gcof:
i will kindly refer you to the guy that quoted me, please do well to explain to him I don’t really know how nairaland works

gurunlocker:
What did they removed when Bubu came on board and increased the fuel pump price to #145?

tactius:


I wish I could....however, having spent a lot of my time explaining how subsidy works to many Nairalanders over the past one week, and being called names like 'Zombie', Criminal., and 'Supporter of Oppression' as well as 'Buharist' (which hurts me a lot because I don't back either PDP or APC) for my pains......I am tired.

tactius:


I wish I could....however, having spent a lot of my time explaining how subsidy works to many Nairalanders over the past one week, and being called names like 'Zombie', Criminal., and 'Supporter of Oppression' as well as 'Buharist' (which hurts me a lot because I don't back either PDP or APC) for my pains......I am tired.

tactius:


The thing is, with subsidy gone...petroleum marketers would make heftier profits, and would even have enough to reinvest in making more profits.

The problem is, subsides are often times the most visible thing a government has done.And the long term benefits of removing subsidy take time to manifest.

Take GSM. GSM was not subsidised from the word go. We were paying over N10000 for SIM , and the service was bad. (At one point one could not call inbetween networks, then you could, but at high costs.). It took about five years before we saw the benefits of GSM not being subsidsed....better service, superfast internet, SIM now costing N500 and so on.

Oil. Nigerians don't want to pay high prices. That is why people like me who support subidy removal are the 'enemy'...we want to take away a benefit. And even though this benefit is coming at a huge cost to our economy and fueling corruption(NNPC can in essence just inflate any sum, and claim it is for subsidy...and even justify it by claiming the market is volatile)..people would rather suffer the corruption than pay N250 and above for fuel.

Reference:


That is what it is, increase in price which only reduces subsidy. It doesn't remove it altogether. Removal means you and I pay the right price for what we consume. Right now you and I are paying more than the right price. Nigerians in reality are paying more than the market price for fuel. The real excess goes to corrupt government officials and smugglers. The rest of us get poorer by the year.

tactius:
They cannot afford to pretend.

The subsidy has to go. No matter how much we try, it is costing us billions of naira that could have been used for other things.

VolvoS60:


^^^
I have a couple of questions.

What is the total cost at the pump head of 1 litre of locally refined premium motor spirit in Nigeria?

What is the total cost (including landing costs, distribution costs etc.) at the pump head of 1 litre of refined premium motor spirit imported into Nigeria?

Abdul3391:


money that will still be looted

get sense abeg

tactius:


1. Landing costs right now are at 205 naira

2.I can't answer the question on cost at the pump head..

The problem is, we don't have accurate values of how much fuel is consumed in Nigeria....

Anyway, the whole fuel subsidy thing is so murky and corruption ridden. Better it goes so that the market does its thing and clears everything. Governments should not be setting prices.

VolvoS60:


^^^
The issue of cost at the pump head is central to this matter sir. We have established that there is a subsidy on imported PMS.

But is there a subsidy on locally refined PMS?

Bossontop:

Wait ooo.....how many times dis buhari government wan comot subsidy

tactius:


The problem is that we import most of the PMS we use in this country...90% as at 2017

So, the amount of locally produced PMS is not that significant to the discussion.

VolvoS60:


^^^
I beg to differ, Sir.

Nigeria has the dubious distinction of being the only OPEC country (correct me if I am wrong) which imports refined PMS in such large volumes. Some years ago, the ambassador of another major oil producer broke diplomatic protocol and stated publicly here in Nigeria that he couldn't understand why Nigeria imports refined petroleum products.

Things were not always like this. There was a time in this country when over half (possibly far more) of the demand for PMS was met by Nigerian refineries. As long as we rely on expensive, US dollar priced, imported refined PMS then subsidy will always remain a moving target. Nigeria does not have any control over the US dollar so why should Nigeria depend on imported refined PMS when the crude oil is here underneath the soil?

It is very interesting that we all have details of how much it costs to import a litre of refined PMS but no one seems to have how much it costs to produce a litre of refined PMS locally. This question is important because it naturally leads to the next one: if there is no subsidy on locally refined PMS, why are the refineries not working?

The attempt by President Goodluck Jonathan to lift Nigeria’s gasoline subsidies in early 2012 is a case in point. Nigeria is a major exporter of crude oil, but because of corruption and mismanagement, it has little domestic refining capacity. As a result, it must import some 70 percent of its gasoline. As of the end of 2011, gasoline was selling for 65 naira per liter, or about $1.50 per gallon at the then-prevailing exchange rate. The withdrawal of subsidies roughly doubled the price to $3.00 per gallon.

Nigerians by the millions immediately set aside their many differences to protest the increases. They saw the subsidies as one of the few tangible benefits they receive from a corrupt and inefficient government. Christians and Muslims stood side by side to block highways, urged on by their respective religious leaders. Trade unions joined the protest movements and declared a general strike.

The government objected that it needed the money raised by price reforms to fund human development and infrastructure projects that would benefit all Nigerians, but few believed them. Protest leaders noted that the government could long since have been using the country’s vast oil export revenues to fund the construction of schools, highways, and power stations, not to mention efficient domestic refineries. Instead, the oil money had been stolen corrupt officials.

After just two weeks of protests, the government largely gave in. The price increase was cut in half, leaving gasoline costing about $2.25 per gallon, which the government argued still required a significant subsidy.

The Nigerian fiasco is by no means unique, but some countries, including Brazil, South Africa, and Turkey, have been more successful in phasing out their subsidies. Based on a comparison of successful and unsuccessful reforms, the IMF has identified several elements that improve the chances for success in removal of fuel subsidies. These include:

• Better transparency, planning, communication, and consultation prior to implementation of price increases.
• Replacing subsidies with appropriately targeted policies to aid the poor.
• Measures to depoliticize future energy prices, for example, by establishing automatic formulas that link domestic prices to world prices.
• Sound macroeconomic and monetary policies to prevent fuel price increases from feeding through into self-sustaining inflation.

Unfortunately, many of the countries with the largest subsidies are deeply lacking in the transparency, trust, and technical competence needed to follow the IMF recommendations.

Subsidies aggravate fiscal imbalances, crowd-out priority public spending, and depress private investment, including in the energy sector. Subsidies also distort resource allocation by encouraging excessive energy consumption, artificially promoting capital-intensive industries, reducing incentives for investment in renewable energy, and accelerating the depletion of natural resources. Most subsidy benefits are captured by higher-income households, reinforcing inequality.

tactius:


The problem is that we import most of the PMS we use in this country...90% as at 2017

So, the amount of locally produced PMS is not that significant to the discussion.

Note that three refineries together produce 5-6 million liters of fuel daily...while Lagos needs 8million (The newest refinery in Nigeria was built 31 years ago...so existing refining capacity is not sufficient)

And the honest reason why NNPC is not building new refineries? Subsidy basically does not let NNPC make a sufficent profit to invest in new refineries, It also incentivises corruption and fuel smuggling as a result.

VolvoS60:


^^^
My initial question still stands. I need to know the cost of producing a litre of refined PMS locally to know if there is a subsidy or not. Does it cost less than 145 Naira to locally refine a litre of PMS in Nigeria? More than 145 Naira? Or is it equal to 145 Naira?

tactius:


I have answered you just now...but the problem with your question is that

1.You assume that since we completed the last refinery in 1988...fuel consumption level has not increased in 30 years.

2.You also assume that our refineries can meet local demand now. They can't ....and I posted the figures in the post you quoted...which you did not read.

3.If we need new ...well, just read the other post.

Wiseandtrue:

You mean There is no imminent plan to remove fuel subsidy AGAIN

Because you can't tell me you have not remove fuel subsidy after selling for N145 as against N87 APC met on board!!!

We are no fools!!!

Flets:
Nigerians have not suffered enough. The day Nigerians get tired of suffering, they will reclaim their country.

Until then, fuel will sell for 250naira per liter and dollar will sell for 600 Naira... and nothing to happen. Thanks to the docility of the masses.