The fuel subsidy is equivalent to about N18,000 per Nigerian over 18, 50% of which is lost to corruption, so the subsidy is worth about N9,000. Can't the government just give out "fuel vouchers" worth N9,000 to every Nigerian over 18 every year?

The fuel vouchers would be accepted in lieu of cash at filling stations to buy anything - petrol, diesel, kerosine, gas - and the stations would be paid when they return the vouchers. With that in place, we can leave pricing to market forces.

This is a smarter way to subsidize fuel consumption because (1) The smuggling problem will no longer exist. (2) The problem of rich people benefiting more from the subsidy because they have more cars and bigger generators will be solved. Every Nigerian over 18 will benefit equally from the voucher subsidy scheme. (3) It would not encourage people to use petrol when diesel or gas would be more efficient.

Poor people would use the vouchers to buy kerosine and pay for transport, because transporters would accept them in lieu of cash and use them to buy fuel. The middle class and small businesses would use vouchers to buy fuel for their generators and small cars. This system for subsidizing fuel should cost less than the former approach and help the poor much more, or what do you think?

Other ideas:
- Increase Petrol Price By 85 Kobo Every Week For 3 Years
- Privatize Public Schools And Distribute Their Shares To The Masses

Smarter way to subsidize fuel consumption? Really??

Op, that is a good idea, but I want to make an amendment to your proposal. The voucher should not be for all above 18, rather for poor Nigerian house hold only. that means a certification of poverty will be required for one to get a fuel voucher.  

Difficult to implement but at least a sound idea, I believe the OP has contacts in government he can relay this to. The problem with any major undertaking in Nigiera is because of corruption and inefficient government, until we get a government that is at least competent in doing a couple of things, we will not have any development.

U think dey want d poor to b able raise a hand?
U think dey want us do same thing dey do huh?

In that case, you may as well just write checks.

But the question is, how do you do this in a country with poor record-keeping?

@OP, nice post. In fact, I made a similar suggestion here yesterday.

Here's d link:
https://www.nairaland.com/nigeria/topic-841721.0.html

efisher:

@OP, nice post. In fact, I made a similar suggestion here yesterday.

Here's d link:
https://www.nairaland.com/nigeria/topic-841721.0.html

That was brilliant.

Thanks Arosa.

Kobojunkie:
Smarter way to subsidize fuel consumption? Really??  

Fuel is primarily consumed in productive activities. It's consumed when you go to work every morning and return home every evening. It's consumed when you run a generator to power the equipment needed for your business. It's consumed when any product is transported from the point of production to where it's needed, e.g. veggies from the north to the south. It's consumed when you manufacture things. It's consumed by tractors during the practice of agriculture by farmers. You can't produce anything without consuming power, and most power comes from fuel.  

Subsidizing fuel consumption subsidizes the production of almost anything you can imagine. Even when fuel is used for pure consumption, like powering your generator to watch a Nollywood movie, or a Fan so you can sleep at night, it contributes to your mental health, which also helps your performance at work. So subsidizing fuel consumption is much smarter than you would initially think. Fuel subsidies are smarter than many other forms of government expenditure, because people will use the subsidized fuel for activities that benefit them most, whether productive or otherwise.

Over a year ago, I suggested that all the oil proceeds be distributed directly to the people in cash; with the federal, state and local governments having to survive entirely on taxes. The US state of Alaska has often paid oil reciepts direcly to citizens so there is some precedent.

Aside from the the obvious reduction in government waste and increase in accountability, there's also the fact that poor people spend money in ways that are far more beneficial to the economy than rich people (they buy local garri instead of imported big screen TVs).

There are 2 problems with this proposal, both of which also apply to Seun's:
1. The corruptocracy would still find ways to steal the bulk of the money either through "ghost Nigerians" or cooking the books.
2. Such a proposal is impossible to implement without a revolution. The elites will never allow it.

Arosa:
Op, that is a good idea, but I want to make an amendment to your proposal. The voucher should not  be for all above 18, rather for poor Nigerian house hold only. that means a certification of poverty will be required for one to get a fuel voucher.  

At first glance, that would seem like an obvious way to save money, but it's a big mistake.  What you're saying in essence is that if people are poor, you give them the vouchers, but if they work hard to get jobs and make more money, the vouchers will be taken away from them.  In essence, you're encouraging people to remain poor. It's important to help the poor, but it's also important not to punish them when they aspire for a better life by taking away their benefits.  Moreso, the problem of figuring out who is poor and who is not poor will be an avenue for corruption, so it's best to avoid it completely.  Vouchers worth the same amount would still benefit the poor much  more than the rich because the poor consume less fuel.

Nice idea.
That's like a special currency for fuel.
I hope this helps save the one key benefit that indirectly sustains Nigerians.

Not into this. I still go with a gradual reduction, and obvious showing of what the gradual reduction is doing.

I was thinking along these lines but Seun, can you explain to us how the vouchers will be distributed? In a country where there is no standardized way to identify individuals, it's difficult to implement something like this,

They dont want Nigerians to 'eat'. That is the fundamental issue. They dont care about any of us. Hence they will never implement any of these schemes.

nice ideas though in an uncorrupt enivroment  

Our current fuel subsidy program no dey sustainable, na this one go come dey sustainable and easier to handle?? ROFLMAO!! 

Talk about planning to jump straight into the fire from the frying pan!

@OP ,

This is likely to fail even more due to FRAUD; in as long as there isn't any checks and balances in the system, there's more likely to be FAILURE. People will defraud the system because theirs no system of accountability, and inventory audit. Although I can agree with you, however, a system where the govt pays the subsidy kinda like how we file our taxes and get refunds, that is something that's needed rather.

If we use how OP suggested, there's nothing stopping those fuel retailers from selling N200 and up for gas, after all there are fuel vouchers, but if the govt proposes a refund up to a certain amount and directly to the consumer, the people will be forced to source cheaper fuel.

Seun:

At first glance, that would seem like an obvious way to save money, but it's a big mistake.  What you're saying in essence is that if people are poor, you give them the vouchers, but if they work hard to get jobs and make more money, the vouchers will be taken away from them.  In essence, you're encouraging people to remain poor. It's important to help the poor, but it's also important not to punish them when they aspire for a better life by taking away their benefits.  Moreso, the problem of figuring out who is poor and who is not poor will be an avenue for corruption, so it's best to avoid it completely.  Vouchers worth the same amount would still benefit the poor much  more than the rich because the poor consume less fuel.

I understand what you are driving at, but I don't think anybody would want to remain poor cos of fuel vouchers. Poverty is not an envious status,  

Arosa:

I understand what you are driving at, but I don't think anybody would want to remain poor cos of fuel vouchers. Poverty is not an envious status,  

No, Seun is right. The same thing happens in the US and UK with people living on welfare or in public housing. If getting a better job means that you're going to lose the government cheque, then many people would rather work less or remain stagnant. There are hundreds of thousands of people living in council flats in the UK who can work but prefer to stay at home and collect disability allowance.

Personally though, I doubt if any government program that preferentially benefits the poor can work in Nigeria. Egaletarianism is a foreign concept to us and even poor people seem to believe that the rich deserve a bigger share of the national cake.

And like I said earlier, the kleptocrats will always find a way to steal the bulk of the money.

^^Welfare still gets abused by many there, not to talk of Nigerians who are ALL about exploitation and abuse. They will bring a whole new meaning to the word abuse.

We can deal with this without setting up more ways for new self-made cabals to originate.

VoodooDoll:

Reasons against:

1) Social welfare vouchers may lead to a massive population explosion. Do we even know Nigeria's true population. People would be encouraged to have as many kids as the state becomes their caretaker

Not true. Seun suggested that the vouchers be given to every Nigerian over 18. The government is not going to be feeding anyone's children. Besides, it is well established that birth rate reduces as people's standard of living rises so less poverty won't lead to more children.

2) Ethnic tension as some smaller ethnic groups would feel cheated and so will go on a massive population explosion. Some ethnic groups will register to collect vouchers in one area but live in another area creating further pressure on infrastructure in the regions they live in

Everybody will get the exact same amount of money regardless of ethnicity.

3) Migratory ethnic groups would find it hard to collect their vouchers - no fixed abode - and so will feel left out of the state and thus cheated

This is easily solvable by making each person register at a single point wherever is convinient. If we can do it with voter registration, we can do it with fuel vouchers.

4) Ghost children and Adults would spring up as corruption and a new cabal prevails

I completely agree on this point. Nigeria is totally corrupt and that is not likely to change anytime soon. Even though we can try to limit fraud with biometrics, etc, the thieves will always find a way.

5) Huge administrative costs may be unsustainable.

The admin costs won't be as high as you think. Computers will do most of the heavy lifting so there won't be much paperwork. Besides, we have an army of idle federal civil servants. Let them earn their salaries for a change.

Some of us don't need any fuel subsidy but there is a way the voucher idea can work with some amendments. Leave out tax defaulters! Focus more on students (below university) and elderly (above 60), people between 18 and 60 should be left to hustle.
We really need to focus on the very poor, those vulnerable to the challenges of the environment.

And then, please show me how to work out this idea without getting it hijacked by the politicians. Remember ghost workers? We need to shrink the "corruption cancer" to a level that will allow any meaningful execution of programs in the country.

This idea is not so right in my opinion, we should just implement a social system instead of hiding under the guise of fuel subsidy.

@Evil brain

1) The US, UK have both seen population growth in their lower class populations. These are the majority of people who rely on such social voucher schemes. I wouldn't want to see its effect in Nigeria especially if it gets enshrined in the masses mentality.

2) Ethnic tensions
The Ijaws and other minority groups are smaller than the majority groups however the voucher scheme would be funded by Abuja. Abuja's income is from Oil and gas (offshore and onshore). A voucher scheme that makes the connection and payment transperant will be easily cross referenced to geopolitical zones. MEND etc will not be smiling to see huge amounts based on head count and population.

3) The Fulani and Igbo ethnic groups are migratory. Fulani for cultural reasons whereas Igbos for trade. While I believe the Igbo ethnic group will be able to overcome this as once they move to a region they quickly establish, I am unsure of the Fulany ethnic group members that may be that may migrate and do not take kindly to being counted, registered etc.

Voters registration is not the same as registering for cash receipt purposes. Also what is the literacy rate amongs women in the North - it is very poor so they may be at a disadvantage.

My opinion.

VoodooDoll:

@Evil brain

1) The US, UK have both seen population growth in their lower class populations. These are the majority of people who rely on such social voucher schemes. I wouldn't want to see its effect in Nigeria especially if it gets enshrined in the masses mentality.

2) Ethnic tensions
The Ijaws and other minority groups are smaller than the majority groups however the voucher scheme would be funded by Abuja. Abuja's income is from Oil and gas (offshore and onshore). A voucher scheme that makes the connection and payment transperant will be easily cross referenced to geopolitical zones. MEND etc will not be smiling to see huge amounts based on head count and population.

3) The Fulani and Igbo ethnic groups are migratory. Fulani for cultural reasons whereas Igbos for trade. While I believe the Igbo ethnic group will be able to overcome this as once they move to a region they quickly establish, I am unsure of the Fulany ethnic group members that may be that may migrate and do not take kindly to being counted, registered etc.

Voters registration is not the same as registering for cash receipt purposes. Also what is the literacy rate amongs women in the North - it is very poor so they may be at a disadvantage.

My opinion.

It should be a one-time event not an ongoing event

Seun:

Fuel is primarily consumed in productive activities. It's consumed when you go to work every morning and return home every evening. It's consumed when you run a generator to power the equipment needed for your business. It's consumed when any product is transported from the point of production to where it's needed, e.g. veggies from the north to the south. It's consumed when you manufacture things. It's consumed by tractors during the practice of agriculture by farmers. You can't produce anything without consuming power, and most power comes from fuel.  

Subsidizing fuel consumption subsidizes the production of almost anything you can imagine. Even when fuel is used for pure consumption, like powering your generator to watch a Nollywood movie, or a Fan so you can sleep at night, it contributes to your mental health, which also helps your performance at work. So subsidizing fuel consumption is much smarter than you would initially think. Fuel subsidies are smarter than many other forms of government expenditure, because people will use the subsidized fuel for activities that benefit them most, whether productive or otherwise.

Apart from your 'solution' seeming to target those further downstream on the fuel producer-consumer tree, what you suggest here is not that different from what we just got rid of, and there is still the question of sustainability to address. Even worse, you just complicated the fight against corruption. How do you tackle corruption at this level? We probably had at most 300 marketers but were unable to handle corruption there. Now you suggest a 'solution' that introduces about 150 million potential fraudsters, are you certain the same Government is ready for such? Please do not suggest more RESOURCE CONSUMING patches cause you and I know the reason we were given for why subsidy was scrapped is because we are, yes, low on financial resources.

Hmmmm, great thinking and very nice idea - in theory at least, So lets do the math.
Using the last voter registration exercise i believe about 70million folks above 18 were registered right? So that makes
70,000,000 * N9,000 = My math is a bit rusty but i think that gives about N630,000,000,000
Oh dear! Wasnt this about cutting costs in the first place? Well, look at the bright side; its less than a trillion naira - at least until Nigerians realize this is actually MONEEEEYYYY being shared and begin trooping out to claim their cash vouchers.
This idea is so DEAD!

seun poor man will rather prefer naira notes than a silly paper called voucher.

ekt_bear:
But the question is, how do you do this in a country with poor record-keeping?

Same way they did voter registration, sending out agents with laptops, fingerprint scanners, and webcams to gather the data. If possible, it may be cheaper to use the data in INEC's voter registry as a starting point. It can be done much cheaper than INEC did it if the exercise is not rushed.

Evil Brain:

Over a year ago, I suggested that all the oil proceeds be distributed directly to the people in cash; with the federal, state and local governments having to survive entirely on taxes. The US state of Alaska has often paid oil reciepts direcly to citizens so there is some precedent.

Aside from the the obvious reduction in government waste and increase in accountability, there's also the fact that poor people spend money in ways that are far more beneficial to the economy than rich people (they buy local garri instead of imported big screen TVs).

Great idea. Fuel vouchers have a slight advantage because they are like a natural extension of the current subsidy.

There are 2 problems with this proposal, both of which also apply to Seun's:
1. The corruptocracy would still find ways to steal the bulk of the money either through "ghost Nigerians" or cooking the books.
2. Such a proposal is impossible to implement without a revolution. The elites will never allow it.

If the person at the top is tough and not corrupt, and that person is careful to recruit the most honest people around, there's a good chance that the corruption in the process will be minimal. Why do you feel the elites will never allow the implementation of fuel vouchers?

[size=13pt]
Population of Alaska :           698,473 people

Population of Nigeria : ~150,000,000 people
[/size]

More information about Alaska

Alaska
Kenai Refinery (Tesoro), Kenai 72,000 bbl/d (11,400 m3/d)
Valdez Refinery (Petro Star), Valdez 50,000 bbl/d (7,900 m3/d)
North Pole Refinery (Petro Star), North Pole 17,000 bbl/d (2,700 m3/d)
Kuparuk Refinery (ConocoPhillips), Kuparuk 14,400 bbl/d (2,290 m3/d)
North Pole Refinery (Flint Hills Resources), North Pole 210,000 bbl/d (33,000 m3/d)
Prudhoe Bay Refinery (BP), Prudhoe Bay 12,500 bbl/d (1,990 m3/d)

So, about 3/4 of a million people and 5 refineries in Alaska. We suggest that as a realistic model for a solution in Nigeria?


Really??