na_so:

When we look at the arguments for and against the subsidy, it appears the supporters of subsidy removal are doing better mental work. I for one will support the removal , my problem however is the govt will most likely only hike the price a little, labour will  embark on strike, govt makes some adjustment and in the end the susidy debate is pushed to another time in future.

i howver want  govt to commit in very specific terms what the 1.3 trillion will be used for.

jmaine:

@ Gbawe . . .On mobile now and would respond appropriately when on PC . .  but one thing is clear . .You are just another blatant cynical hypocrite . . . Thinking my response is akin to guilty conscience when your major grouse with Efisher on this thread was his lazy folks retort . .before you make a sentence . .take a closer look at yourself

Till then . . . .

And Nigerians are there dragging their feet. Swallow the bitter pill NOW lazy folks!

Your statement is simplistic because it seeks to first defend the clamour for subsidy removal by a politician you support (GEJ). You do not view issues from a perspective of the economic realities on the ground in both Nations. Ghanaians don't buy much fuel for generators. That consideration alone means fuel for transport is the major issue for them whereas in Nigeria, many homes and businesses rely on fuel to power generators. Operating cost for businesses reliant on generator sets (virtually all) will , for example, go through the roof with 100%-125% increase in fuel price!!! This is why many keep telling GEJ that the conditions are not right to copy others ,who have it much better than us, in removing fuel subsidy !!!

Besides, fuel , per litre, has always been significantly more expensive in Ghana than Nigeria for obvious reasons. Even with subsidy removal, Ghanaians will pay 15% more for petrol and diesel. Considering that fuel is primarily used for transport purposes and that the increase in petrol and diesel is max 15%, it is obvious the influence of subsidy removal on Ghana will certainly not cause the nation to grind to a halt. How on earth can you then compare that to Nigeria where fuel subsidy removal, for a nation that relies on fuel for electrification and transportation, will mean a 100%-120% increase in pump price?

Ungracious to call Nigerians "lazy folks" when you yourself show very "lazy" thinking. The situation of Ghana is a million miles different from that of Nigeria.

Myopic folks keep seeing things from one perspective only. My advice: Grow up.

efisher:

*Yawns*

Can anyone suggest ways in which the FG can make judicious use of money recovered from subsidy removal. Also, consider suggesting water-tight means by which we the populace can "police" the use of these funds.

Thanks in anticipation.

Nigeria: Buhari - Chaos Looms


To avert the looming chaos in the New Year, immediate steps should be taken to drastically reduce the cost of governance in the three tiers of government."

Buhari detailed the governance costs he wanted slashed: "Salaries and especially allowances should be drastically reduced; security votes should be abolished - not increased as the 2012 Budget has done. Votes for the Armed forces, Police and Security Services should be transparent and accountable;[b] foreign travel and estacodes should be stopped for at least six months other than for the Presidency, Ministry of Foreign Affairs and medical emergencies. Government House expenses in all the states should be drastically reduced, foreign travel suspended for a while.

The National Assembly should give a lead in reducing their allowances substantially and stopping their foreign travels. These savings should be applied to education, infrastructure and agriculture with emphasis on youth employment through meaningful and practical emergency programmes. The public will see through any cosmetic or token gestures and will not tolerate a continuation of status quo. Corruption and plunder are the root causes of unemployment, insecurity, violence and unrest."

He added: "If all hands are on deck to help save our country from imminent collapse we should stabilize. [/b]When that happens Nigeria should take a close look at the country's structure in a calm and unemotional atmosphere. Hopefully we may come to a better form of government to see Nigeria through the next 50 years."

Gbawe:

They are not and it is disappointing you conclude so. I hope this is not because of your pro-GEJ stance. Let me demonstrate what many are saying regarding the "wicked" and "anti-people" leadership of GEJ. We have all done the recurrent expenditure thing to death and everyone accepts it is too high at circa 73%. The GEJ Government has produced two full budgets so far with scant or no effort at reducing the unacceptably huge amount allocated to recurrent expenditure.

The total amount of the 2012 budget is N4.7 trillion. Recurrent expenditure at 73% would be N3.431 Trillion. Even if , very modestly, GEJ's Government target a cut in recurrent expenditure of 25% we would have a savings of roughly N0.9 Trillion. Tackling corruption and the scam element of subsidy would easily make up the shortfall to probably provide more the N1.3 trillion "used" for subsidy recently!!!

Now, you and other GEJ fans should answer this:

When has GEJ ever made personal fiscal sacrifices given what Nigeria is facing? Have we seen GEJ announce that, for example, he will cut the food budget of him and Sambo from roughly 1 billion Naira to around 200 million till further notice ? Have we seen GEJ cutting cost, duplication, waste and doing away with superflous positions? Where is the letter written to the NASS seeking pay cut for public official while the same President is quick to chase a tenure elongation bill? Why has GEJ not made a reform of Government , along a drastically streamlined model, a priority?

It is very dishonest for us to keep talking as if the money they insist on saving via subsidy removal cannot be realised elsewhere [size=18pt]easily [/size]. We all know why GEJ is not looking elsewhere i.e his arrangement with virtually every AGIP in Nigeria means he cannot  touch their 'food' . We discussed this non-stop before the election i.e the notion that it was unhealthy for GEJ to have so many AGIPs behind him!!!

What is amazing is that non of the fans of GEJ show the integrity to admit that it is highly innapropriate , wicked, and wrong for the GEJ government , considering we run the most hideously and profligately expensive bureucracy in the world, not to make cost-cutting the cornerstone of governance while many rich nations worldwide are routinely and proactively cutting cost and waste to survive an austere period. Yes let us look at subsidy but let us also have the decency and integrity to ask why GEJ has no interest in cutting waste and fighting corruption that could release what they tell us they are spending on fuel subsidy.

aurenflani:

all these grammar about subsidy removal how much is a litre of petrol in the UAE, IRAN (with all the sanctions), Iraq (do not forget the war! war), Egypt, Libya, Algeria, Venezuela etc?

na_so:

Gbawe if only you remove this line "you and other Gej fans" from your post . It will help to make me understand that all your talk is not all about allowing your  anti GEJ  sentiments to colour all you say. On your post i have a lot to tell you but it appears all arguments now revolve around " i am for GEJ" and "I am against gej" without looking at the specific merits of the argument.

My friend we are talking sustainable economics here . Not aluta contiua populist leanings. I no wan talk abeg.  

Stompie:

The crux of the matter is that the fuel subsidy removal will be devastating to Nigerians. This is the point Gbawe is eloquently making, and its quite an obvious one too.    Why can't this govt listen to the people who will no doubt bear the brunt of this cuts?  Efisha and other proponents of this move,do you not care that Nigerias (individuals and businesses) will suffer a great deal from this proposed subsidy withdrawal? I ask this in good faith.

EiE Nigeria's Statement On The Federal Government’s Games With Fuel Subsidy
Posted: December 12, 2011 - 18:44
Ngozi Okonjo-Iweala
By EiENigeria.org

Despite the concerns raised by different groups and individuals, President Jonathan will, tomorrow, present the 2012 Budget to the National Assembly excluding the provision for fuel subsidy.

In her two appearances before the Senate Joint Committees on Appropriation, Finance and Petroleum Resources (Downstream) for the public hearing on “The Operations of the Fuel Subsidy Scheme in Nigeria,” the Minister of Petroleum represented the Federal Government’s position as follows:

The fuel subsidy structure is inefficient, costing us N600bn (~$3.75bn) in 2010 and N1.3 trillion (~$8.125bn) from Jan – October 2011. The Federal Government cannot continue to pay as it’s unsustainable. By removing the subsidy, the savings will be used to provide critical infrastructure and services. Currently, only a small percentage of Nigerians (the marketers, middle & upper-class Nigerians) benefit. When removed, more Nigerians will benefit.

In the words of a Yoruba proverb, the Federal Government has, yet again, left leprosy to treat ringworm. While we understand that the current cost structure is unsustainable, Nigerians can no longer afford to pay for government’s inefficiencies. It’s too expensive (financially; productive man hours and human lives) and it’s also NOT sustainable.

Issues to Consider

1.    A lazy, thoughtless approach
The government clearly finds it easier to undertake an unwise blanket removal of subsidy than engage in the discussion of trimming the inefficiencies in fuel subsidy management and in the running cost of government. The language is also deliberately confusing – one minute it’s ‘deregulation’ and the next it’s ‘fuel subsidy removal’.

2.    How much subsidy?
The Interim Report on the Process and Forensic Review of NNPC by KPMG states “Based on our analysis, subsidy over-deduction for 2007, 2008 & 2009 was estimated at N2 bn, N10.3 bn and N16.2 bn respectively. A rough estimation of subsidy payment on product losses for the period under review (2007-2009) is estimated at N11.8 billion.”
Clearly, the subsidy management regime is fraught with waste, graft and insincerity; evidence that the ‘N1.3 trillion’ does not accurately reflect the amount of petrol imported or consumed by Nigerians.

3.    A matter of trust?

To counter the argument that Nigerians do not trust the government to wisely manage the ‘savings’ from the removal of the fuel subsidy, the government is planning a subsidy savings management program. The details were shared by the Vice-President in a meeting with some civil society organisations on Friday, December 9th. Why has this plan not been made public?

The questions and concerns that arise are obvious ones:

a.    How does the government plan to calculate ‘fuel subsidy removal savings’?
Will these savings be the theoretical cost of the subsidy – minus cost of corruption - or the current (inflated) figure? Also, how does the government intend to remit same to this proposed quasi-government agency? Will this necessitate the setting up of another special account, in the manner of the Excess Crude Account?

b.    The Obasanjo regime wound down the widely acclaimed PTF because it served as a duplication of the work of the ministries.
We agree with this approach.

c.    Setting up a new body means an increase in recurrent expenditure for staffing, salaries, pensions, cars, running costs etc. This is UNACCEPTABLE.

4.    No Effect on the Poor
The government’s assertion that the subsidy removal would have little effect on the poor is quite simplistic. [size=18pt]The resultant increase in the price of PMS would drastically increase the cost of food, transportation and doing business, shutting down many small enterprises which directly or indirectly depend on the price of petrol remaining low. The middle class is the engine of growth by way of consumption and the SMEs that create jobs. Any strain on them is negative for the economy.[/size]

The Way Forward

The government should take a more measured and sustainable approach that takes into consideration all stakeholders in the Nigerian project. They need to:

1.    Reduce Cost of Governance
The government must drastically cut down the cost of maintaining public and civil servants – security votes, multiple advisers, fuel guzzling convoys, excessive foreign travel and estacodes etc. Expenses such as (a) the Vice-President’s residence awarded to Julius Berger at N7 bn ($43.75m) with a request for N9 bn ($56.25m) more; (b) disbursement of N250 billion per year in  ‘security votes’ to the President and Governors; and (c) a N1.7 trillion wage bill (2012 Budget) are criminal and unstainable!


2.    Reduce Cost of Subsidy
Why does NNPC get 445,000 barrels of crude a day that it can’t refine? In 2006, there were 3 marketers; we now have 77. According to BusinessDay, “the increase has also been linked to this year’s elections and it has been suggested that the subsidy programme became an avenue for patronage extended to those with political connections.” Significant savings can be made on the bandied N1.3 trillion if the government will prune out the “briefcase marketers”, clean up the NNPC/PPPRA to plug waste and leakages, and tackle smuggling.

3.    Restore or Sell the Refineries
This is of critical concern and priority. Increasing the capacity of our refineries would reduce the amount of fuel that needs to be imported into the country. How much has been spent on repairing the refineries in the last 12 years?

4.    Provide Power
According to a 2009 report by the Nigerian Electricity Regulatory Agency (NERC), Nigerians spend N797 billion yearly to buy fuel for powering generators. In 2010, President Jonathan said the cost of fuel (to power generators) was $13 billion. NERC’s estimates 32% of generator fuel is PMS. This means Nigerians spend about $4.19 billion or N646 billion on petrol, while the rest goes to diesel. Imagine how much fuel import dependence we can curb if this government fulfills the often-repeated promise of improving power supply in Nigeria!

Why has the government not presented a policy document or engaged openly and directly with Nigerians on this issue? Why the rush to remove the subsidy when other holes have not been plugged?

Enough is Enough Nigeria will continue the conversation by hosting a public Town Hall Meeting within the next 10 days to discuss the issue. In a country that provides no social services and the average citizen provides all basic utilities – water, electricity, and security; the government cannot remove the bread from our mouths while it continues to feed fat on its princely cakes.

We will engage in words and action. Enough is enough!

On Fuel Subsidy:
On fuel subsidy the fgn shd fight corruption in the petroleum industry. As far as the fed min of fin is concerned only N240billion is needed to subsidize fuel import in a year. Hence that was the figure passed into law by the National Assembly. The Nigerian gov't should name and publicly prosecute its officials who colluded with the so called oil cartels to modify the 2011 appropriation act by increasing fuel subsidy from  N240 billion to N1.4 trillion.

With the reform of the port by the finance minister, payment of demurrage is no longer part of the landing cost of petroleum products. Import duty can also be waived to further reduce the said sum of N240billion.
With less than 240b the economy will not collapse contrary the false alarm of the Central Bank Governor.

The group told Saharareporters that  another protest specifically targetted at the fuel subsidy removal will take place on January 3rd 2012

Gbawe:

The Issues some will stubbornly not face , i.e the need to fight the scam element of subsidy, is again voiced by Femi Falana when he led a protest march against fuel subsidy removal amongst other things. It is the reason many prominent Nigerians are demanding that the Government must not punish Nigerians because of its own ineffiency and inability to do what is right. How, for example, does it seem fair to prevent Nigerians from enjoying essentially N240 billion of subsidy (according to Femi Falana) with a blanket removal that ignores a monumental N1.1 trillion scam component (N1.4 trillion- N240 billion)    !!!! How can Nigerians support the Government to abdicate its duty like that ?

http://saharareporters.com/gallery/photonews-occupy-lagos-protest

Gbawe:

And you are "blatant" blind apologist , totally lacking integrity, and focused on the blind defense of your fellow GEJ buddies. Go back to page one and see what transpired and stop wasting your time talking to me. I guess you never noted Efisher's sly attacks and ungracious manner indicating the bad belle he carries around 24/7 against some posters.

Gbawe:


I actually used to credit you with objectivity but I see that thinking was highly misplaced.

Gbawe:


Just leave me alone and don't bother speaking to me in future

jmaine:

I gladly accept the charge . . . but you would never see me convulse and rant in torrents about similar sins of perceived opponents . . .

You lost your objectivity a long time ago . . . So you have no moral basis to ascribe objectivity to anyone . . . You call it mischief but i call it saying the obvious . . .  



For the emboldened  . . .  It begins now . . so i expect you to do same

efisher:

@Gbawe, as I said earlier, you can continue insulting all you want and I won't bother doing same. I'd only like to clear the misconception from one of your posts. It reads thus:
Just for the records, if u read my post, I was referring to "GEJ fan club" and not "NL politics section poster of the year" or "Gbawe fan club". I have absolutely nothing against that. You just went off on a tangent and reeled out insults for nothing as usual. SMH

BTW, congrats on your award.


@Topic,
Let's look at this from another perspective.

4.    Provide Power
According to a 2009 report by the Nigerian Electricity Regulatory Agency (NERC), Nigerians spend N797 billion yearly to buy fuel for powering generators. In 2010, President Jonathan said the cost of fuel (to power generators) was $13 billion. NERC’s estimates 32% of generator fuel is PMS. This means Nigerians spend about $4.19 billion or N646 billion on petrol, while the rest goes to diesel. Imagine how much fuel import dependence we can curb if this government fulfills the often-repeated promise of improving power supply in Nigeria!

If we carry out a cost - benefit analysis of subsidy, can we confidently conclude that the benefits outweigh the cost? If not, why then should we continue with it?

Cost–benefit analysis (CBA), sometimes called benefit–cost analysis (BCA), is a systematic process for calculating and comparing benefits and costs of a project for two purposes: (1) to determine if it is a sound investment (justification/feasibility), [size=18pt](2) to see how it compares with alternate projects (ranking/priority assignment). It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits outweigh the costs, and by how much. [/size]

CBA is related to, but distinct from cost-effectiveness analysis. In CBA, benefits and costs are expressed in money terms, and are adjusted for the time value of money, so that all flows of benefits and flows of project costs over time (which tend to occur at different points in time) are expressed on a common basis in terms of their "present value."

aurenflani:

all these grammar about subsidy removal how much is a litre of petrol in the UAE, IRAN (with all the sanctions), Iraq (do not forget the war! war), Egypt, Libya, Algeria, Venezuela etc?

Beaf:

How can anybody be as bitter and hate filled as Gbawe? Its not normal and its not healthy.

None of those countries is a role model for Nigeria. They are all ugly places in one way or the other.
Ask us instead about, China, Russia, USA, UK, France, Germany etc. Those (aside from Russia) are the sort of countries Nigeria should be modelled against, not a group of extremist backwaters that cannot tell left from right.

The fuel subsidy is already gone, thank the Good Lord. Lets discuss how we can ensure the judicious use of the savings.

Oil Subsidy Removal: Jonathan still consulting – Okonjo-Iweala
On December 15, 2011 · In Headlines
| 12:10 am

By Emma Ujah, Abuja Bureau Chief & OKEY NDIRIBE
ABUJA— Contrary to reports that the federal government has finally removed fuel subsidy, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed yesterday, that Goodluck President Jonathan was sill consulting and would announce his decision on the issue at the end of the consultations.

“Mr. President is consulting widely on the subsidy issue.  He has been consulting with various stakeholders in the country, including private sector operators, students, religious leaders and others.  At the end of the wide consultation, we will give him room to take a decision,” she said at the briefing on the 2012 budgetary allocations in Abuja.

Thrice, journalists tried to glean information from the minister and each time she stuck to her position that the President was still consulting on the subsidy which has become an extremely volatile issue.

“I know you will come through various ways to make me say something on the subsidy but what I have told you earlier is the position.  The President is still consulting.  His decision will be made public at the end,” she insisted.                                   

jmaine:

@ Gbawe . . It's okay bruv . . .