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Nairaland Forum / Nairaland / General / Politics / Memo To Buhari: Remove Fuel Subsidy By Dave A. Lafiaji (352 Views)
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Memo To Buhari: Remove Fuel Subsidy By Dave A. Lafiaji by sammiestar: 7:59am On Jun 25, 2015 |
Barely six weeks after Nigeria received rare favourable commentaries in the international media for its ground-breaking transfer of power from a sitting president to a victorious opposition candidate, Nigeria slipped back into the “bad news” pages in the foreign news media in the last days of the Jonathan administration Prominent foreign media organizations were relaying all over the place, news of acute fuel shortage in Nigeria that not only threatened the continued normal operations of businesses, especially the mobile telephone network companies, airlines and banks but had the potential to disrupt the milestone event of the formal handing-over of power at the end of May 2015, to Nigeria’s sixth (constitutional) president, Muhammadu Buhari. And this, in a country that has been, for an unbroken period of more than forty years, Africa’s N° 1 oil producer and exporter! If the self-styled “giant” of Africa could be misgoverned and kicked into the gutter of international public opinion in this manner, what other proof do those who continue to doubt the capacity of the black man to organize his own affairs properly and govern himself reasonably well, need? None, I would say. While most people within and outside Nigeria think that President Goodluck Jonathan “redeemed” himself and fully atoned for his poor performance (or refusal to perform) in office, by way of the civilized and patriotic manner in which he conceded victory to Buhari, it is most sad that that his last week in office was overshadowed by a spectre of agonizing Nigerian citizens and businesses thrown into disarray and uncertainty, in search of non- existent fuel! If anything, this should serve as a poignant warning to Buhari, if he does not want a similar scenario to play out for him in a mere 48 months’ time. What then should Buhari do, now that he is in the job (of president of Nigeria)? Rather than discuss from a straight answer to this question which I’m sure his advisers are already working on, perhaps it would be more interesting to let an answer flow from our discussion. First, let us debunk the fallacies that have been spun on (and by) successive federal governments of the last sixteen years at least, namely: -once the refineries are re-fitted and begin to operate at full capacity, Nigeria would no longer need to import fuel and there would no longer be subsidy; this reasoning is utterly absurd. When you allocate one barrel of crude for domestic refining, you reduce by one barrel, the quantity available for export at world market prices, say US$53 and thus reduce your export earnings by same amount. Now, if you sold the locally refined products at say, half its true (world market) price, you would have obtained the equivalent of US$26.50 instead of the US$53 that you would have obtained otherwise. In other words, you would have provided a 50% subsidy to the price of the locally refined fuel. Alternatively, if you sold the refined product at the true market price, you would obtain the same proceeds (assuming full recovery of refining costs) as from exporting the crude (feedstock). Upshot: subsidy is present whenever you sell or exchange any good below its true (economic) cost-petroleum is “God-given” to Nigeria; therefore, Nigerians should be allowed to “enjoy” the resource as cheaply as possible: utter nonsense. Water is also a God-given resource and you know what you pay when you pick up a 1-litre bottle of table-water off a supermarket shelf. Government has never subsidized (bottled) water and I have never heard anyone complain of scarcity of the item, yet millions of litres of the stuff is consumed daily. And this is despite the... CONTINUE HERE : http://www.beriahng.com/2015/06/memo-to-buhari-remove-fuel-subsidy-by.html |
Re: Memo To Buhari: Remove Fuel Subsidy By Dave A. Lafiaji by VickJames(m): 8:11am On Jun 25, 2015 |
Fuel subsidy removal should be delayed till those refineries have started working. |
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