Aviation fuel to increase by 30 per cent
There are indications that the Federal Government might face further revenue crisis after staking about N720 billion subsiding Premium Motor Spirit (popularly known as petrol) as crude oil price maintains its rising outlook at the international market.

Brent, yesterday, sold for $73 per barrel given positive economic recoveries across the world, especially U.S. and accelerating global vaccination campaigns.

While Nigeria’s crude oil export revenues reportedly slumped by as much as 98 per cent, falling in April to N723 million from the N35.72 billon generated in March, expected gains from rebalanced oil market remained elusive, as the Federal Government and labour engaged in endless negotiations.



In March last year, government had announced removal of subsidy, which experts described as a scheme in favour of the rich with high consumption, but the development met deadlock in January this year, given the adjustments in pump price of fuel.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, had put monthly subsidy bill at N120 billion when crude oil price hovered around $65 per barrel.

Although not captured in the 2021 budget, the Federal Government, through the state oil firm, has staked some N720 billion between January and June this year. With crude price nearing $75 a barrel, more economic woes may worsen fiscal realities amid continued borrowings to finance the system.

Energy expert, Prof. Wunmi Iledare, had told The Guardian that the subsidy was “dangerous to the economy”, adding: “Effective regulation is a necessary condition for the elimination of market failures.”

Another professional, Michael Faniran, stated that subsidy on petrol favours the rich with high levels of consumption compared to the poor, stressing that there was need for the masses to canvass subsidy removal.

“I would rather that the country subsidise production and not consumption. The poor are actually subsidising the lifestyles of the rich and the middle class,” he added.

To Energy Economist at the University of Ibadan, Adeola Adenikinju, liberalisation of the downstream sector, including the removal of subsidy, remained the way forward.

The increase in crude oil price may however face fresh concerns due to increasing shale production from the United States even as research body, Rystad Energy, warned that of impending rising pressure on OPEC+ to loosen production constraints to stave overheating of the market.



Coming at a time that demand for aviation fuel is projected to increase by about 30 per cent, the International Energy Agency (IEA) has stated that global oil demand would rebound past pre-pandemic levels by the end of 2022.

Crude oil demand had declined by 8.6 million barrels per day in 2020. The agency predicted that demand would hit 5.4 million barrel per day this year and another 3.1 million in 2022.

IEA, which had forecasted that countries like Nigeria would be thrown into deep financial crisis from the global transition from hydrocarbon, pointed out that the oil cartel might have to boost production to meet expected demand and keep the market in check.

Shale oil remained a major OPEC competitor. The increase in crude oil price, has according to Baker Hughes, pushed the number of oil and gas rigs in the American to 461 as drillers boast of more than 100 additional rigs this year.

Karlovych:
Our darling daddy strikes again and from all of us at vulturebbqrillz we can't be more proud of his achievements, no other president in the history of the country can compare to the wonders of our darling daddy. Hopefully this will serve as a lesson to those that will collect rice and groundnut oil to sell their votes in 2023

vedaxcool:
[s][/s]

Pretend you can read.

vedaxcool:
[s][/s]

Pretend you can read.

Beancounter93:
At 65 dollars per barrel it cost 120 billion monthly to subsidse fuel

Now it is nearly 75 dollars per barrel

The cost of subsidising fuel will rise

And as we spend out of our oil money to subsidise fuel and also spend billions to import the thing seeing as it takes years for refineries to be fixed. The spending is going to get worse

Oil subsidy has gotta go. Or we keep on begging imf for more and more loans

Esseite:
Go and take lesson notes from Jonathan how he sustained it at $100...

Fuel subsidy is the only direct general benefit Nigerians get from the Government, if it was not subsidized, the funds would have been stolen like the others..

Increase it and see the mother of all protests, the president no longer has that "saviour" mantra that made us all ignore when he pushed it from 97 to 140...

Beancounter93:


If you APC guys had supported subsidy removal in 2012 we won't have been in this quandary by now.

Esseite:


What did they used the funds of when it was removed to do.. why has our debt hit N33tr?

Beancounter93:


GEJ also in the process drained our reserves doing so.

There is a reason why he wanted to remove subsidy in 2012. It was wasting money .A lot

But Nigerians said no. And so the wastage continued.

We were.still paying subsidy claims from GEJs regime as late as 2018.

vedaxcool:


Lol keep comparing apples and oranges. Let's pretend that the same individual who oversaw the wanton abuse of the scheme which he deliberately used to enrich his cronies. If there was ever a time subsidy is needed it is now; prices of the products are quite exorbitant.

Beancounter93:


Our debt is rising because the oil price is not high enough for a nation our size. And also because of rising subsidy costs

That is why i would have expected this apc governemt to diversify the economy and widen the tax base and increase the tax to.gdp ratio so that we can get other sources of revenue apart from oil to fund the subsidy

Things they.have not done

Esseite:


They can assist private refineries with loans converted to shares to hasten completion in a very short period and that automatically solves that.

Fuel subsidy is the only benefit all Nigerians get from the Govt, if they cant control their borders to restrict it to just Nigerians, that is their business.. if it was not subsidized, it would have been stolen one way or the other.

Esseite:


But our debt was not this high when our population was about the same while we even paid higher subsidy. I strongly think it is lack of proper management and square pegs in round holes.

Beancounter93:


Our debt is rising because the oil price is not high enough for a nation our size. And also because of rising subsidy costs

That is why i would have expected this apc governemt to diversify the economy and widen the tax base and increase the tax to.gdp ratio so that we can get other sources of revenue apart from oil to fund the subsidy

Things they.have not done

Beancounter93:


Our debt was not high then because to pay for the higher subsidy GEJ has to drain the forex reserves from 60 billion to 32 billion when he left office

There is a reason why he wanted to remove subsidy. By defending it you are agreeing with Bubu and company in2012 when they marched against subsidy removal.

Beancounter93:


Well you APC protesting forced GEJ to contimue the wasteage and to continue the enriching by opposing subsidy removal in the first place.

Esseite:


You are speaking like someone else aside you and myself would pay for it if it is removed.... this would increase inflation by 100% if not more in all ramification in an already depressed economy.

vedaxcool:



Yes, because rather than hold his cronies to account he pushed the burden to the Nigerian people.

PMB removed subsidy and people accepted it. He reintroduced it back because the economic conditions are not just suitable for an increase in fuel. The pressure on the masses are a serious concern.

vedaxcool:


Lol the economy is being diversified but it requires commitment from everybody. When the borders sure closed to support the production of rice, many people kept railing against the closure. Despite their railing, Nigeria emerge the largest Rice producer in Africa. You might think governance is a switch but it is a process with many moving parts.

State governors are also responsible for collection of taxes they have either failed to improve their capacity of have become thieves stealing the taxes.

Lagos carries 51% of VAT tax collection, indicating that significantly there is a problem on state level, it is not APC guys doing stuff it is government functioning well at all levels.

We should always comment from an informed position, not trivialising issues.

Beancounter93:


1.When the governemt closed borders you guys rightly critiqued them.

Border closure is like throwing the baby with the bathwater

2. Yes fuel subsidy is a benefit, the problem is this benefit is pushing Nigeria into debt.And draining money which could have helped the poor

3.Apart from Dangote and a few others we don't have enough investment in new refineries because of the price controls associated with subsidy