the govt is not paying subsidy on fertilizer? Or not paying subsidy on pilgrimage?

Now even if I toe your line (though I do not), pray tell me, where has the excess crude money being made now been channeled to? Currently we have been having excess of at least $40 per barrel ($112 -$72), what has happened or is happening to the money being saved?

if this statement was made by NOI, this thread wuld av reach 25pages, wia are the hausa-fulani slaves of d west?

texazzpete:

Seun,
The key to what Sanusi is saying is evident in this quote from the OP

By the way, I noticed that you did not say Seun was brainless with his assertion, considering that we both hold the same view and wrote the same thing. Spineless fool!

Seun: The subsidy won't be a greater problem for Nigeria if the price of oil drops. I don't know why Sanusi keeps saying this. If the price of crude oil drops, the cost of providing the fuel subsidy will drop by a similar percentage. If the oil price rises, it will also go up.

Mallam SLS though arguing that part about subsidy, but his argument remains that since Nigeria largely depends on sale of crude oil for its huge chunk of revenues, when the prices of oil goes down, Nigeria WILL NOT have any sustainable revenue. You're right that though there won't be any need to subsidize, but ask yourself, how will Nigeria fund her budget without revenues.

Look at this basic estimate, Nigeria's recently passed budget was about $27billion, of that amount and at least 60% is from oil sale (60% is a lil too conservative becos it's higher), that's a total of $16.2 billion coming from sale of oil. Now, with a reduction in price sale of oil in whatever % point from the constant price is like to have a hit on Nigeria revenue. Therefore, using the $50/barrel, that's a reduction in about 50% point in the revenue, meaning that Nigeria's revenue will be about $8.1billion.

Is it not obvious that Nigeria won't fund her obligations such as Education, Healthcare, etc? I mean you won't have subsidy, however, Nigeria will be in the worst shape than it has ever been given given that there will be a whole lot of unfunded obligation because there's no money

manny4life:
Mallam SLS is not arguing that part about subsidy, but his argument remains that since Nigeria largely depends on sale of crude oil for its huge chunk of revenues, when the prices of oil goes down, Nigeria WILL NOT have any sustainable revenue. You're right that though there won't be any need to subsidize, but ask yourself, how will Nigeria fund her budget without revenues.

Look at this basic estimate, Nigeria's recently passed budget was about $27billion, of that amount and at least 60% is from oil sale (60% is a lil too conservative becos it's higher), that's a total of $16.2 billion coming from sale of oil. Now, with a reduction in price sale of oil in whatever % point from the constant price is like to have a hit on Nigeria revenue. Therefore, using the $50/barrel, that's a reduction in about 50% point in the revenue, meaning that Nigeria's revenue will be about $8.1billion.

Is it not obvious that Nigeria won't fund her obligations such as Education, Healthcare, etc? I mean you won't have subsidy, however, Nigeria will be in the worst shape than it has ever been given given that there will be a whole lot of unfunded obligation because there's no money

The budget of the FGN is based on a crude benchmark of $72 per barrel. A reduction to $50 in actual sale price will therefore NOT translate to a 50% reduction in revenue to the FGN! So that argument is patently false.

You might want to know that Nigeria has also been earning an excess amount from the sales of crude, approximately $40 per barrel for up to 3 months now. He did not say we would not be able to carry out all our programs, just that we would need to eat into much of our savings.

I can't wait for this man to leave by July. so that GEJ can put a credible person as he has always done. period

Akainzo:

The budget of the FGN is based on a crude benchmark of $72 per barrel. A reduction to $50 in actual sale price will therefore NOT translate to a 50% reduction in revenue to the FGN! So that argument is patently false.

You might want to know that Nigeria has also been earning an excess amount from the sales of crude, approximately $40 per barrel for up to 3 months now. He did not say we would not be able to carry out all our programs, just that we would need to eat into much of our savings.

Ok fine, I thought the CBN estimated the Benchmark to be about $95/barrel, I was wrong in my estimate, however, even at $22/barrel to the estimate means a reduction in 44% points. So you do the math and then tell me 44% reduction the estimated budget will be given that more than 60% is represented from crude oil sales.

If you listened to NOI, they have dipped in further into the ECA to cover the deficit from the budget as well as fund other obligations. Obviously, Nigeria has no savings, so I have nothing to say with regards to that, somebody is looting somewhere. Apparently, why would he want to scare you away when he says you won't be able to carryout all your programs, is it not if the money is there, you carry out programs, if there's no money how do you intend on doing it?

All this to justify the need to leech onto crude oil sales....but just consider an imaginary situation where oil flow suddenly stops today, I mean right now? what would happen? There would be mass deaths and starvation abi? Insisting that spreading oil wealth around is the worse from of corruption being perpetrated on the Nigerian society....

People have been sitting down waiting every month for oil money for the past 30years and there is no improvement, we have replaced person after person and still no improvement,we need to stop encouraging laziness...

There is no reason why Govt should be distributing products to people, people can do that themselves, has it occurred to the laziness supporters here that there would be no corruption of the scale in the downstream sector if the Govt was not involved there?
Yet people see govt as a father Christmas to do all things.....

the problem is a lot more than corruption, it about running on a faulty structure that encourages corruption, if the structure is removed the corruption reduces drastically, Y cant you get this simple logic?

Seun: The subsidy won't be a greater problem for Nigeria if the price of oil drops. I don't know why Sanusi keeps saying this. If the price of crude oil drops, the cost of providing the fuel subsidy will drop by a similar percentage. If the oil price rises, it will also go up.

It is not as simple as that.

According to the budget:

Disposable Income (DI)= 4.877 T
Total Recurrent Expenditure (TRE) = 3.53T = ((Subsidy) 0.88T + other recurrent expenditure (ORE) of 2.65TK)
Capital Expenditure (CE) = 1.34TK

Disposable income = CE + TRE = CE + ORE + Subsidy

K = constant (I have made both CE and ORE constants because they were derived from a fixed DI of 4.87T)

Let T = 1000000000000.

4.87T = CE + ORE + 0.88T

Income is derived from crude oil revenue and subsidy is nearly directly proportional to the price of crude oil. Lets see what 20% reduction in both parameters would mean.

0.8 x 4.87T = CE + ORE + 0.8 x 0.88T

3.9T = 1.34TK + 2.65TK + 0.704T

Note that whilst subsidy burden has reduced by 0.176T to 0.704T for the financial year, your total Fiscal income for the year has dropped by a massive 0.97 T to 3.9T, which is 72% of your capital expenditure, 37% of ORE or 138% of new subsidy requirement

To be able to meet the capital and recurrent budgets, the budget must run at a minimum of 20% deficit, which must come from your savings or more debts; both of which have their own effects on the currency, inflation and the stability of the economy.

In a nutshell, the subsidy is only one of the components in the budget. A unilateral reduction of subsidy will lead to an increase in the total disposable income and I am a staunch supporter of complete removal of subsidy and for obvious reasons.

While it is true that the cost of fuel subsidy will reduce as a result of fall in crude oil price, the disposable income will also fall since it is directly dependent of the same crude oil price.

The fall in DI will be at least 5 times the fall in subsidy requirement at 20% reduction of crude oil price. The resultant effect will be a budget deficit achieved by depletion of savings, which might not be sustainable or by further borrowing. The other way out is to make cuts in capital expenditure or ORE, which might involve redundancies and sharp rise in unemployment.

We will continue to wait in vain for good roads, hospitals and other capital-intensive projects if all we are going to commit to capital expenditure is a paltry 20% of the budget, which is a miserable 1.34K in the current budget.

maclatunji:

Guy, leave that thing. Na your grammar (wey you no even fit speak well) the man on the street go chop if fuel hits N150 per litre?

leave the guy abeg
he is been paid to write those trash here

when you talk too much, you forget elementries or basics >:

Akainzo:

By the way, I noticed that you did not say Seun was brainless with his assertion, considering that we both hold the same view and wrote the same thing. Spineless fool!

Seun has proven his intelligence. You, unfortunately, have not. Clear distinction

unclenna: daddy's boy. Lol.

What is Daddy's boy. I said I grew up around this whole Oil thing and have been schooled Extensively. So what does daddy's boy got to do with this. Simple don't teach me what I have been thought? Is that difficult to understand?

valacious: indeed daddy's boy. Can a man alone drill an oil well?

Did I say he drilled alone? When oil wells are being drilled, there is always a site engineer that heads it. Must it always be insults?

Eg in the Movie Armageddon, when describing Engr. Harry, they talked about how many Oil Wells he has drilled, did he drill it alone?

Jarus:

Smh

For someone that has been delivering lectures in LSE far back 1999.
For someone that had been invited by American Congress to come lecture them on how he managed the Nigerian economic crisis
For someone that had won Global Central Banker of the year
For someone that speaks with global press like FT, Economist, BBC etc from time to time
For someone that delivers lectures in various conferences at the global stagem

To think, by this ordinary interview in NY(where the press swamp at him anytime he is around) he is seeking international attention, I can only pity your level of ignorance.

Ogbeni, take it cool. In my opinion, all those past records were when he was more sensible and not playing politricks like he is now. The solution is not just about removing subsidy where corruption thrives as it only translates to more pain on the citizens who bears the effect of such actions.

dvee2: No amount of fuel subsidy removal will translate to any changes if CORRUPTION is not tackled first. FULL STOP

I DEY LAUGH O

texazzpete:

Seun has proven his intelligence. You, unfortunately, have not. Clear distinction

You, are a clear example of what is wrong with our educational system. You cram to pass an exam rather than studying to understand and learn!

A so called "educated illiterate" is able to comprehend and analyze an interview to arrive at the same conclusions as a seasoned intelligent prof, and rather than acknowledge his abilities you go off looking for "proven" qualifications. How foolish can you descend to in your reasoning.

Better wise up and type an apology to be accepted into the world of thinkers and not just readers. I will forgive your infraction this time.