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Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by birdman(m): 10:20pm On May 15, 2011 |
Kobojunkie: Lets simplify this: A company in Ekiti makes Adire attire and sells to different parts of the country. Factoring in transportation costs, she sells at N1000 a yard and makes N200 profit. A Chinese company does the same thing, except that his cost of transportation from China is being subsizided by his government, so he sells the same yard for N500 and makes N200 profit too. Who wins in the long run? Hopefully this is connected enough for you. You can of course replace adire with plastic, cement, etc, By the way, debo, I'm still waiting for you to come up with one top 20 GDP country that doesnt have substantial subsidies. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Katsumoto: 10:25pm On May 15, 2011 |
Kobojunkie: Govts give subsidies to companies to keep them competitive. The EU gives grants to its farmers to keep them competitive. America gives subsidies to wheat farmers to compete with Asian and Russian farmers. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by debosky(m): 10:28pm On May 15, 2011 |
birdman: Are those counties top 20 GDPs because of preponderant social subsidies or because of economically beneficial subsidies? If the benefit of petrol subsidy were kept inhouse as is being done by Saudi Arabia and Venezuela it would make sense. Instead the subsidies are going to foreign companies, not to Nigerian refiners. The policy of subsidy has little benefit to Nigeria economically. Katsumoto: I don't really follow - so you are against removal of subsidy because of endemic corruption in all industries?
That is not a complex analysis to make - we increased prices from 11 naira to 65 naira over a period without significant economic impact, while the benefits from the PTF was clearly seen. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Kobojunkie: 10:29pm On May 15, 2011 |
birdman: There is really nothing to simplify here. We have had this subsidy for almost 10 years, if memory serves me well. The Petroleum Support Funds was set up to help stabilize cost of the petroleum products(not just fuel) locally. I am not sure why you suddenly want to make this about the subsidy in other countries, many of which are even more recent and also local. Anyways, back to the issue this thread is really about . . . |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by kulutempa: 10:30pm On May 15, 2011 |
birdman: Subsidies for exports? Yes, definitely. Subsidies for local consumption? Well, that's like spending all your income without saving for a rainy day or investing for the future. Reminds me of the Yoruba proverb: Alaru to nje bread, awo ori e lo nje ti o mo. Translation: a market porter who eats bread is effectively eating his scalp. When the oil runs out where will the subsidies come from? |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Kobojunkie: 10:32pm On May 15, 2011 |
Katsumoto: And all that is connected to this particular local fuel price control subsidy HOW Instead of the red herrings, sticking to the particular issue, and context, will be much appreciated. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by debosky(m): 10:33pm On May 15, 2011 |
Katsumoto: This goes to the crux of the matter - who is this subsidy benefiting? The few importers who don't even tell you the landing cost before claiming exorbitant subsidies? Do the subsidies help Nigeria be economically competitive? I don't think so - those American and European subsidies are targeted at productive activity, not just blanket subsidy that encourages inefficient consumption and waste with little benefit. Subsidies elsewhere encourage economic development, Nigeria's petrol subsidy does not. Every factory using diesel to run its plants will tell you they will appreciate the government building a power plant instead that provides cheaper electricity that they can rely on, than supplying slightly cheaper petrol. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by zstranger: 10:35pm On May 15, 2011 |
^^^ Read through Katz'z post. All your questions have been answered. Next! |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Katsumoto: 10:37pm On May 15, 2011 |
debosky: The fact that you can only point to the PTF has having done good in over 50 years of production is testament to the point some of us are making. When the subsidy is removed, how do you ensure that the funds are used judiciously? OBJ, GEJ's godfather, spent $16B on the power sector whith nothing to show for it. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Katsumoto: 10:42pm On May 15, 2011 |
debosky: Economic development is good; providing assistance to a people who live on meagre earning's is also a good thing. Not every decision made in the developed world aids economic development. The UK govt has been paying rent and providing free accommodation for those who cant afford it for generations; does that provide more economic development than helping people who spend a significant portion of their earnings on transport? |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by debosky(m): 10:46pm On May 15, 2011 |
Katsumoto: PTF had a direct linkage to a removal of subsidy - that is a clear example of the benefit that can arise from removing part of the subsidy. What is required is a direct linkage to what is being removed in subsidy by a separate fund. This has worked in the past and can be implemented again. The wider expenditure failures in no way justify inefficient application of subsidy that is not even experienced by everyone in Nigeria. Secondly, OBJ never spent $16bn on power, and there are at least4 new power plants on the ground at Olorunsogo, Papalanto, Omoku and Afam to show for it. Can we stop repeating the same stories over and over again? |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by debosky(m): 10:49pm On May 15, 2011 |
Katsumoto: Not every decision I agree - but the quantity spent on infrastructural development far dwarfs the amount spent on social support programs, even in the UK. In Nigeria, we spend more on subsidy spending than on health, spending over 1 trillion in three years - more than we spend on health. How can that EVER be justifiable? |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by kulutempa: 10:59pm On May 15, 2011 |
Katsumoto: That subsidy is gradually coming to an end because the UK government is at long last realising that it cannot afford to live above its means forever. Even the UK government is not immune to bad economic choices, but at least they have an efficient tax collection system and a productive economy that does not rely on just one volatile commodity. To use earnings from such a commodity to subsidise local consumption of petroleum products is not only downright stupid. It is economically suicidal. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Katsumoto: 11:01pm On May 15, 2011 |
debosky: There can be 20 new plants for all we know but what we care about is whether the supply of power increased. To most, it didn't. For information of OBJ's $16B see below: http://nm.onlinenigeria.com/templates/?a=12171&z=17 http://www.thenigerianvoice.com/nvnews/48286/1/16-billion-electricity-money-buhari-vows-to-inves.html http://www.ipocafrica.org/index.php?option=com_content&view=article&id=551:nigeria-obasanjo-should-be-tried-over-us16-billion-power-scam-kukah&catid=109:news-archive-2010&Itemid=101 debosky: The UK is spending £125B on healthcare this year for 60 million people while Nigeria is spending $4B on oil subsidy for 150million people. Please clarify that the 1 trillion is in Naira. see below for UK spend on healthcare since 1985 http://www.ukpublicspending.co.uk/uk_health_care_chart_10.html |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by debosky(m): 11:06pm On May 15, 2011 |
Katsumoto: Nigeria is spending more on subsidy than on health - that cannot be a reasonable outcome. over 1 trillion on subsidy over three years 2006-2009 - in naira. The headline figure comparison is not the aim, but the proportion of national income spent on an inefficient subsidy compared to healthcare. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 11:06pm On May 15, 2011 |
I think we are dancing around in circles a bit. Here is what we know: 1) The $4.2 billion in subsidies is not the most efficient way to address whatever need it is meant to achieve (I guess helping out poor people.) There has to be at least one scheme on earth that achieves whatever goal this subsidy has more efficiently. Here is what we don't know: 2) Is it possible realistically for the Nigerian FG to choose and implement one of those schemes? Again, not necessarily in a corruption-free way, but with more actual "bang for the buck" than (1)? Katsumoto I guess believes the answer to (2) is no, it cannot. He think either a poor scheme will be chosen, or whatever scheme chosen will cause less value to be delivered than (1) due to corruption (though we must keep in mind that corruption already exists in (1)). Thus, to him, there is more of an economic impact in just keeping the subsidy than trying something new. However, he has this belief without any sort of data about how effective (1) is (how much of this $4.2 billion is actually reaching the poor, if this is the goal?), and what exactly the replacement (2) is. In my opinion, this attitude is wayyy too pessimistic. If this inefficient subsidy is the preferred way for Nigeria to spend $4.2 billion/year, then Nigeria is probably doomed. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Katsumoto: 11:11pm On May 15, 2011 |
debosky: You are getting into a different argument; its no longer why the subsidy but the subsidy can be better spent elsewhere. My argument is not for the subsidy to remain in perpetuity. If competent leadership can draft and articulate a good fiscal policy that leaves the average Nigerian better off, I am for that. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Katsumoto: 11:15pm On May 15, 2011 |
ekt_bear: Its not my pessimism that should worry you; it should be the successive corrupt, visionless, and incompetent leadership that Nigeria has had for 50 years. My pessimism is not without foundation. You have a president that has laid the foundation for new universities and appointed VCs, yet existing universities are being neglected. There are too many examples I could give. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by birdman(m): 11:47pm On May 15, 2011 |
ekt_bear: There is good reason to be pessimistic. GEJ has already taken a few steps in IBB's direction policy wise. Subsidy removal is really SAP again in new clothes. Implementing a change, without addressing the reason for the previous status quo is a recipe for disaster. It ends up killing local industries (I've given several examples in this thread). Perhaps even worse, it breathes new life into corruption. Things become so hard that we return to a winner take all type of politics. Get into office hungry, eat, eat, eat until the next coup. I for the life of me cant understand why anyone would follow IMF's advice. Even their host countries throw their advice away. God help us |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by adconline(m): 1:53am On May 16, 2011 |
1) The $4.2 billion in subsidies is not the most efficient way to address whatever need it is meant to achieve (I guess helping out poor people.) There has to be at least one scheme on earth that achieves whatever goal this subsidy has more efficiently. What better way to do it in Naija? Why hasn't the US stopped subsidies for Amtrak,public transport systems, farmers, big oil and Wall Street? |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 2:58am On May 16, 2011 |
Eku, read this about your govt. Not much though. Just 5 billion naira. Naija[i] for you[/i] http://www.publishwhatyoupay.org/es/resources/nigeria-government-quiet-over-missing-n5billion-extractive-industry-ii |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:02am On May 16, 2011 |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:08am On May 16, 2011 |
8 billion dollars is lost annually due to one thing and one thing only - corruption Read this: http://www.boston.com/news/world/africa/articles/2004/12/17/corruption_costs_nigeria_40_percent_of_oil_wealth_official_says/ |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:14am On May 16, 2011 |
If 40% gets stolen every year by these leaders, why give them more by removing this subsidy? Why? Development, my foot! |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by zstranger: 3:14am On May 16, 2011 |
^^^ 100, 000 and the govt is doing nothing. Can you connect me with the people stealing our oil? I think they real the real patriots. I'd rather do that for a year than work at a stupidddd bank in Lagos. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:15am On May 16, 2011 |
zstranger: I wouldn't mind too. Instead of living in a cold country, I tell ya. |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:21am On May 16, 2011 |
NNPC, the most corrupt in the world: http://nigeriaworld.com/feature/publication/babsajayi/031111.html |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:23am On May 16, 2011 |
This is bad, too bad: http://www.gamji.com/article9000/NEWS9136.htm |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 3:33am On May 16, 2011 |
Between 1999 and 2007 about $250 billion revenue windfall accrued to the country from excess crude oil prices at the international spot markets, and this money was allegedly mismanaged and unaccounted for. The EFCC if it is serious with the anti-graft campaign should embark on thorough investigation and prosecution of the perpetrators of this executive stealing of money that belongs to all of us. http://www.ngex.com/news/public/article.php?ArticleID=657 |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by pleep(m): 4:01am On May 16, 2011 |
What I think some people fail to realize is that this subsidy is abosultly vital to nigeria. A country were the average person makes less than 2$ a day, so about 700$ a year. Compare that to the u.s.a were 50,000$ is the average. without subsidies these ppl would buy commodities like petrol for same price. That just isn't right |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by queensmith: 11:16am On May 16, 2011 |
So who exactly is being subsidised here because fuel is still very expensive?? |
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by jesus3: 2:02pm On May 16, 2011 |
peep are arguing against subsidy with little or poor information at their mercy. The only thing i can more than 50% of the Nigerian populace is benefiting from the FG is PMS subsidy. At least my travels around Nigeria in the last couple of months suggests a uniformed price of PMS in states like Lagos Ogun, Oyo, Osun Edo Fct, Niger, etc at N65/litre. Meaning Nigerians that travel by car on board vehicles that run on Petrol benefits as well as average Nigerians that use small petrol generators tends to benefit as well. A 1000watts generator requires about 5-8litres for a filled tank. At N65/litre a common man will need N520 to enjoy electricity which PHCN can supply FG will compound his problem by removing subsidy for him to buy fuel at N130/litre. Meaning 8litres will cost N1040 for a man that earns N18,000 minimum wage monthly. Remember he might have to keep buying petrol for more than 10 days as PHCN can guarantee regular Electricity AGO, Kerosene and JET A1(Aviation Fuel) are alrady deregulated and Nigerian are crying for Help. AG0= N160/N170 a litre Kerosene = over N100 a litre Jet A1= N170- N180/litre. Allow the removal of subsidy and allow more money to be stolen by politicians. ur senators and house of rep members are earning about N45 to N50 million each per quarter. Yet the 4billion being spent on Subsidy doesn't affect their salaries and allowances. N45million X over 300 house of rep members. N50million X 109 senators |
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