citizenisb: FOR NIGERIAN YOUTHS TO BE DISCUSSING BIAFRA WHEN THE ELITE ARE OPENLY LOOTING BILLIONS OF DOLLARS MEANT FOR NATIONAL DEVELOPMENT IN 2012 GOES TO SHOW HOW DAFT WE ARE.

MANY ON THIS FORUM WHERE NOT EVEN ALIVE DURING THE CARNAGE SO IF YOU THINK THAT WAS GENOCIDE, A GREATER ONE VIA CORRUPTION IS HAPPENING NOW WITH HUNGER, UNEMPLOYMENT AND MASS DEATH OF WOMEN AND CHILDREN AT CHILDBIRTH AND MALARIA SCOURGES WHICH SHOULD HAVE BEEN HISTORY IF NOT FOR BAD LEADERSHIP.

LET US KEEP ON PLAYING TO OUR LEADERS TUNES SINCE WE LOVE TO CONFIRM HOW DAFT WE ARE : TALKING OF BIAFRA WHEN SINCE 1999 WE HAVE HAD MORE MONEY THAN OUR ENTIRE HISTORY COMBINED TO HAVE TRANSFORMED US TO BRAZIL OR SOUTH KOREA, IT IS A PITY!!

PointB:

Get rid of fuel subsidy, or keep whining forever!

citizenisb: FOR NIGERIAN YOUTHS TO BE DISCUSSING BIAFRA WHEN THE ELITE ARE OPENLY LOOTING BILLIONS OF DOLLARS MEANT FOR NATIONAL DEVELOPMENT IN 2012 GOES TO SHOW HOW DAFT WE ARE.

MANY ON THIS FORUM WHERE NOT EVEN ALIVE DURING THE CARNAGE SO IF YOU THINK THAT WAS GENOCIDE, A GREATER ONE VIA CORRUPTION IS HAPPENING NOW WITH HUNGER, UNEMPLOYMENT AND MASS DEATH OF WOMEN AND CHILDREN AT CHILDBIRTH AND MALARIA SCOURGES WHICH SHOULD HAVE BEEN HISTORY IF NOT FOR BAD LEADERSHIP.

LET US KEEP ON PLAYING TO OUR LEADERS TUNES SINCE WE LOVE TO CONFIRM HOW DAFT WE ARE : TALKING OF BIAFRA WHEN SINCE 1999 WE HAVE HAD MORE MONEY THAN OUR ENTIRE HISTORY COMBINED TO HAVE TRANSFORMED US TO BRAZIL OR SOUTH KOREA, IT IS A PITY!!

citizenisb: FOR NIGERIAN YOUTHS TO BE DISCUSSING BIAFRA WHEN THE ELITE ARE OPENLY LOOTING BILLIONS OF DOLLARS MEANT FOR NATIONAL DEVELOPMENT IN 2012 GOES TO SHOW HOW DAFT WE ARE.

MANY ON THIS FORUM WHERE NOT EVEN ALIVE DURING THE CARNAGE SO IF YOU THINK THAT WAS GENOCIDE, A GREATER ONE VIA CORRUPTION IS HAPPENING NOW WITH HUNGER, UNEMPLOYMENT AND MASS DEATH OF WOMEN AND CHILDREN AT CHILDBIRTH AND MALARIA SCOURGES WHICH SHOULD HAVE BEEN HISTORY IF NOT FOR BAD LEADERSHIP.

LET US KEEP ON PLAYING TO OUR LEADERS TUNES SINCE WE LOVE TO CONFIRM HOW DAFT WE ARE : TALKING OF BIAFRA WHEN SINCE 1999 WE HAVE HAD MORE MONEY THAN OUR ENTIRE HISTORY COMBINED TO HAVE TRANSFORMED US TO BRAZIL OR SOUTH KOREA, IT IS A PITY!!

utumunta: Y am i tired of discussing corruption in ds con3?
Does our leaders hav another con3 dat we dnt know abt, where they intend 2 run 2 afta mismanaging Nigeria? Somebody ansa me pls

dounleedee: Sometimes, the digression on this forum exposes the thin cord that binds us together and makes it easier to understand why Nigeria is a failed project.
It has now become the order of the day for Nigerians to spool back crimes committed by previous governments and individuals in defence of the subsisting rot in our polity when it is so obvious that their reasoning is simply influenced by bigotry.
The honest truth about Nigeria is simply that all the constituent ethnic groups are guilty of corruption either actively or passively.
It is criminal for anyone to excuse or justify the idleness and lack of will of the current government in tackling corruption by referring to the past.
If GEJ is honest and transparent, it will be a spring board for him to curb the rot in his domain and the panacea to deal with past public officials indicted or accused of corruption. No practical Nigerian can allude corruption to GEJ and neither are we expecting GEJ to rid the land of corrupt practices.
What Nigerians are desirous of seeing is a president who is committed to fighting corruption in deeds and actions and not through mere rhetorics.

dounleedee: Sometimes, the digression on this forum exposes the thin cord that binds us together and makes it easier to understand why Nigeria is a failed project.
It has now become the order of the day for Nigerians to spool back crimes committed by previous governments and individuals in defence of the subsisting rot in our polity when it is so obvious that their reasoning is simply influenced by bigotry.
The honest truth about Nigeria is simply that all the constituent ethnic groups are guilty of corruption either actively or passively.
It is criminal for anyone to excuse or justify the idleness and lack of will of the current government in tackling corruption by referring to the past.
If GEJ is honest and transparent, it will be a spring board for him to curb the rot in his domain and the panacea to deal with past public officials indicted or accused of corruption. No practical Nigerian can allude corruption to GEJ and neither are we expecting GEJ to rid the land of corrupt practices.
What Nigerians are desirous of seeing is a president who is committed to fighting corruption in deeds and actions and not through mere rhetorics.

Olaolufred: Nigeria's problem is not subsidy.
It is Corruption.
Our Leaders are supposed to face the problem "CORRUPTION",
but alas it swallowed them up like a pint of honey.

However, If subsidy is removed, and Government put price at N 139 per litre,

WILL THE PRESIDENCY BE SOO STRONG TO MAKE SURE THAT THE SO-CALLED MARKETERS DO NOT ARBITRARILY TAKE SAME TO N180 PER LITRE AFTER CONTRIBUTING IMMENSELY TO THE 2015 RE-ELECTION BID?
IF THE PRESIDENCY FIGHTS THEM TO MAINTAIN THE N139PER LITRE, THEN IT IS FIGHTING CORRUPTION WHICH COULD BE FOUGHT EVEN WITH SUBSIDY IN PLACE.
HOWEVER, IF THE GOVT ALLOWS FUEL TO SELL AS HIGH AS N200 PER LITRE, IT MEANS CORRUPTION IS STILL ALLOWED TO STAY EVEN THOUGH WE WERE TOLD IT WAS SUBSIDY.
EITHER WAY, MY BIG QUESTION IS, "WHAT HAVE WE THE CITIZEN OF THIS NATION GAINED FROM THE GOVT?"

http://www.google.com/url?sa=t&rct=j&q=importation+cost+price+of+PMS+to+nigeria+&source=web&cd=3&cad=rja&ved=0CDcQFjAC&url=http%3A%2F%2Fwww.pppra-nigeria.org%2Fpms.htm&ei=Olu4UM4XpOThBN2XgZgB&usg=AFQjCNHXeQBOgmXxDKOOBMTmB3FqrX0TVg

Gbawe:

I really don't know how many times this must be repeated to people to prompt them to do some basic research to note that corruption is the problem and not whether subsidy remains or goes. Indeed, Ribadu noted this lately after his petroleum task force had submitted his findings. He sad, and I quote, "with a clean petroleum sector Nigeria does not need subsidy removal".

I personally will not go into the details of the whole fuel subsidy thing because we have done it to death here and anyone over the age of 18 should have become an expert on the issue after the January full removal of fuel subsidy that was then scaled down. What I urge others to do is simply investigate what other major exporters of crude are doing with their fuel.We should all note whether those Nations, with considerably higher income per capita than Nigeria, are deliberately attempting to make fuel exorbitant for their people.

Some should see the table below and put things in perspective. Asking for fuel subsidy removal is a very insensitive and callous demand that will pile more hardship on an already burdened people. This is the tragedy of Nigeria. What "palliatives" have been seen from the last round of fuel increase? They have been increasing prices for years claiming the extra amount retained by government will deliver improved infrastructure, better healthcare, improved education blah,blah blah. Yet what do Nigerians have to show for those surreptitious increases in fuel price?

The rich, the politicians and diasporans always attempting to talk for everyone else. Nigerians, and I will spare folks the statistics and economics in the hope some can do some basic reading, have no business paying what we currently do for PMS. In fact even the last increase would never have happened under 99.9 of world leaders who genuinely deserve the position they occupy and deploy a direct and pro-people approach to leadership. Our President simply capitulated to the corruption he is a part of and helped create by throwing Nigerians under the bus. It is indeed about corruption and not fuel subsidy removal.


www.nairaland.com/attachments/609333_fuelsubsidylindaikejiblog_pngceb73d15478f80742891a26c8d4b4040

Olaolufred:

We gave Nigeria as a christmas gift to the politicians.
It is now hard to take it back.
When will the citizen stand as one against these monsters?

Pump price and minimum wage: Nigeria versus OPEC countries
Font size: OLAJIDE OMOJOLOMOJU 26/01/2012 12:35:00

The removal of subsidy on premium motor spirit (PMS), otherwise known as petrol, has generated a lot of controversy, culminating in the grounding of economic activities across Nigeria for six days, beginning from January 9. OLAJIDE OMOJOLOMOJU takes a look at the price of PMS vis-a-vis minimum wage in Organisation of Petroleum Exporting Countries (OPEC) and few non-OPEC countries and Nigeria.

Up till Monday January 16, Nigeria was in a state of comatose as social and economic activities were paralysed as a result of a nationwide protest and strike called by the organised labour and civil society organisations against the Federal Government’s deregulation of the downstream sector of the oil industry, which jacked up the pump price of petrol from N65 per litre to between N141 and N150 per litre. The 116.9 per cent increase in the pump price of fuel resulted in high prices of goods and services across the country, even when some states and the Federal Government are yet to comply with the provisions of the National Minimum Wage Act (NMWA), which crisis is still rocking some states over the inability of some governors to fully implement the NMWA. To compound the woes of Nigerian masses, the take home pay of a high percentage of Nigerians cannot take them home, even before the hike in price of PMS.

Nigeria is blessed with crude oil and it is one of the leading exporters of what has come to be known as ‘black gold’ in the world, but unfortunately, it is the leading importer of refined petroleum products, as a result of pervasive corrupt practices in the oil sector. With four refineries, which turn around maintenance has continued to gulp millions of dollars annually, but running at 30 per cent capacity, Nigeria has for a long time being importing refined petroleum products despite being a leading member of OPEC. The history of hike in prices of fuel in Nigeria dates back to 1978, when the military government headed by Olusegun Obasanjo, then a General, pushed up the price of fuel from 8.4 kobo to 15.37 kobo. In January 1982, the administration of former President Shehu Shagari jacked the pump price of PMS to 20 kobo.

The battle against hike in fuel price began to manifest in 1986, when the military junta headed by former military president, Ibrahim Babangida, increased the pump price from 20 kobo to 39.5 kobo on March 31, 1986. Babangida upped the price again to 42 kobo on April 10, 1988 and on January 1, 1989, he pronounced 60 kobo per litre for private motorists, a policy that led to protests by the organised labour and students’ unions across the country. On March 6, 1991, Babangida again jacked the price up to 70 kobo, before the Ernest Shonekan-led Interim National Government (ING) increased the pump price of PMS to N5 on November 8, 1993. The late General Sani Abacha brought the price down to N3.25 two weeks later, after toppling the Shonekan-led ING. Not to be left out, Abacha raised the price of fuel on October 2, 1994, to N15 but was forced by protests from labour and civil society organisations to bring the price down to N11 two days after the increase. On December 20, 1998, it was the turn of former Head of State, General Abdusalami Abubakar to increase fuel price to N25.

During Obasanjo’s second coming as a civilian president, he had a running battle with the Nigeria Labour Congress (NLC) over the increase in the pump price of petrol, which he began on June 1, 2000, when he increased petrol price to N30 before reducing it to N25 a week later and five days later, he reduced it to N22, on June 13, 2000. Not done with inflicting pains on hapless Nigerians in the name of deregulating the downstream sector of the oil industry, the Obasanjo administration, one and a half years later on January 1, 2002 jacked up the price of PMS to N40 and on the eve of his departure in 2007, raised the ante again to N70, before the late President Umaru Musa Yar’Adua reduced it to N65 following another nationwide protest by pro-democracy groups, civil society organisations and the organised labour.

Almost four years on, President Goodluck Jonathan joined the bandwagon and hiked the price to between N141 and N150 per litre. After nationwide protests, he was forced to reduce the pump price of fuel per litre to N97. But all these documented increment were never commensurate with workers’ minimum wage. While Obasanjo increased fuel price about three times during his stint as president, he managed to increase workers’ salary just about once to N7,500, which many state governments failed to implement. Early last year, President Jonathan signed the NMWA into law, legalising N18,000 as the national minimum wage, despite that it failed to meet workers’ demand of N52,000. Many analysts have argued that the signing into law of the NMWA was to hoodwink Nigerian workers to vote massively for Jonathan in the April 2011 general elections.

[b]A comparative analysis shows that with the new price regime of N97 as announced by President Jonathan on Monday January 16, Nigeria is second to Iran among OPEC members in the highest pump price of fuel and fourth behind the United Kingdom (UK), the United States of America (USA) and Iran when compared with both OPEC and non-OPEC countries, but sadly, it ranks last in the minimum wage ranking. While fuel sells for N3.61 in Venezuela with a minimum wage of N95,639, it sells for N34.54 in Kuwait, which had the highest minimum wage among OPEC countries and ranked third behind the UK and the USA among non-OPEC countries with a minimum wage of N161,461.

In the UK, which had a minimum wage of N295,644, the high price of fuel at N334.41 per litre is justified, just as in the USA, the price of fuel per litre is N157 while the minimum wage is N197,296. In Saudi Arabia, Qatar and Libya, the pump price of fuel stand at N25.12, N34.54 and N26.69 respectively while minimum wages in the three countries are at N99,237, N101,250 and N23,813, thus making Libya the OPEC country with the lowest minimum wage after Nigeria’s N18,000. The OPEC country with the highest pump price of fuel is Iran with a minimum wage of N86,585. The United Arab Emirates sells PMS at N78.18, while Algeria and Iraq sell fuel at the pump price of N63.55 and N59,66 respectively with minimum wage standing at N55,957 for Algeria and N25,813 in Iraq. Against this background, and given the fact that infrastructural development of all the countries mentioned above is far ahead of Nigeria’s, today, the minimum wage in both the public and private sectors of the Nigerian economy remains N18,000 per month,.

This is practically on paper as the Federal Government and many states are yet to begin the full implementation of the NMWA. In some states, what is operational is the ‘doctored’ version of the NMWA, wherein certain categories of workers, especially from Grade levels 1-7 are beneficiaries of the NMWA. The same is applicable to the private sector, which hides under the guise of the public sector’s failure to implement the NMWA.

Analysts and watchers of political events in the country are at a loss as to why three years after, the Federal Government, which has failed to implement the NMWA, is implementing the policy on deregulation of the downstream sector of the oil industry just three months after coming public with the idea, even while the 2012 Appropriation Bill is still before the National Assembly and even when the country is still running the 2011 budget which expires on March 31.

More curious is why Nigeria, an oil producing country, could not pay her citizens higher minimum wage like other OPEC countries which have high minimum wage to cushion the effects of any petroleum product price hike. The new price hike in the pump price of petrol may lead to another round of agitation from organised labour for a new minimum wage, even as there are rumblings across the country for labour to demand for nothing less than N52,000 as the minimum wage, but how organised labour would push the demand through remains to be seen.[/b]

Gbawe:

My brother, it is a shame some can argue for subsidy removal when it makes more economic and humane sense to fight corruption and initiate some changes that can transform , for the better, the way things are done. Why, for example, use marketers for god sake? Is it not like telling a known thief to go and deposit your money in the bank for you when you can do it yourself? There are many things this Government continues to do that reveals it is a government prepared to abet corrupt and shun rightful actions or courses.

For me those supporting fuel subsidy removal consist of three main groups.

(1) those who cannot be bothered to seek information thus validating the assertion that "to hide anything from the black man keep it in a book".

(2) Those connected to the affairs of governance and are thus automatically and sycophantically obligated to endorse all actions of government to include initiatives and policies that are glaringly wrong. We saw this, illustratively, with the mad 7 years tenure elongation plan of GEJ that was his own selfish plan to perpetuate himself in power.

(3) Bigoted and clannish Nigerians who feel duty-bound to back everything their "persecuted" Kinsmen and women do - never mind that the unnecessary actions of those leaders cause pain and hardship for all Nigerians in every nook and cranny of the nation.

In the end, those who see clearly, are detribalised and make efforts to be well-informed, have no choice but to just watch an impending accident as a reckless driver speeds unthinkingly towards a concrete wall. Our lack of unity, dishonesty, bastardized values and ethnic loathing will may ensure the impending accident happens. I personally thing the road ahead is tough for Nigeria because many Nigerians now operate with a compromised moral compass damaged by clannishness, bigotry and rent-seeking.

http://nationalmirroronline.net/index.php/politics/29893.html

The Fuel Subsidy Debate: Placing all the cards on the table - By Oluwole O. Adesina, PhD



As the news broke that the Nigerian government has decided to remove the oil subsidy effective January first, I wondered how I could simply explain the word “SUBSIDY” to my mother and some elders in my community. All they know is that government took away subsidy on petroleum products and that caused an increase in price from N65 to N142. How this can help or hinder growth of the country is not completely known or clarified.



Some other words for subsidy can be: Aid, Grant, Funding, Support, and Discount. I decided to use the word “discount” to explain subsidy to my mother and some elders in my community so that they can understand the concept completely. Thus this work is just to shed more light on the pros and cons of fuel subsidy, I am totally neutral on the subject however, I just want to share what recent research says on fuel subsidies, its economic and social impact and let readers decide on which side to swing either to the left or to the right.



Nigeria has over 159 million inhabitants. It covers an area of 924,000 square kilometers. Abuja, the Federal capital since 1991, has a population of more than one million. English is Nigeria’s official language, although many local languages such as Hausa, Yoruba, Igbo and Ijaw are also spoken. Major resources in Nigeria include petroleum, natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc and arable land. The capital-intensive oil sector provides 20 per cent of our country's gross domestic product, 95 per cent of foreign exchange earnings, and about 65 per cent of budgetary revenues.



Oil was first discovered in Nigeria in 1956 at Oloibiri, in Nigeria’s Bayelsa State and since then Nigeria has been able to join world leaders in oil production and eventually became a member of Organization of Oil Exporting Countries since 1971. Other members include: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. The secretariat or headquarters of OPEC has been located in Vienna Austria since September 1965.



The Secretary General is the legally authorized representative of the Organization and Chief Executive of the Secretariat. In this capacity, he administers the affairs of the Organization in accordance with the directions of the Board of Governors. The current holder of that office is Abdalla Salem El-Badri. The Nigerian representatives in this organization are: Mrs. Diezani Alison-Madueke; Minister of Petroleum Resources, Eng. Goni Musa Sheikh as the governor for OPEC/Chairman of the Board of Governors, and Mr. Suleman Ademola Raji as National Representatives (OPEC 2012)



There have been many researches on subsidy reform and how it affects a country; the economic, environmental, and social impact of removing subsidy at a global level (Burniaux et al., 2009; Koplow, 2009). In developed and developing countries, subsidies to the production and consumption of fossil fuels exist in a wide variety of forms including direct budgetary transfers, tax exemptions and price controls.



Subsidies can be justified in theory if they promote an overall increase in social welfare. However, the consensus of expert opinion is that fossil-fuel subsidies have a net negative effect, both in individual countries and on a global scale (Von Moltke et al., 2004).



According to Jenifer Ellis 2010, removing fossil-fuel subsidies is considered by many to be a win-win policy measure that would benefit both the global economy and the environment and therefore a “no regret” option for climate-change mitigation (Burniaux et al., 2009). In theory, eliminating fossil-fuel subsidies would result in higher fossil-fuel prices in countries that currently subsidize consumer prices, which would reduce consumption and thereby Green House Gas (GHG) emissions. At the same time, removing subsidies would remove a costly drain on the government budget. Consequently, eliminating subsidies to fossil fuels may be one of the most cost effective and least distortionary options available to governments for reducing their GHG emissions.



However, governments contemplating fossil-fuel subsidy reform should carefully evaluate the environmental and economic benefits of doing so. It is possible that reforms could provoke some unintended negative environmental effects. In some poorer countries, for example, the sudden removal of subsidies for cooking fuels could lead to a reliance on biomass for cooking and heat in some areas, increasing pressure on forests and negatively affecting indoor air quality (Von Moltke et al., 2004). And at a global level, subsidy removal could result in downward pressure on international prices of fossil fuels, resulting in increases in consumption in regions not subject to a cap on GHG emissions.



In addition, there is concern that subsidy removal could have adverse social impacts, or that the social benefits may not be fairly distributed. Pearce and von Finckenstein (2000) observe that, by their very nature, subsidies redirect economic rents to certain stakeholders. Thus subsidy removal could, in the short-term, create some economic losers.



The International Energy Agency (IEA, 1999) notes that even if there are some losers from subsidy reform, solutions that increase overall net economic and environmental well-being should still be implemented, and measures to compensate the losers considered. The money saved from subsidies could, in theory, be redirected to transfers or social programs that are better targeted for the poor.



The timing and speed of reform is also critical. Many countries that have eliminated food or fuel subsidies in recent years have experienced large-scale civil unrest (Coady et al., 2006). For example, when the Government of Indonesia dramatically raised fuel prices twice in 2005—thereby escalating the prices of food and commodities—demonstrators took to the streets throughout the country, with mobs burning tires and effigies, and throwing stones in protest.



According to recent study conducted by Jennifer Ellis (2010), the major economic, and social and impact of fuel subsidy reform are:



Economic Impact

The precise economic impacts of fossil-fuel subsidies are in part related to whether they take the form of:

a) producer supports that lower prices for consumers by lowering production costs for producers;

b) consumer supports that lower prices for consumers but also reduce returns for producers; or,

c) price support, which increases revenues for producers but increases prices for consumers.


For example, subsidies that lower the cost of fossil fuels generally increase the consumption of fossil fuels and sometimes demand (if the fuels are not available to consume), which in turn generates a whole range of additional economic impacts. The level of subsidies for each type of fossil fuel also distorts interfuel substitution decisions. For example, in the 1990s, subsidies for coal fostered excessive production in many developed countries, and excessive consumption of coal in many developing countries (Anderson and McKibben, 1997).



1. Subsidies can increase energy consumption and reduce incentives for energy efficiency. Subsidies that reduce prices for consumers promote higher consumption of energy, and reduce incentives to use energy efficiently. Subsidies that reduce production costs for producers reduce producer incentives to minimize costs and increase efficiency (Morgan, 2007).



2. Subsidies can decrease foreign exchange revenues. Subsidies that encourage greater consumption reduce export opportunities for fossil-fuel-producing nations and revenues from those lost exports (Birol et al., 1995; de Moor, 2001).



3. Subsidies are a drain on government finances through direct financial transfers from government budgets, government expenditures on infrastructure or research and development or reduced government income from taxation. This can lead to fiscal deficits and debt accumulation



4. Subsidies can increase countries dependence on imports. Subsidies that increase fossil-fuel consumption in non-fossil-fuel-producing countries increase those countries’ dependence on imports.



5. Subsidies undermine investment in alternative energy sources and alternative energy technologies. By increasing consumer demand for fossil fuels, or decreasing production costs for producers, subsidies distort the market and reduce investment in alternative energy sources or alternative energy technologies that are potentially more efficient or less environmentally harmful (Varangu and Morgan, 2002).



6. Subsidized fuels are used for purpose for which they were not intended. By lowering prices for certain fuels, subsidies can result in misuse of those fuels for purposes that were not intended. For example, in India and Indonesia subsidized kerosene intended for household cooking has been used illegally or as a cheap addition to transport fuel (Committee on Pricing and Taxation of Petroleum Products, 2006).



7. Subsidies can promote smuggling and corruption. Subsidies that lower prices for consumers but also lower returns to producers can encourage smuggling of the fuels to countries where prices are higher. This has occurred in Africa and Indonesia and benefits those selling the fuels while having negative economic impacts for the country as a whole (Clements et al., 2003). Corruption is another common consequence when fuels are subsidized and scarce as attempts are made to control distribution channels, in the case of LPG and kerosene.



Social Impact

Subsidies to fossil fuels, particularly those that keep down the price of liquid fuels, natural gas or electricity, are often justified in non-OECD countries on the basis that they benefit the poor and reduce the cost of living (IEA, 1999). There is an argument to be made for subsidies of this kind, particularly with respect to electricity, which is considered key for reducing poverty and indoor air pollution (Varangu and Morgan, 2002). H[b]owever subsidies do not always accomplish this, and may not be the most efficient mechanism for poverty alleviation. Subsidies may be regressive, benefiting middle- and upper-income groups more than lower-income groups. Direct transfers to target groups rather than general subsidies may be more effective in reducing poverty.[/b]



1. Subsidies may benefit the rich more than the poor, who spend more money on energy and have greater access to energy than the poor (Clements et al., 2007; UNEP, 2008). A study by the World Bank (2008) found that the bottom 40 per cent of the income distribution receive only 15 to 20 per cent of fossil-fuel subsidies. Even when the rate of energy consumption by the poorest quintiles increases as a result of subsidies, the wealthy derive larger absolute benefits from lower energy prices (World Bank, 2008).



2. Subsidies may reduce energy available to the poor because in an artificial low price environment, producers may have little incentive to produce or supply more, and a higher percentage of what is produced may be consumed by the rich (UNEP, 2008).



3. Subsidies often do not target types of energy that would be more beneficial to the poor. Subsidies may favor larger capital-intensive projects, such as dams or power plants, at the expense of local labor intensive means of providing energy services (IEA, 1999). Power plant and dam construction can displace or create negative environmental impacts that primarily affect poor communities, while not improving their access to energy.



4. Subsidies may divert government money that could be more effectively directed to social program such as healthcare, free education, food coupons or targeted cash transfers.



5. Fossil-fuel consumption and production produce local emission that cause many health effects that impact the poor in particular, due to their more limited choices regarding where they live (Von Moltke et al., 2004).

http://www.africanoutlookonline.com/index.php?option=com_content&view=article&id=3579:the-fuel-subsidy-debate-placing-all-the-cards-on-the-table&catid=96:allcomers&Itemid=54

Olaolufred:

You just quoted an uncle of mine.
The memory of how I became our Church Organist after the writer travelled out of town.
and how He succeeded my Dad as the church organist in early 80's came alive.
However, the truth that we know is the one that can set us free.
We will sooner or later understand that the truth we chose not to pursue will come back to haunt us later. NIGERIA ARISE TO FIGHT YOUR POLITICAL WOLVES CALLING THEMSELVES LEADERS.