dachilino:
The Vice President for Sustainable Development, World Bank, Laura Tuck, who spoke at the ongoing World Circular Economic Forum in Helsinki, Finland , stated that Nigeria’s fuel subsidy is not helping the poor.  Tuck who spoke on the theme ‘Scale it up! The Next Era of the Circular Economy', revealed that the the continuous payment of huge sums of money as subsidies on fossil fuels has worsened resources consumption and increased greenhouse emission and pollution.

“Strong evidence shows that a lot of countries put subsidy on fossil fuels, and these subsidies are insufficient to support the poor. They aggravate resources consumption, pollution and greenhouse gas. Globally, subsidies on fossil fuels are huge,” she added.

Tuck said, “We cannot achieve a circular economy if we continue to make policies that give incentives to overuse of resources. Circularity means we use fewer non-renewable energy like fossil fuels and carefully manage our renewable resources like Timber and fisheries, among others.”


https://unclesuru.com/2019/06/04/nigerias-fuel-subsidy-not-helping-the-poor-world-bank/

Ugosample:


Imf saved South Korea

And saved Taiwan too..


Africa is a peculiar mess, hence no sensible policy that worked elsewhere works here

That's just the problem

wirinet:

Cheap transport is critical to the survival of the poor. As it is the poor spend close to 30% of income on only transportation.

Economies are built on cheap fuel (energy). Without cheap energy, you can never compete on the international stage. Countries go to war to secure sources of cheap energy.

It is not subsidy that encourages corruption, the society encourages corruption, ie churches, mosques, traditional institutions, the people themselves. There is corruption in all facets of our society. Even if subsidy is removed, corruption will still remain in the upstream sector.

Hamilton, an economist said the existence of subsidies can not be divorced from abuse. It's true globally.

If there's corruption after deregulation of the price, that is no longer on the masses. If there's corruption with subsidies, that means it's the taxpayer losing money. If there's corruption after deregulation,i it is on their neck again

tactius:
Good morning.

If we remove subsidies and price controls in the downstream sector this would happen

1.Foreign investment would flow in now that profits can be made.

2.This stimulates investments in things like refineries and so on

3.Which would eventually bring down fuel prices

4.Money spent on subsidy can be ideal spent on other sectors which need it, such as education, health, even public transportation

5.Need I say that jobs would be created, benefiting rich and poor.

6.Fuel smuggling, claiming subsidy for fuel not imported and importation of fuel would end.

Good morning

tactius:


Good morning.

If we remove subsidies and price controls in the downstream sector this would happen

1.Foreign investment would flow in now that profits can be made.

2.This stimulates investments in things like refineries and so on

3.Which would eventually bring down fuel prices

4.Money spent on subsidy can be ideal spent on other sectors which need it, such as education, health, even public transportation

5.Need I say that jobs would be created, benefiting rich and poor.

6.Fuel smuggling, claiming subsidy for fuel not imported and importation of fuel would end.

Good morning

laudate:

Sorry sir, I do not agree with you. If you remove subsidy on fuel, cost of goods and services would triple and inflation would kill any attempt at meaningful production.

This is because our level of infrastructure is still too poor, to cushion the impact of such subsidy removal.

Even the money you think would be saved from subsidy removal, would not be enough to carry out any meaningful venture in other sectors, as inflation would wipe out such an endeavour.

And foreign investment cannot be guaranteed even when subsidy is removed. That same hypothesis was used to hoodwink Nigerians when the nation was told to devalue it's currency years ago. What happened??

Investment in the oil sector is not dependent on subsidy being removed. No one compels you to sell your products in the domestic market, after you have invested in the oil sector. You can always export it. Oil is an international commodity.

wirinet:


That's what I have been trying to tell IMF and World Bank supporters, our problem is not the subsidy itself but corruption. No country that does not subsidise one item or the other that is critical to their economy. Europe still heavily subsidise agriculture till today. Even the US itself subsidises agriculture. The US also subsidises coal. Many countries including China subsidises renewable energy.

In fact Nigeria is a country with one of the fewest subsidies in the world. Most OPEC countries subsidises fuel. We enjoy no health subsidy, no housing subsidy, no agricultural subsidy, nothing, only petrol subsidy.

budaatum:

The emboldened is about the only bit of this that got my attention but I notice it caught no one else's.

"Price controls"! It means a product is kept at a price set by government, and in Nigeria, we know it's kept low and very likely beneath the cost at which it can be sold at a profit. Like petrol really. But we can at least claim a reason for petrol with our crude oil and our ineptitude at running refineries. Electric though!?

Imagine it were tomatoes. You invest in land and fertiliser and labour and grow them, and when you get them to the market, government sets the price. I'm absolutely certain if that price is higher than the cost at which you grow your tomatoes, you wouldn't mind much. You'd likely be delighted if it's high enough for you to make a tidy profit. And if you're fortunate and the price set is so high, you'd likely invest in more land and more fertilizer and more labour and grow even more tomatoes. But this is Naija, where the price set by government is more likely to be way below your costs so that after you sell your tomatoes, you would have lost money.

Now think, you lost money on your tomatoes. Are you going to plant tomatoes next season? If you're into the charity business or you're stupid, you just might. But if you're not and have rent and school fees for your kids to pay and you want to eat and pay the interest on a loan I very much doubt you'd be stupid enough to throw your money away growing unprofitable tomatoes!

Well, that's the case with electricity in Nigeria I'm afraid. You generate it, transport it along unreliable transmission wires, lose a large chunk of it to illegal use and theft and what you do get paid for does not cover the cost of producing it. Now tell, would you plant electricity next season? I very much doubt it unless you're into the charity business or you're stupid, of course, but somehow, I just can't imagine you'd be either.

So, what's the solution you might wonder. Increase the price of electricity of course. But come on people, increase the price of electricity so electricity planters can earn more money and plant more and sell more? Surely you must be cursing me by now, or haven't you noticed you'd have to pay more for my electric if you want it?

Ok, perhaps you're all nice civilised folks and don't want to curse me so let's try a different way of looking at this. Imagine Buhari removes the price control so I can sell my electricity at a market determined price like I currently sell my tomatoes no doubt at a profit high enough for me to want to plant more next year. Are you cursing me yet? I'm sure you would be if it was the subsidy on petrol I were talking about removing. Hell no! You'd likely stone me if you could get your hands on me!

Well, that's what this piece is saying where it says "The private sector is given little incentive to invest.” After all, I'm in the electric planting business for the money and the profit and not because I love you all as Adam Smith would say, so why give you light if you aren't paying me for the priviledge! And you wanna complain you're in darkness?!

When you pay me enough to cover my planting of tomatoes after paying for the land and the fertilizer and the labour and the interest on a loan and cover what I lose to theft and illegal harvesting, and still make a tidy profit to reinvest, I will plant 12000megawatts of tomatoes and I will sell 12000megawatts of tomatoes and even more megawatts of tomatoes than you can eat even because you would be incentivizing me to invest what you pay me in more land and more fertiliser and more labour to plant more tomatoes so I will have more tomatoes to sell you and make more money. But if you want cheap electric, keep your price controls and don't incentivize me but don't expect me to waste my time labouring in the sun just so you can have light because, like you, I ain't that stupid nor into the charity business!

Anyone cursing me yet, because I am telling you, we are too cheap!

olajide8:
You can only have a competition, when the product you are selling or the service you are buying has similar alternatives, coke and Pepsi local rice and uncle Bens and not one in which the product is monopolistic, oil is oil, you can only have competition in the area of the services they deliver, but you cannot control the price -

1 you are right that it would bring in foreign investor who want to make profit, now, ask yourself this question who wants to invest infrastructure refineries where their policy can change over night?

-2. all someone like otedola has to do is, go to Venezuela import more petrol at a cheaper rate and sell at a premium why waste time building a refinery

3. If our govt sells a barrel at the international bench mark price without subsidizing, cost of production, would the pump price change?

4 .Our problem has always been we nigerians and corruption e.g we are building roads for billions whereas countries smaller then ours benin republic are building the same roads for less, everyone that gets into public office is not patriotic enough, they believe it's my turn to steal from nigeria

5. Jobs would not be created, because all the smart kids on the block have to do to maximise profit by reducing cost of labour, labour always takes the brunt- so importation is cheaper 6. In other words things would continue

See all you postulated are textbook effects of what should be, but in our nigeria it is not like that, if it were ptf would work price of petrol would be uniform all over nigeria.

Any advice the IMF and world Bank gives is a pointer to what a country should not do - they said float our currency we did a partial flotation and our naira hit N500, whereas bubu stood against the floating of the naira, people said he was not an economist the economist said it was the best idea after garri, he listen, and we now know where we are - N365, he had to rush back and peg the currency again,

As we speak IMF and world Bank are still insisting we should float our currency, even the US today doesn't float their currency, they peg their interest rates, till tomorrow

Europe is fighting China for not floating it's currency which directly affects the cost of production, now where are the economist in nigeria that all where singing devalue float the naira, today they are no where to be found, the blame for the increased value of a bag of rice is squarely put on the table of the president