same tory!!

I am totally suprised at all d apologists of GEJ who see nothing wrong in d premature removal of fuel subsidy. Let me address it from a purely economic point of view:
1. It will hike general consumer prices since our economy is hinged on oil and its derivatives. Removal of subsidy willl see a higher cost of running factories, businesses, and transportation and all these will shoot consumer prices up. In d end, we still end up spending more on projects cos of the hyper-inflation that wud hv arisen.
2. we have better comparative advantage in refining petroleum products dan importing same from abroad. It will help to push down the price of petrol if govt instead revamped our refineries and we start refining here. Why has he not done so? Why not build new ones? And why not wait until those cushions are in place before removing subsidy? Worst case scenario: y not refine in neighbourin African countries to reduce costs for its citizens?
Then, speakin politically, wat is d guarantee that the funds wil be managed well? If IMF is so good at dishing instructions to 3rd world nations, how come Europe is in a mess and still sliding?
He does not hv d credibility needed to assure us that the funds wil be managed properly n wil not go like d Police equipment fund and all other juicy baskets in Nigeria that they all loot and get away with? All we r going to hear is that d monies hv been looted n dat the person has been granted bail, and sorry, that's d end of it.
No amount of useless soap-box rationalizations from GEJ and his apologists such as Beaf will make us swallow d shallow logic they serve us.
our mantra still remains: no to fuel subsidy! Arab Spring (nay, Nigerian Harmattan) beckons!

Batam:

@ Kobojunkie, from your post your assert for supply to be greater than demand so that price will fall, forget it, it doesn't work like that in Nigeria because the cabals you mentioned would not allow new investor into the oil business. I remember, a friend told me that he liaised with a foreign firm to import diesel and sell at a lower price some years back but he was threaten by these so called cabals. Deregulation will only strengthen those oil firms to inflict hardship on the masses  

I made no such assertion. I do agree with you that more and more, it seems Nigeria does not believe in the concept of demand and supply. Our Politicians, rather than let the people make decisions, would choose to ban or close doors to competition, so it can have it's way. We see this in the actions of the administration's banning of rice import, cement import, even Lagos state's managing of the rehabilitated expressway. It seems the model at all levels is to FORCE the actions of the people in every wise.  The sad of this is that the people resist little.

I do not believe in the existence of cabals/OJUJU calabars in all of this. Is the cabal also reason why Healthcare remains in the devastated state it does in Nigeria? Is a Cabal also responsible for the state of the Nigeria roads, both at the National and local levels? Is a Cabal responsible for the decay that we call the Nigerian police? I wish people will snap out of this need to conjure up a cabal to excuse the obvious lack on the part of those we call politicians.

I don't know of your friend but I do not believe his story at all. I have heard people tell me that sort of story so so many times that it gets tiring explaining to people that RESISTANCE is part of the game. From market women, to shop owners, to babysitters, everyone seems to create stories of OJUJU Calabars STOPPING THEM from moving forward. Now the reason being I don't believe even your friend's story is this, people get threatened on a regular basis, especially when they are trying to break into a competitive market that is tightly controlled like the oil business in Nigeria. Did he expect an embrace or something? Of course people fight there way into a position in the market because there are people in there who do not want another mouth sharing the profit with them or spoiling market for them. It happens everywhere. That is why not just anyone can go into business. One needs to ready to fight for a place or be ready to close shop in a couple.


Susidy removal is not deregulation though as I understand it. It is simply removal of the cushion that supposedly makes the product cheaper for the masses to purchase. Removing it will hurt, but keeping it as is still hurts since we pay so much more and cannot sustain the cost. So, something has to be done. Again, I vote for closing up the loop holes, which will also free up money for infrastucture.

FRESH AIR

Subsidy being used to fund the 2nd Niger Bridge? What a lie, or should I use Goodlucks famous word "dastardly"? what a "dastardly" lie. The 2nd Niger Bridge is already being funded by the IFC which is a member of the World Bank. What a way to try and get SE support. Read the below:

[size=13pt]Nigeria: IFC to Finance Second Niger Bridge[/size]

Michael Eboh, Favour Agbi And Olabisi Moshoba

15 November 2011




The International Finance Corporation, IFC, a member of the World Bank Group, has said it will finance the construction of the second Niger Bridge.

The IFC in a statement made available to Vanguard, said its decision to finance the project is coming on the heels of a request by the Federal Government of Nigeria to that effect.

The IFC also said that it will provide advisory services for a new public-private partnership to build a hospital in Cross River State.

Speaking at the opening session of the Africa Regional Public-Private Partnership Conference, sponsored by IFC, the World Bank's Public-Private Infrastructure Advisory Facility, and Nigeria's Infrastructure Concession Regulatory Commission, in Lagos, Jean Philippe Prosper, IFC Director for Eastern and Southern Africa, said the financing of the second Niger bridge is in realization of the fact that Africa requires more than $90 billion annually in investment in maintenance and new projects, but is spending less than half of that.

According to him, well-structured Public-Private Partnerships in physical and social infrastructure are a priority for IFC because they can help African governments raise the large sums of capital required to meet infrastructure needs in energy, health, logistics, transportation, and water and sanitation.

Prosper said the IFC Advisory Services mandate will help the Cross River State government identify a private company to build and operate a new hospital.

"It builds on a successful mandate IFC received to help the government of Lesotho attract a private investor to build a world-class hospital in Maseru that opened in October. IFC will also consider the feasibility of a public-private partnership that would lead to investment for a second Niger River bridge crossing," he said.

Also speaking, Yolande Duhem, IFC Director for West and Central Africa said, "There is a large body of economic research that shows infrastructure investment results in more growth and poverty reduction. We thank the Public-Private Infrastructure Advisory Facility, PPIAF and the government of Nigeria for working together with IFC on this conference to promote these important partnerships.

"The impact of the infrastructure deficit is enormous. The World Bank, for example, estimates that the Nigerian manufacturing sector must bear additional indirect costs amounting to 16 percent of sales because of bottlenecks in the business environment, much of it related to infrastructure. Losses due to power outages alone amount to 10 percent of sales."


http://allafrica.com/stories/201111150341.html

Why will Nigerian pay for governmen's inefficiency? Administrations before now failed in all ways! GEJ is on the way to failure
NO to subsidy removal if there is any at all. Government cannot provide basic amenities and you now say it is because of fuel subsidy
what a kiddish excuse !!!!!!!!!!!!!!!!!!!!!!!!! GEJ Go to the ants learn their ways an be wise.

GEJ's SURE blueprint came in with Sunday's newspaper. A quick glance at it made me laugh out in German.
He wants to build 3 refineries,resuicitate the railways,kickstart vocational training schemes,build roads,boost broadband connectivity,improve electricity generation&mass transit etc.
Isnt this the same bull$hit Yaradua,OBJ,IBB,Abacha&co preached?
SURE has taken almost 24 months 2 put 2geda,how long will he take to execute it?
Do we resemble brain dead creatures?
Pass the ammo jo!

The truth is that; WE may not like it, neither will many of us see the need for it to be removed, but this subsidy has got to go.

I know that the adverse effect of its removal would be big, but if my assessment is fair, then I wonder how so, but then again, sacrifices have got to be made.

Funny enough, I have been to Italy severally and to greece once and on the surface, both those countries looked way better than Nigeria. So it hit me quite hard to hear that both countries where in financial problems. I am not an Economist, neither an Accountant, but if the brains that own this field say it has to go, then I want to believe that removing it would have some positive effect. We as a country are not immune to these financial crisis happening all over the world.

It makes absolutely no sense to me for us to be spending so much money on financing loans and debts and also keep a monstrousity of a sinkhole such as this subsidy of a thing and yet keep borrowing to fund projects.

Lagos state reverted to PPP for projects and indirectly threw that cost back at us (e.g MMA2 and the 2000 Naira levy, Lekki road and the Toll gate), and look how people have fought it tooth and nail. Forgetting that these deveopments we all camour for cost money.

I know that the past has actually affected our ability to trust and rightly so, but in this case, I think removing it is the way to go at the moment.





P>S; My only qualms with the entire removal process was the lack of sensitization on the part of the government, and it is this that might come to hunt them in the end.

reason why subsidy claims more than doubled was during the yaradua days when the cabal was in charge.
in 2006, only MRS, TOTAL and OANDO were officially listed as beneficiaries of the fuel subsidy recognised by the Federal Government. The three companies were said to have been listed as “major marketers.”
In the following year, 2007, AP and MOBIL joined the three companies and became listed under the category of majors. The same year NIPCO was introduced and listed under the category of petrol depot owners.

AITEO Energy Resources and TRIQUEST Energy were also added in 2007, bringing the total to eight beneficiaries of the fuel subsidy.

Our reporters gathered that the list of subsidy beneficiaries increased sharply in 2008, rising to of 23, including six majors. Also in 2008, CONOIL and NIPCO were joined by Capital Oil and Folawiyo Energy, under the category of depot owners.

The list of independents also increased from two in 2007 to 14 in 2008 as AITEO and TRIQUEST were said to have been joined by TONIQUE Oil services, IMAD Oil & Gas, Integrated Oil and Gas, Rahamaniyya, AMG Petro Energy, Brittania, ACORN, A-Z Petroleum, SHIELD Petroleum and MAJOPE Investment Limited.

And in 2010, while the beneficiaries of the subsidy payment under the category of major marketers remained steady at six and the depot owners remained two, the list of independent marketers jumped up to 28, with the curious inclusion of many relatively unknown and unheard-of companies.
From data obtained from the Petroleum Products Pricing Regulatory Agency’s website, retail price for petrol is N65 while the expected price is placed at N139.69. This amounts to a subsidy of N74.69 per litre.
The expected price of N139.69 was arrived at by adding a margin of N15.49 to the landing cost of the product, which is N124.20 per litre, according to data on the PPPRA website.
Nigeria consumes about 32 million litres of petrol on a daily basis and at N74.69 per litre of subsidy, the marketers share over N2.4bn daily.
each marketer both major and independent submits its own bill, whereas if they were say 5. the total cost would definetly not top 700 billion

jp philips:

I will like to commend GEJ for backing down on the subsidy removal on the other hand i hope the consultation does not include bribing or cajoling the NLC and civil society groups to accept that demonic policy.

I think i understand Al harem and jason's confusion your confusion was orchestrated by Ruben Abiati and GEJ by proxy.

How many of you have researched on this subsidy issue before taking a stand?

There are more misnomers than facts surrounding this subsidy brouhaha.
First, the Govt said the economy will collapse,  ridiculous indeed
Secondly, the Govt said oil importers are a 'cabal', nearly fell off my seat.

Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenum gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.

Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.

These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics,storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance knowing fully well that the landing cost is higher than the stipulated price
To my greatest chagrin, the odechukwu administration woke up and termed them 'cabals' who are fleecing the nation.

Assuming Ruben Abiati goes abroad to buy a TM underwear for 1k and decides to sell it 1.5k adding purchase price  plus logistics plus profit and the Govt tells him to sell at 900 naira, wont he ask for the 600naira balance?  when the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?
Are we this docile? If Nnpc lived upto their responsibility, we wont have need for the importers in the first place.

There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeaseance?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.

This is the most silly approach any human being with brain if they have one can summon.

Thirdly,

Odechukwu insulted the intelligence of Nigerians telling us  that we don't benefit from this subsidy except for the importers and he had the unbridled temerity to be advertising it on NTA saying the rich are getting richer.
This people are demons.

When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?
So when the transporter buys PMS @ 65naira and fixes his price based on that, he says his mother did not benefit from the subsidy that guaranteed the price in the first place?

It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.

I feel sorry for people that think that competition will crash the deregulated price erroneously juxtaposing it with GSM.

Do you know that the price of crude being the raw material for refined pet. Products is sold at the same price in the whole world?

If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.

The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.
This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira.

At this verge you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignment
If he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to a remote village in the delta between Belema and Kola communities and i saw the local refinery myself. I will post the pictures later.

Conduct a chemical test on those cheap diesel if you are not convinced and you will realize a lot of additives are missing.
Sounds incredible but that is the reality on ground.
You now know why many importers in the delta hardly have diesel.

I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem because there is no cheap crude to supply these refineries.

The oil production of Nigeria stands at 2.37 million barrels of crude daily. nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% then

That gives a total of 1.4m barells daily.

If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.
In that case, Nigeria makes 140,000,000usd daily from this JV.

Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,
In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.

Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,

The total cost becomes 270,000,000usd per day.
There is no way you can refine that crude at that price and sell it 65naira/l and make profit.

Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/l

With this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.
So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.

I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realized i was dead wrong.

I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.

This i believe was proposed for the following reasons:

1 the refineries are working below capacity so what the heck does Nnpc use the crude for?
2, there is a benchmark on crude price for budget implementation.

With this reasons, any existing or yet to exist refinery in Nigeria will get crude at a high price and must need subsidy to sell at 65naira/l, at this cross road, the then GMD of Nnpc decided that all crude should be exported and subsidy be paid on imported products.

Guess he was left with no choice.

At this verge, i must reiterate here that competition amongst importers will only crash the profit margin but not cost price.

Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.

Before this issue of subsidizing petroleum products can be addressed,
You must have the following at the back of your minds:

1, Nigeria pegs a benchmark on crude prices to enable it implement budget. This stands at 75usd/bbl. And this crude is sort from the JV.

2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)

3, if we make excess crude revenue, then the price of subsidy on refined products shoot up.

With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its own challenges.

By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.
This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.

This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,

most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba,jigawa and some other states have a genuine case.
With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.

The FG had no choice but to capitulate

With this development, the FG is left with little or no choice.

The way forward:

In the short run:

While the FG is consulting, they must consider these options,

1,  identify and tackle the corruption prevalent in the subsidy regime. That will push down the cost of the subsidy in the first place.
Like i said in April,no matter how sincere GEJ think his administration is, he cannot make any reasonable progress in the face of corruption,

2, the power projects must come upstream before removing subsidy, this will reduce the demand on pet. Products to a very great extent.

3, Nigeria must accommodate Gas export, port duties and other forms of revenue in their budget implementation policies.

4,  Govt must never invest an extra kobo in our moribund refineries, by doing otherwise, the cost price of the refineries will rise to an extent that it will no longer be attractive to investors or will prolong their repayment plan.
Thereby making it very capital intensive.

5, Instead of deceiving Nigerians with their cabal bullshit and deluding them that they don't benefit from this subsidy, the FG should channel that propaganda with intense lobbying to the senate,NLC and civil society organizations to stop the state governors from demanding for the ECR, this can be achieved by the FG asking the state to pay whatever increment they can afford for the workers that way the ECR will be used for subsidizing pet. Products.

In the long run:

Nigeria must seek local production capacity.
It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.

Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,

The IOC's has made us believe that it will cost less than 12usd to extract 1bbl of our oil. The Management of NPDC must be reshuffled and if possible experts brought in on contract basis to improve NPDC's production

These experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,

If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,

A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries.

A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 22naira per litre of pms from these refineries.

With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.

These refineries shouldn't be operated by the Govt for any reason.

The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically.

Once the above takes effect, there wont be any need to be paying subsidy because pump price will be around 23naira/l and inflation will reduce by 40‰.

Now how competent is Allison Madueke and iweala if they cant figure this out to think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide.

what iweala forgot is that in the face of inflation the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.

As a sound economist, she should tell Nigerians the value of 1.3 trillion naira in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy removal.

If you remove subsidy and the money disappears, then it is a NO NO for Nigerians

I agree mostly with what you’ve said as I’ve advocated the same thing except for the “insider knowledge” and the running refineries costing us more. I know that the FG will need to subsidize the crude oil to the refineries or remove the artificial peg on the cost of fuel at the pump; otherwise, no private investor will touch the refineries with a 10 foot pole!

However, I’m not yet convinced that fuel from our refineries at a 100% capacity will cost us more than the current subsidy. It defies logic because the imported fuel that we buy also incurs the same type of production costs we face locally. The math is as straight forward as outline below:

Cost of crude oil (Drilling cost + opportunity cost of not exporting) + refining cost + profit + transportation = fuel price at the pump.

i think this distraction should be done good away with, if we must a real reform measure serious then certain pin pointed aspect have to be looked into. My take is "remove it, nigerians have witness what is beyond hardship" like the President said its just for a short time and later on things might move at the masses level. Good move let it be done with a good amount of sincerity.

sartorius:

reason why subsidy claims more than doubled was during the yaradua days when the cabal was in charge.
in 2006, only MRS, TOTAL and OANDO were officially listed as beneficiaries of the fuel subsidy recognised by the Federal Government.  The three companies were said to have been listed as “major marketers.”
In the following year, 2007, AP and MOBIL joined the three companies and became listed under the category of majors.  The same year NIPCO was introduced and listed under the category of petrol depot owners.

AITEO Energy Resources and TRIQUEST Energy were also added in 2007, bringing the total to eight beneficiaries of the fuel subsidy.

Our reporters gathered that the list of subsidy beneficiaries increased sharply in 2008, rising to of 23, including six majors.  Also in 2008, CONOIL and NIPCO were joined by Capital Oil and Folawiyo Energy, under the category of depot owners.

The list of independents also increased from two in 2007 to 14 in 2008 as AITEO and TRIQUEST were said to have been joined by TONIQUE Oil services, IMAD Oil & Gas, Integrated Oil and Gas, Rahamaniyya, AMG Petro Energy, Brittania, ACORN, A-Z Petroleum, SHIELD Petroleum and MAJOPE Investment Limited.

And in 2010, while the beneficiaries of the subsidy payment under the category of major marketers remained steady at six and the depot owners remained two, the list of independent marketers jumped up to 28, with the curious inclusion of many relatively unknown and unheard-of companies.
From  data obtained from the Petroleum Products Pricing Regulatory Agency’s website, retail price for petrol is N65 while the expected price is placed at N139.69. This amounts to a subsidy of N74.69 per litre.
The expected price of N139.69 was arrived at by adding a margin of N15.49 to the landing cost of the product, which is N124.20 per litre, according to data on the PPPRA website.
Nigeria consumes about 32 million litres of petrol on a daily basis and at N74.69 per litre of subsidy, the marketers share over N2.4bn daily.
each marketer both major and independent submits its own bill, whereas if they were say 5. the total cost would definetly not top 700 billion

I'm not sure I follow your logic. Increasing the number of importers will only raise the subsidy amount if, as a group, they're importing more fuel. If the consumption stays the same, it does not matter if you have 5 importers or 23 except if the number of importers increase the landing cost due to economy of scale. Then in that case, the government should just have them bid for the landing cost price of fuel. If 5 importers were selling at 115, the government can simply keep the landing cost the same for the 23 importers.

i think this distraction should be done good away with, if we must effect a real reform measure then certain pin pointed aspect have to be looked into. My take is "remove it, nigerians have witness what is beyond hardship" like the President said its just for a short time and later on things might move at the masses level. Good move let it be done with a good amount of sincerity.

phraze:

i think this distraction should be done good away with, if we must effect a real reform measure then certain pin pointed aspect have to be looked into. [b][size=13pt]My take is "remove it, nigerians have witness what is beyond hardship" like the President said [/size][/b]its just for a short time and later on things might move at the masses level. Good move let it be done with a good amount of sincerity.

Abi? Nigerians have witnessed what is beyond hardship and should witness some more of it. The president has spared no expense this year when it comes to power supply, feeding expenses and sundry. However, according to you, what the Nigerian people deserve still is more hardship and more suffering, since they need to be the ones to SUFFER SOME MORE , abi? The Sacrifice needs to be made ONLY by the Nigerian people it seems -- their leaders do not need to lead at all by example.

Wallie:

I'm not sure I follow your logic. Increasing the number of importers will only raise the subsidy amount if, as a group, they're importing more fuel. If the consumption stays the same, it does not matter if you have 5 importers or 23 except if the number of importers increase the landing cost due to economy of scale. Then in that case, the government should just have them bid for the landing cost price of fuel. If 5 importers were selling at 115, the government can simply keep the landing cost the same for the 23 importers.

most of what the Nigerian government describes as subsidy can actually be termed to be the cost of systemic inefficiencies and a very high level of corruption within the supply chain
One shouldn’t expect anything less than calls for subsidy removal when provisions for factors like demurrage and interest rate are included in the computation for landing cost of petrol.
when over 23 oil importers as it is presently[img][/img] submit claims both false and geniue with collaboration with corrupt goverment officilas, then u wonder why subidy claims in 2011 was 1.3 trillion wheres in 2010 it was less than 500 billion with the world oil prices stable

Unfortunately, I have to agree with subsidy removal

If they cancel subsidy, if the govt issue several license for people to import their own fuel as long as they meet a certain import requirement say $100,000 paid up capital, trust and believe, that will drive fuel down way past the N65. This is simple economics, higher the supply, lower the demand and that means lower price for the people.

For our tomorrow we have to give the comforts of today. Subsidy has to go.

Government should not engage themselves in the building of refinery, it should be left to the more capable hands of the private sector. And for this to happen subsidy should go!

Freebies are not free in the long run, lets end subsidy TODAY!

Fuel we have struggled for years to get access to is now considered a comfort that we already need to give up. Only some months ago, we were paying more than N100 for this so called comfort. Just when we were finally rejoicing that we have gotten the break the politicians have told us of for years, we now have to give up this comfort.

Yes, Nigerians ALWAYS SEEM TO BE GIVING UP COMFORTS for better tommorow . . . while their politicians don't ever have to do same . . ., and when Tomorrow finally arrives, our politicians and their goons demand we give us some more comforts.

How come people in other oil producing countries are not being forced to give up their comforts just when they get em?? 

Tell government to cut their wasteful way of life. The billions they withdraw from the reserve, what did they do with it? The million budgeted for bullet proof jeep is not needed. If they do that we may be ready to listen to their arguement

Nigerians are easy to be decieved and fooled by the government. The main reason is that some people cannot reason logically.

this beaf did not mention that part of the fuel subsidy will be used as feeding money for jonathan and sambo. even jonathan did not tell those that voted him that he will use N1b to feed himself and his vice.
God don catch all of them because we will fight them till we kill them and their families.
a sample of the war to come have been displayed at the lekki toll.
we will show them that enough is enough

Nigerians should wake up from being gullible and stop accepting every line,hook and sinker from this draconian govt. They are hell bent on milking d masses dry kinda way of settling themselves for huge but yet stolen money used for campaign or whatever. Subsidy removal,increased nepa bill,new plate #,new drivers licence,lekki toll gate,post jamb,, what is happening to the billions oil dollars? Nigerians wake up and fight.

Kobojunkie:

Fuel we have struggled for years to get access to is now considered a comfort that we already need to give up. Only some months ago, we were paying more than N100 for this so called comfort. Just when we were finally rejoicing that we have gotten the break the politicians have told us of for years, we now have to give up this comfort.

Y[b]es, Nigerians ALWAYS SEEM TO BE GIVING UP COMFORTS for better tommorow . . . while their politicians don't ever have to do same[/b] . . ., and when Tomorrow finally arrives, our politicians and their goons demand we give us some more comforts.

How come people in other oil producing countries are not being forced to give up their comforts just when they get em?? 

Plus Governors like Udaghan et el will share N400 billion from the anticipated savings. We all know where that money will disappear into a deep black hole.

This "oil subsidy removal" scam was sold to GEJ by that snake charmer Okonjo Iweala. She convinced GEJ Nigeria will collapse in 2yrs if we don't remove oil subsidy. Last year, he was focused on Power, but that has now been pushed to the back burner.

A certain gap-toothed general also told Nigerians that SAP would be a temporary pain and things will be fine. Well, the rest as they say is history. As with GEJ, he was also backed by his World Bank/IMF experts .

Oil subsidy is not the issue; corruption in the oil industry is the tiger that needs to be slain. But I don't believe GEJ has the balls to fight corruption hence diversions that "Cabals" need to be hammered into submission by removing oil subsidy. And the poor Nigerian masses are collateral damage in this epic battle of wills

BTW - when did this word "Cabal" creep into the Nigerian lexicon

^^^^ Thanks to madam Dora January 2010 tear-fest, Nigerians now see an OJUJU-CABAL every where. ROFLMAO!

Okija_juju:

The truth is that; WE may not like it, neither will many of us see the need for it to be removed, but this subsidy has got to go.

I know that the adverse effect of its removal would be big, but if my assessment is fair, then I wonder how so, but then again, sacrifices have got to be made.

Funny enough, I have been to Italy severally and to greece once and on the surface, both those countries looked way better than Nigeria. So it hit me quite hard to hear that both countries where in financial problems. I am not an Economist, neither an Accountant, but if the brains that own this field say it has to go, then I want to believe that removing it would have some positive effect. We as a country are not immune to these financial crisis happening all over the world.

It makes absolutely no sense to me for us to be spending so much money on financing loans and debts and also keep a monstrousity of a sinkhole such as this subsidy of a thing and yet keep borrowing to fund projects.

Lagos state reverted to PPP for projects and indirectly threw that cost back at us (e.g MMA2 and the 2000 Naira levy, Lekki road and the Toll gate), and look how people have fought it tooth and nail. Forgetting that these deveopments we all camour for cost money.

I know that the past has actually affected our ability to trust and rightly so, but in this case, I think removing it is the way to go at the moment.





P>S; My only qualms with the entire removal process was the lack of sensitization on the part of the government, and it is this that might come to hunt them in the end.

I disagree completely.

GEJ and his Prime Minister Okonjo- Iweala are only selling us gold dust. Too many Nigerians are living on the margin and a nearly 50% jump in gas prices can be catastrophic. I don't believe this govt conducted a detailed analysis to understand the full impact on living standards, small businesses and overall economic activity. For instance, the 2012 budget is based on nearly the  same inflation rate as this year. This tells me the inflationary pressure from oil subsidy removal was not factored into their projections. Did they even consider impact of a sudden increase in oil prices or continued depreciation of the Naira?

They'll simply force this down our throats and let the people feel the pain

Na today?

I will like to commend GEJ for backing down on the subsidy removal on the other hand i hope the consultation does not include bribing or cajoling the NLC and civil society groups to accept that demonic policy.

I think i understand Al harem and jason's confusion your confusion was orchestrated by Ruben Abiati and GEJ by proxy.

How many of you have researched on this subsidy issue before taking a stand?

There are more misnomers than facts surrounding this subsidy brouhaha.
First, the Govt said the economy will collapse, ridiculous indeed
Secondly, the Govt said oil importers are a 'cabal', nearly fell off my seat.

Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenum gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.

Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.

These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics,storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance knowing fully well that the landing cost is higher than the stipulated price
To my greatest chagrin, the odechukwu administration woke up and termed them 'cabals' who are fleecing the nation.

Assuming Ruben Abiati goes abroad to buy a TM underwear for 1k and decides to sell it 1.5k adding purchase price plus logistics plus profit and the Govt tells him to sell at 900 naira, wont he ask for the 600naira balance? when the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?
Are we this docile? If Nnpc lived upto their responsibility, we wont have need for the importers in the first place.

There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeaseance?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.

This is the most silly approach any human being with brain if they have one can summon.

Thirdly,

Odechukwu insulted the intelligence of Nigerians telling us that we don't benefit from this subsidy except for the importers and he had the unbridled temerity to be advertising it on NTA saying the rich are getting richer.
This people are demons.

When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?
So when the transporter buys PMS @ 65naira and fixes his price based on that, he says his mother did not benefit from the subsidy that guaranteed the price in the first place?

It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.

I feel sorry for people that think that competition will crash the deregulated price erroneously juxtaposing it with GSM.

Do you know that the price of crude being the raw material for refined pet. Products is sold at the same price in the whole world?

If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.

The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.
This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira.

At this verge you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignment
If he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to a remote village in the delta between Belema and Kola communities and i saw the local refinery myself. I will post the pictures later.

Conduct a chemical test on those cheap diesel if you are not convinced and you will realize a lot of additives are missing.
Sounds incredible but that is the reality on ground.
You now know why many importers in the delta hardly have diesel.

I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem because there is no cheap crude to supply these refineries.

The oil production of Nigeria stands at 2.37 million barrels of crude daily. nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% then

That gives a total of 1.4m barells daily.

If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.
In that case, Nigeria makes 140,000,000usd daily from this JV.

Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,
In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.

Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,

The total cost becomes 270,000,000usd per day.
There is no way you can refine that crude at that price and sell it 65naira/l and make profit.

Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/l

With this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.
So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.

I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realized i was dead wrong.

I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.

This i believe was proposed for the following reasons:

1 the refineries are working below capacity so what the heck does Nnpc use the crude for?
2, there is a benchmark on crude price for budget implementation.

With this reasons, any existing or yet to exist refinery in Nigeria will get crude at a high price and must need subsidy to sell at 65naira/l, at this cross road, the then GMD of Nnpc decided that all crude should be exported and subsidy be paid on imported products.

Guess he was left with no choice.

At this verge, i must reiterate here that competition amongst importers will only crash the profit margin but not cost price.

Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.

Before this issue of subsidizing petroleum products can be addressed,
You must have the following at the back of your minds:

1, Nigeria pegs a benchmark on crude prices to enable it implement budget. This stands at 75usd/bbl. And this crude is sort from the JV.

2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)

3, if we make excess crude revenue, then the price of subsidy on refined products shoot up.

With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its own challenges.

By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.
This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.

This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,

most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba,jigawa and some other states have a genuine case.
With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.

The FG had no choice but to capitulate

With this development, the FG is left with little or no choice.

The way forward:

In the short run:

While the FG is consulting, they must consider these options,

1, identify and tackle the corruption prevalent in the subsidy regime. That will push down the cost of the subsidy in the first place.
Like i said in April,no matter how sincere GEJ think his administration is, he cannot make any reasonable progress in the face of corruption,

2, the power projects must come upstream before removing subsidy, this will reduce the demand on pet. Products to a very great extent.

3, Nigeria must accommodate Gas export, port duties and other forms of revenue in their budget implementation policies.

4, Govt must never invest an extra kobo in our moribund refineries, by doing otherwise, the cost price of the refineries will rise to an extent that it will no longer be attractive to investors or will prolong their repayment plan.
Thereby making it very capital intensive.

5, Instead of deceiving Nigerians with their cabal bullshit and deluding them that they don't benefit from this subsidy, the FG should channel that propaganda with intense lobbying to the senate,NLC and civil society organizations to stop the state governors from demanding for the ECR, this can be achieved by the FG asking the state to pay whatever increment they can afford for the workers that way the ECR will be used for subsidizing pet. Products.

In the long run:

Nigeria must seek local production capacity.
It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.

Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,

The IOC's has made us believe that it will cost less than 12usd to extract 1bbl of our oil. The Management of NPDC must be reshuffled and if possible experts brought in on contract basis to improve NPDC's production

These experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,

If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,

A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries.

A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 22naira per litre of pms from these refineries.

With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.

These refineries shouldn't be operated by the Govt for any reason.

The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically.

Once the above takes effect, there wont be any need to be paying subsidy because pump price will be around 23naira/l and inflation will reduce by 40‰.

Now how competent is Allison Madueke and iweala if they cant figure this out to think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide.

what iweala forgot is that in the face of inflation the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.

As a sound economist, she should tell Nigerians the value of 1.3 trillion naira in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy removal.

If you remove subsidy and the money disappears, then it is a NO NO for Nigerians

There are lots of things questionable with this analysis.

1. when a barrel of crude from NPDC costs 18usd and the international market price is 75usd, this is an excellent ground for abitrage. The cabal only needs to steal crude from NPDC and sell it to international clients at 75USD, OR take the better option of stealing it from NPDC,sneak it down to their private refineries in south africa and import it back to nigeria at international market price. i think they will even make 20 times greater profit than what they are making from genuine importation at international price.

2. Before 1999, NNPC was selling to the four refineries at almost half of the international crude price and it was discovered that the whole petroleum product used in cote de ivoire were all stolen crude from nigeria.Cote de Ivoire had no official invoice of crude oil transaction in the international market.Their economy was lubricated from stolen crude from NNPC. it has happened before, it will happen again.

3. JV means joint venture between the NNPC and the multinationals.In most of the JV agreement, NNPC has the dominant share with as much as 55% in some. How come the party with the dominant share is not the manager of the venture? The multinationals put in less money and are at the same time the operator of the JV agreement and yet almost all the risks of the business is on the federal govt as represented by NNPC.

4.The subsidy is very high because the marketers factored in the logistics of exporting crude, importing products, tax to foreign govt and nigeria, storage, high cost of labour in developed countries ( e.g 15 euro/hr in Germany). when you produce in nigeria, all these costs are minimal and the true cost of PMS even with international crude price might not be up to 65 naira per litre.

5. The refineries are not working because the cabal are not making it to work.

6. ONLY A WEAK AND INSENSITIVE GOVT CAN ALLOW ALL THE ABOVE TO CONTINUE. THE ONLY OPTION IS TO FIGHT THE CABAL HEAD ON RATHER THAN THE WEAK APPROACH OF PASSING THE COST OF GOVT INEFFICIENCY TO THE MASSES!!

^
Mr clever man, tell us how YOU will fight the cabal, when they have written their operations into the law and it is impossible to secure our borders. I am very interested to hear, O Wise One!

It isn't just a matter of cobbling together things heard around the corner and posting on NL, give us your practical A to Z.

@Beaf
I am really sorry for u that u have committed yourself to "defending" GEJ and his lazy policies -blindly.

That keeps u from realizing what the following really means - "when they have written their operations into the law and it is impossible to secure our borders".

You basically called GEJ incompetent. SMH - vigorously.

Beaf:

^
Mr clever man, tell us how YOU will fight the cabal, when they have written their operations into the law and it is impossible to secure our borders. I am very interested to hear, O Wise One!

It isn't just a matter of cobbling together things heard around the corner and posting on NL, give us your practical A to Z.

^
Believe me, I am more sorry for you. All you do is bounce around the place making personal attacks, making no sense whatsoever, blowing with the wind and standing for nothing. I recall you even lying about the "free farmland" your hero, Aregbesola gave farmers on an elephant reserve (only to get thugs to beat them off it).
Please further increase your font size to 1000pt bro, it tells something about you.

Your type is called, hypocrite. You pretend to be for the people, but you stand for corruption and ethnic bigotry.