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

Fuel subsidy removal should be delayed till those refineries have started working.