Saintinoo:


You see that thing subsidy? it is bad, so bad that it destroys an economy. But what choice does the government have, are our refineries working? is getting our refineries work a rocket science?

The trillions going into fuel subsidy can be used to transform the country, but are our crop of leaders willing to do that?

Have some functional refineries and we say goodbye to subsidy and live better.

Petrol is sold for 180 now, transport of short distance is now 150 as of 80 naira last year, income is not increasing, this is what we are talking about.

The money they are spending on subsidy....if the government removed subsidy and kept the money in the treasury...the petroleum sector will make profits that include an amount equal to the amount we spend on subsidy plus extra profit...which can then be used to fix and maintain refineries.

Refineries do not work in Nigeria because...quite simply...it is not profitable to refine fuel in Nigeria. Under the subsidy system...it does not matter if the refinery works or not...subsidy money will be paid. That incentivises stealing of subsidy money and government money...and sabotage of the refineries...since whether they work or not..subsidies and government money would be paid to the sector.

Also subsidies limit the amount of profit the sector can make...meaning there is not enough money to keep refineries running (and yes, I know they have spent money on reparing refineries..but let us be frank..the money is not enough, plus at the end, the thing is not running at a profit...meaning no cash for continuing maintenance...meaning the thing will break down)

The downstream is then forced to look for other means of making money eg...black market, smuggling to other African countries, to sell above N300 per liter. And we still lose money even then

Removing subsidy, privatising NNPC is the only way we can have working refineries...because the profit motive would ENSURE they work...since under the new no subsidy regime...the refineries have to work well...meaning no stealing, sabotage, or corruption...because it would affect profits.

The reason why is that Nigerians do not want to pay the market price for fuel. We want to pay N30 for one liter of fuel because we are poor, and because we are poor. But the truth is, if you want any business to work...it has to have the means of making a profit.


The thing is, experts have been telling us for decades...even before I was born, that we should get rid of subsidy. We refused to listen to them. Now we are paying the price of over 40 years of doing the wrong thing. (We make the same mistake in the power sector, which is why we have no stable power too)

So subsidy has to go. You do not have to agree with me, and before you start....I know that if it goes, fuel will cost as high as N400-700 a liter. I know that prices will go up. I effing know. But the alternative is, we end up spending up to N7 trillion on subsides or more by Dec 31 this year on keeping fuel below N200....or we save money by removing subsidy, and using part of it to mittigate the pain of removal. Take your choice of medicine...it is bitter either way.

Subsidywise20:


Even then

1.If Dangote had taken over the PH refinery, any fuel sold from there would have been sold at a higher price than the 'government price'.

Busienssmen don't run charities, they run businesses. They won't come and renovate stuff for you and dash you for free...it has to earn a profit so that it can keep on running well enough.

2.So long as fuel is being sold below what it costs to produce and transport it to the end user...it does not matter if Dangote runs PH refinery, it would still be at a loss.



He is taking a risk...plus government has basically said that when his refinery is ready, subsidy is going.



Problem with your arrangement is that production costs keep on rising...because refinery has to be upgraded, expanded, maintained, etc. Subsidy costs rise as a result. If they keep rising...then government would be spending more of the budget subsidisng any fuel...and taking more loans to make up the deficit.

Let's not forget that crude oil prices also rise too.



No, if subsidy goes, the trillions go back to the TREASURY...meaning government has more money to spend on things like educaiton, health, roads, etc etc...and spends less time taking loans...


No, Yaradua, Obasanjo , GEJ and Buhari are all the same...they kept subsides...and that limited growth in the industry..and wrecked our refineries...from running at a loss

first bolded

Do you really think Government will fully deregulate PMS especially with what we have seen with AGO?..hmmm let wait and see

second bolded.

If FG still wants PMS at a fixed and controlled price. they will have to pay subsidies ..sufficient subsdides dat will cater for the welfare of the refinery and generate profit for dangote.. they can achieve this by selling crude at an extreme discount...in summary if deregulation is not removed..subsidies goes to dangote

Cognitivereason:

first bolded

Do you really think Government will fully deregulate PMS especially with what we have seen with AGO?..hmmm let wait and see

second bolded.

If FG still wants PMS at a fixed and controlled price. they will have to pay subsidies ..sufficient subsdides dat will cater for the welfare of the refinery and generate profit for dangote.. they can achieve this by selling crude at an extreme discount...in summary if deregulation is not removed..subsidies goes to dangote

Right now we have a choice between

1.Paying subsides to Dangote or NNPC...or both, and spending an increasing amount on subsides due to rising production costs, and cost of doing business per year. At the expense of the budget...either way, we still end up paying too much money and taking loans to cover the resulting budget deficit. (Funding subsides from raised taxes is another matter)...plus subsidsing Dangote essentially means we don't let him make enough of a profit to run and upgrade his refinery...which leads to it breaking down, and then we back to square one.

2.Not paying subsides, meaning prices go up to over N400 per liter....BUT...government saves the subsidy money and uses it for education, health, sports, welfare, salaries, etc...meanwhile profits in the petroleum sector attract investment...plus government gets increased revenue in the form of tax...in return for some years of high fuel prices.

Kayyy:


I decided to quote this post cause from the first page till I got to this quote nobody was having any sensible discussion just curses, insults and emotional statements here and there, while you have analysed the problems , the solution you're offering would be worse on this same people complaining about the marginal increase at intervals, APC is not doing any thing different from what PDP did, and this was because PDP government in power knew the problem and realised that the solution was total removal of subsidy or having up to 5 refineries working at optimum capacity to refine our products and have fuel readily available, and even this is not going to totally solve the problem cause refinery operators opened for business purpose and not charity and would demand prices to make the money on their investment back. APC have seen what the PDP government were going through them and now see that like the previous government their hands are tied now, how do you decide between total removal of subsidy with the price jumping to 600-800 naira or also leaving subsidy and account for over 4 trillion of your budget spent on it.

For those that are calling Tinubu on this matter I don't understand how this is linked to him except you just want to use any current negative news as tool to bring down his campaign and project your own candidate, at the end of the day any one of them would be taking a solution that would still have dire consequences on the people, for how long I cannot say, Atiku's idea of selling all the refineries is not looking bad currently but even after selling it would take years to repair/revitalise these refineries and in the interim decision would have to be made on total subsidy removal or continuous payment same for Peter Obi, if we can think smartly there is a reason since 1999 we have been having this subsidy discussion with different people in government, even if one is dumb they can't all be dumb I suppose

Even when these refineries have been repaired , these private companies would want to make money back on their investment and will still be the one fixing our fuel prices and so don't expect the prices falling down drastically like the miracle people are proscribing here, with all the refineries in the US, gas prices have almost doubled in months with their oil companies posting massive profits (which is what all private companies want to achieve including the ones in Nigeria ) same for a number of other countries in the west, lastly currently we have ( at least we've been told ) total subsidy removal on diesel and within one year the diesel prices have doubled we have not seen the positive effect of that subsidy removal on diesel so what makes you think petrol would be different , Also if you think Dangote will spend over 13 billion on his refinery to crash our fuel prices for us I can sell you anything then, even with him being the largest cement manufacturer, he has not crashed the price of his cement so why would he do different with the refinery and petrol/ diesel prices Summary of the matter is that eventually our pump prices will reflect the going rate compared to majority of countries over the world, it will have to increase to a much extent. Anyways I don't know much maybe people can advise me better

Govt do not need to subsidise local refineries. Nnpc can sell crude oil to them at fixed cost based on agreement like it's done iran and Saudi Arabia.
Though they may not be able to export products from such arrangement due to WTO regulation on subsidised products.
Even if govt decide that local refineries should buy crude oil at international rate, fuel will still be cheaper because it's not going to be subject to fluctuating dollar rate.
So the permanent solution is to refine crude oil locally for subsidy to go.

This is not the right time to remove subsidy, it should have been done 2 yrs ago when FG was actually not subsidising fuel due to low price of crude oil.

Nigerians would have gotten use to the gradual rise of pump price and adjust accordingly. FG would also have had enough time to show Nigerians what it can do with the subsidy money in other sectors of the economy.
But telling Nigerians to buy fuel from 200 to 800 per litre now is suicidal. Trust me this APC govt may not survive it. Nigeria will implode, lekki tollgate protest will be a child's play.
They know and the decision to postpone it indefinitely. It's going be the headache of next govt.

Subsidywise20:


Right now we have a choice between

1.Paying subsides to Dangote or NNPC...or both, and spending an increasing amount on subsides due to rising production costs, and cost of doing business per year. At the expense of the budget...either way, we still end up paying too much money and taking loans to cover the resulting budget deficit. (Funding subsides from raised taxes is another matter)...plus subsidsing Dangote essentially means we don't let him make enough of a profit to run and upgrade his refinery...which leads to it breaking down, and then we back to square one.

2.Not paying subsides, meaning prices go up to over N400 per liter....BUT...government saves the subsidy money and uses it for education, health, sports, welfare, salaries, etc...meanwhile profits in the petroleum sector attract investment...plus government gets increased revenue in the form of tax...in return for some years of high fuel prices.

They both come at a cost let see how Obi and Yusuf will tackle it