Do you know that:
• Petrol Subsidy is a major channel for corruption?
• The inefficiencies of the subsidy regime have created an enabling environment for corruption to thrive. A small group of wealthy persons have benefited significantly from this system with little benefits accruing to the common man.

• Petrol Subsidy will eventually bankrupt Nigeria?
• 30 percent of total federal government expenditure or about 4.2% of GDP is spent on payments to fuel marketers as petrol subsidies, yet the government has to borrow a fraction of this figure to finance the budget deficit. This level is unsustainable and this unlimited liability exposes the government to volatility in oil prices.

• Petrol subsidy is denying Nigerians jobs?
• Since 2000, about 20 refinery licenses have been issued to private investors which should have led to hundreds of thousands of jobs being created but not a single refinery has been built because the subsidy will not allow investors to recover costs.

Removing the monies paid to petroleum marketers as subsidy is the only way out. But where will the savings go?

The Federal government has established a Subsidy Reinvestment and Empowerment Programme (SURE – P) that Nigerians can use to hold government accountable. The discontinuation of the current fuel subsidy will save additional resources for investing in programmes targeted at mitigating poverty and spurring economic growth.

• Healthcare—many of our mothers, sisters, and daughters are dying in childbirth. At 545 deaths per 100,000 live births, Nigeria has one of the highest maternal mortality ratios in the world. In addition, our children are dying from preventable causes. 1 in 6 children will die before age 5. The SURE – Programme will provide additional N 73.8 Billion to save the lives of 12 million pregnant women and children over the course of 4 years.

• Youth Employment— over half of Nigerian youth are unemployed, a socially unacceptable phenomenon. The SURE Programme has earmarked N81.1 billion to provide 370,000 jobs per year across the country for the unemployed youth through labour-intensive public works scheme, vocational training and youth employment programmes.

• Urban Mass Transit Scheme – given that Nigerian households spend between 30 to 40 percent of income on transportation, the government’s SURE programme has allocated N20.5 billion to increase mass transit availability in order to alleviate the transportation challenges of ordinary Nigerians.

• Roads—our roads have become death traps! Nigeria is ranked 191 out of 192 countries in the world with un-safe roads, with 162 deaths per 100,000 population, resulting from road traffic accidents. An additional N283 billion will be invested into the road sector, under the SURE programme, to complete over 1,326 km of high-quality roads across the country.

• Power—our epileptic power supply is crippling the growth of this economy. The SURE programme will invest N195 billion in the construction of large, small and medium hydropower plants that will generate a cumulative capacity of 2740 megawatts of electricity, while also providing counterpart funding for the development of coal power projects with a potential to generate 1000 megawatts.

• Food Supply—how can a country so blessed with arable land and hardworking people continue to spend about US$10billion on food imports? The removal of subsidy would free resources for a drastic increase in investment in Agriculture to ensure food security for our people.

• Other critical infrastructure investments –funds from the SURE-Programme will also be invested in the following sectors: Petroleum, ICT, Niger Delta, Agriculture, and Water. Specific projects include:

- Construct 3,877km of railway lines;
- Revitalize irrigation projects on 28,850 hectares of land;
- Build 3 new refineries with a combined output of 30 million litres of petrol in Bayelsa, Kogi, and Lagos States.
- Completion of the East West road across major towns in the Niger Delta.

This struggle is not between the government and the masses because government is squarely on the side of the masses. The fight is between the government and masses on one side, and persons who are bent on continuing their age-long “milking” of the system for their personal benefits, on the other side. Let us support government’s efforts at defeating these persons, and creating a better country for all Nigerians.

But with corruption still highly prevalent in out society, how far are we sure that all this will not go down the drain.

Corruption is out major setback here

Seconded!

just to be clear, I agree with Okonjo Iweala!

two years ago, there was all sorts of corruption in the banking sector

a man named sanusi cleaned it up.

he faced  stiff opposoition within and without. he was smeared in newspapers. but today, the banking industry is better for it

instead of all this whining about corruption, if you are SERIOUS and not just paying LIP SERVICE to the problem, get a sanusi/ribadu EMPOWER him/her, sit back and watch the industry get cleaned up.

bt that will never happen; where will the funding for gej 2015 come from?

I firmly believe in this transformation.

Okonjo Iweala is right. Let's allow the nation move forward for once.

^^^^

all these recycled campaign promises

its almost as if shes running for pres

They will tell the poor man that there is no gain without pain yet all of them are collecting fat salaries and making billions off the poor.Nonsense

Power—our epileptic power supply is crippling the growth of this economy. The SURE programme will invest N195 billion in the construction of large, small and medium hydropower plants that will generate a cumulative capacity of 2740 megawatts of electricity, while also providing counterpart funding for the development of coal power projects with a potential to generate 1000 megawatts.

from 1999 to date i believe we have spent well over this amount and we have not generated anything spectacular, na today we go come generate am like magic abi?

The Federal government has established a Subsidy Reinvestment and Empowerment Programme (SURE – P) that Nigerians can use to hold government accountable. The discontinuation of the current fuel subsidy will save additional resources for investing in programmes targeted at mitigating poverty and spurring economic growth.

We already have the budget every year to do that, and it doesnt look good so wetin this new document go show us?

It seems after all the talk, shouting, teaching, lecture, protest, educating, directing, etc people are doing, some people still don't know why people are angry

1. Yes the system/ government is corrupt. In fact the country is teeming in corruption

2. Yes subsidy has to go and everyone supports the FG for that

3. Before the removal of subsidy, build our refinery so we would not have this same issue in the future. If we have our refineries working, we would not be paying subsidy to anyone and we can control the prices of our crude oil as a Nation.

4. Before removal of subsidy , CUT THE COST OF GOVERANCE not just by 25% because the bulk of the money made in government is not through salaries but be over PRICED projects. An average senator in Nigeria collects more than Obama the american president.

5. Now remove subsidy.

Other things people are protesting for because it was a build up of anger since 1970 and this was the opportunity for a revolution are

1. protest against corruption and the arrest of these people

2. protest against boko haram and killing of Christians/igbos

3. protest against the NEGLIGENT of the Niger-delta

4. Building of the Niger Bridge. Must the bridge collapse before we maintain and build the next ? Since we can save lives, why not do it now.

Now what is the point of thinking ahead when there is still corruption and non-accountability in the government ?

What is the point of thinking ahead when the next administration would tell us about removal of subsidy again ?

IS THINKING AHEAD NOT BUILDING OF REFINERIES ?

Is thinking ahead not protesting against corruption ?


In Nigeria today, we have No light, No security, No shelter, No good roads, No good water, No refinery even though we are oil producing, Total neglect of infrastructure, Total neglect of the Niger-delta, Total neglect of the Niger bridge, Total neglect of people dying in the North, Lack of accountability, Lack of credibility, Lack of industrial growth apart from Oil which the entire country is dependant on, Lack of economic growth apart from the telecommunication sector by OBJ.

-------------------------------------------------------------------------------------------------------------------

I would also what to use this medium to address people thinking it is an ethnic thing.

I have heard various people saying the protest is against "GEJ" "minority" and other sentimental words to describe the protest.

I would like to educate the people about the politics behind what is happening according to my understanding and I would really appreciate if I can also learn more from other posters home and abroad.

In 2010, Sanusi made speech to the House of reps (HOR) that they were thieves and they are the ones sucking Nigeria dry due to the huge sum of money paid to them monthly. The HOR shut him down and called him all sort of names.

In 2011, Sanusi during the channels debate said 1.6 trillion naira is paid to this people out of 1.8 trillion naira thus 200 billion Naira is left for development of the country.

This people are the senator, governors, HOR, HOA, chairmen and the business men that were labelled as oil benefit thieves.

Now people Imagine 200 billion left for 150 million people in 36 states out of total of 1.8 trillion Naira. Yes I am sure people would agree with me that subsidy has to go !!!!

All am doing here is to make people political aware of the situation right now and lets not forget the Iweala and the IMF factor.

Now people are NOT and I repeat NOT angry at the removal of the subsidy I mean at such rate the paying of subsidy is not sustainable. It has to go at one point or the other, either through GEJ or the next administration. Yes I respect GEJ and Sanusi for thinking ahead of time. That is very commendable but the Issues that cause the subsidy corruption are not yet addressed.

In the future the issue would come up again so what is the point ?.

Stop messing with my head lady,

I hear you,

But do you hear me?,

The reality is that I shouldn't pay for your damn corruption,

you want to increase my cost by over 100%, yet sit your fat ass and earn millions of naira monthly, How much do you think I earn!

Once more, I hear what you are trying to do, but it'll kill me, if you can do it with me, How much does your senator, house of rep. earn?, how much do you earn minister?, what have you done with the little given to you in the past, you've squandered it!, you all should just resign

This is why removing the subsidy is good for Nigeria (and why there are no bakeries in Nigeria).

1.  In the 1970s and 80s Naija-land built two bread bakeries. The bakeries were owned by the state. Two decades previously, Naija-land had discovered large quantities of oil. Flush with income from the oil, the government decreed that the bakeries should sell bread at N65, even though it costs about N140 to bake a loaf of bread.

2.  So from the outset the bakeries operate at a loss and have to rely on government subventions to remain operational.

3.  Incidentally, the government also adopts a similar policy for the other sectors of Naija-land. Its spanking new universities and hospitals are free, it creates monopolies to provide cheap power and cheap telecoms, and its banking sector is heavily regulated and consists of only 5 or 6 banks. Almost everything in newly rich Naija-land is provided for free by the government.

4.  But as the years go by and the government's revenues declines, and Naija-land's population increases (from 50m to130 to 170m), it becomes increasingly difficult for the government to fund the bakeries (and the other sectors).

5.  By the end of the 1980s the government is broke and heavily indebted. Creditors and multilateral agencies put pressure on government to streamline its obligations and reduce its spending. They suggest that the government should deregulate the bakery sector, the power sector, the telecom sector and the financial sector. The government (led by Gen BIB), and supported by the trade unions, refuse but later relents and in 1989/90 deregulates only the financial sector.

6.  The result is spectacular. The newly deregulated financial sector go on to become one of the most dynamic sectors of the economy and some of the banks created in 1990 (Zenith, GTB etc) go on to become some of the most successful businesses created in Africa since the end of the colonial era.

7.  But the government (supported by the trade unions) refuses to implement any further restructuring. Naija-land limps on, broke, economically stagnant and politically unstable. By the late 1990s, the bakeries are practically moribund (after billions had been spent on them, much of it siphoned off corruptly). Naija-land now starts importing bread from abroad. Licensed traders buy the bread abroad for N140 and sell locally at N65. The government refunds them the balance of N75. Naija-land’s forex reserves come under pressure, as the purchases are now made in hard currency. The new system fuels corruption, with the middle men becoming some of the richest people in the country. Some appear in the Forbes list of the richest people in the world.

8.  By the year 2000, as the government’s finances continue to deteriorate (and with Naija-land now among the biggest sovereign debtors in the world), the government makes another push to streamline its finances. The new civilian government of Chief JOB, despite opposition from the labour union, decides to deregulate the telecom sector (which like the bakery sector was totally dependent on government funding and barely functional).

9.  Again, the result of the liberalization is spectacular. The total number of phones in Naija-land soars from about 250k to about 60 million in a decade. Naija-land becomes the largest telecom market in Africa and one of the fastest growing in the world. The telecom sector becomes the biggest contributor to Naija-land’s non-oil GDP growth.

10.  Buoyed by the successful of the telecom deregulation, the government decides that it will deregulate the bakery and the power sectors too. But to do that it would first have to remove the price caps on bread (N65) and power. Nobody will build a bakery if they have to produce at N140 and sell at N65. And nobody is ready to sell at N65 and then go and lobby and bribe government officials to be paid the difference (N75), especially at a time when it was becoming obvious that the government could not afford to pay. But again there is vocal opposition from the trade unions and some Naija-land citizens and so the government backs down. The government manages to remove the subsidy for diesel-bread, but not for the more popular (and more financially burdensome) regular bread.

11.  So the status quo remains unchanged and by 2011 the government is spending about a quarter (25% of the annual federal budget) to import bread from abroad. The impact of this on Naija-land’s forex reserve and currency is devastating. Despite oil at over $100 a barrel, Naija-land’s forex reserves continued to decline partly because of the increased forex cost of buying bread abroad and reselling at N65. The Naira comes under severe pressure, forcing the CBN to further deplete the reserves in other to protect the currency. And of course, attempts to attract private sector investment into the bread sector are futile.

12.  Meanwhile, increasingly desperate about the power sector, the government (despite opposition again from the unions and after spending billions on a National Integrated Power Project) finally announces an ambitious deregulation of the power sector, in the process removing all price caps in the sector. Private sector interest is immediate and strong, and there is now the possibility that the power sector will over the next few years see significant investment and improvement.

13.  Finally, in 2012, the government ends the bread subsidy. It mismanages the communication of the new policy, focusing on the savings to the government (in a country where, for good reason, governments are not trusted) rather than on the savings to the economy via new investments into the bread sector and forex savings when domestic bakeries emerge. Predictably, the trade unions oppose the new policy and call a nationwide strike.

14.  Nigeria is poised for a big fight whose outcome could determine the fate of the country for perhaps another decade—economic stagnation and possibly political instability if the subsidy is maintained; or economic prosperity and political stability if the distorting, corrupt and unsustainable subsidy goes. I hope the government prevails.

I honestly quite agree with her, lets give progress a chance.

damola1:

Stop messing with my head lady,

I hear you,

But do you hear me?,

The reality is that I shouldn't pay for your damn corruption,

you want to increase my cost by over 100%, yet sit your fat Bottom and earn millions of naira monthly, How much do you think I earn!

Once more, I hear what you are trying to do, but it'll kill me, if you can do it with me, How much does your senator, house of rep. earn?, how much do you earn minister?, what have you done with the little given to you in the past, you've squandered it!, you all should just resign

gbam!u nailed it,no one cud had said it better, if its going to cost me so much what is it costing you, and in plain terms i dont trust you all!!!

Aunty Ngo

Please stop yeye cheap talk, go and build a refinery and come back and remove the subsidy

yeye people

only fool will agree with your cheap information

remember madam NAFDA

This has always being the promise of massive transformation heaven on earth mouth watering carrot and stick. Why to go after the few oil major and deal with them and why Nigeria alone of all oil producing nation will not have capacity to refine all na lie. Agent of IMF and world bank. So they told us to devalue naira that if done we will be in paradise ever since we took that advise it has always being a downward plunge they are berfit of idea they should resign and allow competent people come over PDP is having its last chance at ruling this nation.

Yes we are patient madam. We know u all mean good for all of us.

SEE WHY I MUST DENY MY NIGER-DELTA BROTHER (GEJ) THIS
SEASON.
>Subject:FUEL
SUBSIDY EQUATION

This economic puzzle is simple enough for anyone to solve.

* Fuel subsidy itself is a scam
* Removal of self subsidy is a scam
* Turn around maintenance of refineries is a scam
* Non development of new refineries is a scam
* Insincerity of government is a scam

Fuel Subsidy Equation
------------------------
1) One barrel of Crude oil = 42gallons or 159 litres

2) Our Refineries (i.e 4) Installed (combined) capacity = 445,000 barrels per day

3) Actual refineries capacity due to ageing equipment = 30% i.e. 133,500 barrels per day

4) . . 133,500 barrels = 21.2 million litres

5) Local required consumption (F.O.S) = 12millions litres

6) It means that even our MORIBOND refineries can actually meet our local consumption need of petroleum.

7) The cost structure of crude oil (i.e. Qua Iboe Crude Oil) production;
- Findings / development - $3.5
- Production cost - $1.5 - Refining Cost - $12.6
- Pipeline/transportation - $1.5
- Distr/bridging fund Margin -$15.69

True cost of one litre of petroleum anywhere in Nigeria ;
- Total sum cost = $34.8
- 1ltr cost = $34.8/159 litres = $0.219
- Naira equiv. 0.219xN160= N35.02k
- Add Tax N5 + N35.02 = N40.02

9) Let FGN refute the above composition.

Why don't they propose to cut Govt expense by 50% keep PMS @ N100 use the proceeds to improve road and infrastructure in 2012 then remove rest of subsidy by 2013.  While keeping govt salary at reduced level.

There is mass corruption in the system.NNPC is the worst of them all. I don't trust this government.11 years of democracy and my life has not really changed for d betteer.The government should meet us the people half way. Do something first to win d trust of people then remove the so called subsidy (that's even if it exists)

fuel subsidy does not exist, GEJ is a fraudster.

damola1:

[size=13pt]Stop messing with my head lady,

I hear you,  

But do you hear me?,
[/size]
The reality is that I shouldn't pay for your damn corruption,

you want to increase my cost by over 100%,  yet sit your fat Bottom and earn millions of naira monthly,  How much do you think I earn!

Once more, I hear what you are trying to do, but it'll kill me,  if you can do it with me, How much does your senator, house of rep. earn?,  how much do you earn minister?, what have you done with the little given to you in the past, you've squandered it!,  you all should just resign

trw:

Do you know that:
• Petrol Subsidy is a major channel for corruption?
• The inefficiencies of the subsidy regime have created an enabling environment for corruption to thrive. A small group of wealthy persons have benefited significantly from this system with little benefits accruing to the common man.

• Petrol Subsidy will eventually bankrupt Nigeria?
• 30 percent of total federal government expenditure or about 4.2% of GDP is spent on payments to fuel marketers as petrol subsidies, yet the government has to borrow a fraction of this figure to finance the budget deficit. This level is unsustainable and this unlimited liability exposes the government to volatility in oil prices.

• Petrol subsidy is denying Nigerians jobs?
• Since 2000, about 20 refinery licenses have been issued to private investors which should have led to hundreds of thousands of jobs being created but not a single refinery has been built because the subsidy will not allow investors to recover costs.

Removing the monies paid to petroleum marketers as subsidy is the only way out. But where will the savings go?

The Federal government has established a Subsidy Reinvestment and Empowerment Programme (SURE – P) that Nigerians can use to hold government accountable. The discontinuation of the current fuel subsidy will save additional resources for investing in programmes targeted at mitigating poverty and spurring economic growth.

• Healthcare—many of our mothers, sisters, and daughters are dying in childbirth. At 545 deaths per 100,000 live births, Nigeria has one of the highest maternal mortality ratios in the world. In addition, our children are dying from preventable causes. 1 in 6 children will die before age 5. The SURE – Programme will provide additional N 73.8 Billion to save the lives of 12 million pregnant women and children over the course of 4 years.

• Youth Employment— over half of Nigerian youth are unemployed, a socially unacceptable phenomenon. The SURE Programme has earmarked N81.1 billion to provide 370,000 jobs per year across the country for the unemployed youth through labour-intensive public works scheme, vocational training and youth employment programmes.

• Urban Mass Transit Scheme – given that Nigerian households spend between 30 to 40 percent of income on transportation, the government’s SURE programme has allocated N20.5 billion to increase mass transit availability in order to alleviate the transportation challenges of ordinary Nigerians.

• Roads—our roads have become death traps! Nigeria is ranked 191 out of 192 countries in the world with un-safe roads, with 162 deaths per 100,000 population, resulting from road traffic accidents. An additional N283 billion will be invested into the road sector, under the SURE programme, to complete over 1,326 km of high-quality roads across the country.

• Power—our epileptic power supply is crippling the growth of this economy. The SURE programme will invest N195 billion in the construction of large, small and medium hydropower plants that will generate a cumulative capacity of 2740 megawatts of electricity, while also providing counterpart funding for the development of coal power projects with a potential to generate 1000 megawatts.

• Food Supply—how can a country so blessed with arable land and hardworking people continue to spend about US$10billion on food imports? The removal of subsidy would free resources for a drastic increase in investment in Agriculture to ensure food security for our people.

• Other critical infrastructure investments –funds from the SURE-Programme will also be invested in the following sectors: Petroleum, ICT, Niger Delta, Agriculture, and Water. Specific projects include:

- Construct 3,877km of railway lines;
- Revitalize irrigation projects on 28,850 hectares of land;
- Build 3 new refineries with a combined output of 30 million litres of petrol in Bayelsa, Kogi, and Lagos States.
- Completion of the East West road across major towns in the Niger Delta.

This struggle is not between the government and the masses because government is squarely on the side of the masses. The fight is between the government and masses on one side, and persons who are bent on continuing their age-long “milking” of the system for their personal benefits, on the other side. Let us support government’s efforts at defeating these persons, and creating a better country for all Nigerians.

Very disappointing arguments from a person of Ngozi's caliber.

No 1, these same promises were made for previous subsidy removal. Nothing has changed

No 2, the programs listed are just too many. It is clearly not possible for an incompetent administrator like GEJ and his lackeys to make such a complex list happen. Why not focus on 3 big impact items eg electricity, refineries and roads instead of attempting to solve all the problems in Nigeria? Create jobs my foot. Ngozi should know more than this.

Lastly, corruption will kill the best intentioned administrator as long as they plan to get these done through govt agencies.

The best way out is to 1st implement all these programs before removing the subsidy. Any other way is simply moving the so called subsidy from existing cabal to a new cabal

Chuba1 whoever you are its apparent you are one of them. Well its not Mr. Presidents fault. It just a further proofs that our standard of education is destroyed. It is expected that Okonjo Iweala Ngozi (The daughter of a Professor, a royal princess and graduate of Harvard University & MIT) would be smarter than Mr. President (The Son of canoe maker, a graduate of a dilapidated Nigerian university who went to school without shoes and listened to lectures sitting on window). Who do you expect to be smarter? She is of course doing her masters bidding (world bank) who are more interested in Nigeria paying it debt not minding whether we are dead or alive .

When Ngozi Okonjo Iweala, the Finance minister and the coordinating minister for the economy (a position not provided in our constitution) presented ‘briefs’ to the Federal Executive Council on why the Jonathan administration must end the subsidy in less than a month.
When Nigerians go through these so called facts, they will find that Okonjo’s conclusions are the typical, ‘working to the answer’. Her thesis cannot stand the test of a strict scrutiny and indeed calls into question her credentials as a financial expert.
For starters:
1. Okonjo’s thesis was wrong from the beginning: she says that subsidy does not reach the poor, that only the rich and the middle class are the beneficiaries. The hollowness and shallowness of the position have been profoundly proven by the cries of agony by Nigerians. Who have been the most hit by the anti-people measure? The poor. Who have been crying loudest? The poor.
Even, if we accept her theory that the rich and middle class are the greatest beneficiaries of oil subsidy, are they not Nigerians? Are they not entitled to some goodies from their government?
2. Okonjo posited that Nigeria had spent N3.6 trillion on subsidy in five years, an average of N660 billion yearly, but fails to explain how the figure rose to N1.3 trillion in 2011, the same year like 2008 when international oil prices shot to the roof.
Using Okonjo’s statistics, the average crude oil price in 2008 was $101.78 dollars, compared with $113.98 in 2011. The amount of subsidy in those years was at variance by more than 10 per cent that any reasonable, rational, logical person will expect. What accounted for this difference? Was subsidy fund stolen to fund Jonathan’s re-election campaign? Was the increase in subsidy expenses because the oil cabal presented bogus claims for settlement?
Mrs. Okonjo Iweala did not explain and no one provided any details.
3. Okonjo’s analysis to paint subsidy as bad and to justify why it must go, were based on two oil prices and it was obvious she did so to arrive at her bogus conclusion.
In one breath, she used $113 dollars as the base price of crude oil to determine how Nigeria’s subsidized oil price ranks with other African countries. At 46 cents, petrol is cheapest in Nigeria, compared with mainly non-oil producing countries, such as Cape Verde, CAR, Malawi, Ivory Coast, Egypt, Equatorial Guinea, and Mali etc. Angola, an oil producer is also classified as selling its petrol higher than Nigeria at 69 cents a litre. If only Mrs. Okonjo had looked at her figures and graph, she would have seen two other oil producers in Africa, seating pretty below Nigeria on this price graph. These countries are Algeria, which unlike Nigeria sells more refined products than Nigeria, which sells its crude to the world, without trying to add value, by refining and creating jobs at home. The other country is Libya. Algeria sells a litre of petrol at 32 cents and Libya sells its own at 17 cents. They are fellow oil producers like our country. According to Okonjo, these countries offer cheap fuel to their people because they are not as populated like Nigeria and because they have higher per capita than Nigeria.
However missing from her explanation was whether those countries behave like Nigeria’s irresponsible rulers, spending three-quarters of their budget on recurrent expenditure, cutlery, bullet proof cars and so on.
4. In another breath, Mrs. Okonjo compared Nigeria’s oil price last year, with a mixed bag of European, Latin America and African nations, all oil producers. These statistics showed that Nigeria’s price at N65 was not the cheapest in the world. Although petrol sold cheaper here then than Angola and Sudan, in Venezuela, it is almost free at 3 cents. Brunei, Yemen, Oman, Algeria, Kuwait, Bahrain, Qatar, Saudi Arabia, Iran all offer their petrol very cheap to their people. In Iran, it is 10 cents, compared with Nigeria’s January 2012 price of almost $1. The Saudis sell their oil at 17 cents, Kuwait at 22 cents.
5. With subsidy removed, we can already feel the effects the increase has had on the Nigerian people: it has further pauperized them and has made things more difficult for the 90 per cent living on less than $2 a day, according to Sanusi Lamido Sanusi, the Central bank governor.
6. In further analysis, Okonjo presented another graph that shows Nigeria’s position, among other oil producers and African nations after the subsidy removal. The graph puts the cost of fuel at 69 cents, using another oil price as basis—$90 per barrel. Of course all Nigerians know that the fuel they are selling at gas stations is between N141 and N150, which is very close to $1. Curiously, on the same graph sits USA. There, a litre of oil is 80 cents, cheaper than what the Russians (84 cents), the Indonesians (83 cents), war-torn Iraq (81 cents) pay for a litre of fuel.
7. Nigerians need to ask Okonjo the logic that supports citizens of an oil-producing nation, like Nigeria, paying more money for fuel than the Americans, oil importers, pay. America has a greater per capita than Nigeria; the least income earner in America earns at least $24,000 a year, compared with Nigeria where 90 per cent live on $2 a day.
Will this policy not diminish further our people’s capacity to get out of the vicious bracket of poverty? How now will 90 per cent of Nigerians starving on $2 a day, not be economically asphyxiated when commodity prices have jumped, in some cases by 100 per cent?
In my view, her argument and the entire policy of removing the fuel subsidy are ill thought out and ‘callous’ as some Nigerians have said.

Madam, its not like they do not understand the situation. The mouthy vermin sees the situation as a ploy to remove honey from their mouths so, they lead the poor hapless Nigerians by the nose. They don't care if the economy crashes or not. They just want the corruption ridden status quo

PointB:

just to be clear, I agree with Okonjo Iweala!

PointB it been long,since after the Ezeigbo NL i never see you again hope you are good, happy new year my brother.

@topic only a fool will say he or she did not support Gej decision.Like protest from now till next year fuel subsidy has gone for good.

trw:

Do you know that:
• Petrol Subsidy is a major channel for corruption?
• The inefficiencies of the subsidy regime have created an enabling environment for corruption to thrive. A small group of wealthy persons have benefited significantly from this system with little benefits accruing to the common man.

Corruption was present before fuel subsidy came. Besides, the are other aspects corruption occurs that aren't related to subsidy e.g contract awarding, ports e.t.c

trw:
• Petrol Subsidy will eventually bankrupt Nigeria?
• 30 percent of total federal government expenditure or about 4.2% of GDP is spent on payments to fuel marketers as petrol subsidies, yet the government has to borrow a fraction of this figure to finance the budget deficit. This level is unsustainable and this unlimited liability exposes the government to volatility in oil prices.

Agreed. However, subsidizing a commodity which we have in abundance is asinine. Also keep in mind the extravagances associated with 'presidential spending', that is also unsustainable.

trw:
• Petrol subsidy is denying Nigerians jobs?
• Since 2000, about 20 refinery licenses have been issued to private investors which should have led to hundreds of thousands of jobs being created but not a single refinery has been built because the subsidy will not allow investors to recover costs.

Removing the monies paid to petroleum marketers as subsidy is the only way out. But where will the savings go?

Nonsense ! I am quite confident that there are investors with effective capital who are (or will be) interested in establishing private refineries in Nigeria. If they haven't established refineries since, what's the guarantee they'll establish refineries soon ? None !

trw:
The Federal government has established a Subsidy Reinvestment and Empowerment Programme (SURE – P) that Nigerians can use to hold government accountable. The discontinuation of the current fuel subsidy will save additional resources for investing in programmes targeted at mitigating poverty and spurring economic growth.

This should have been done before subsidy removal and then, only after the government has gotten assent  from stakeholders.

trw:
• Healthcare—many of our mothers, sisters, and daughters are dying in childbirth. At 545 deaths per 100,000 live births, Nigeria has one of the highest maternal mortality ratios in the world. In addition, our children are dying from preventable causes. 1 in 6 children will die before age 5. The SURE – Programme will provide additional N 73.8 Billion to save the lives of 12 million pregnant women and children over the course of 4 years.

This has been a problem before subsidy, during subsidy and chances are it will be a problem after subsidy.

trw:
• Youth Employment— over half of Nigerian youth are unemployed, a socially unacceptable phenomenon. The SURE Programme has earmarked N81.1 billion to provide 370,000 jobs per year across the country for the unemployed youth through labour-intensive public works scheme, vocational training and youth employment programmes.

Empty promises. Besides increased cost of living pending the time this would be effected will increase the problem the govt. set out to solve via subsidy removal.

trw:
• Urban Mass Transit Scheme – given that Nigerian households spend between 30 to 40 percent of income on transportation, the government’s SURE programme has allocated N20.5 billion to increase mass transit availability in order to alleviate the transportation challenges of ordinary Nigerians.

This should have been effected before subsidy removal as well.

trw:
• Roads—our roads have become death traps! Nigeria is ranked 191 out of 192 countries in the world with un-safe roads, with 162 deaths per 100,000 population, resulting from road traffic accidents. An additional N283 billion will be invested into the road sector, under the SURE programme, to complete over 1,326 km of high-quality roads across the country.

Billions have been budgeted towards road construction and renovation to no effect.

trw:
• Power—our epileptic power supply is crippling the growth of this economy. The SURE programme will invest N195 billion in the construction of large, small and medium hydropower plants that will generate a cumulative capacity of 2740 megawatts of electricity, while also providing counterpart funding for the development of coal power projects with a potential to generate 1000 megawatts.

While increasing the costs of constructing such plants. Beside I thought the elecricity sector had been deregulated to some extent. Has the power problem been solved yet ?

trw:
• Food Supply—how can a country so blessed with arable land and hardworking people continue to spend about US$10billion on food imports? The removal of subsidy would free resources for a drastic increase in investment in Agriculture to ensure food security for our people.

Resources doesn't equal development without adequate guarantee and structures to convert resources into national growth in any economical sector.

trw:
• Other critical infrastructure investments –funds from the SURE-Programme will also be invested in the following sectors: Petroleum, ICT, Niger Delta, Agriculture, and Water. Specific projects include:

- Construct 3,877km of railway lines;
- Revitalize irrigation projects on 28,850 hectares of land;
- Build 3 new refineries with a combined output of 30 million litres of petrol in Bayelsa, Kogi, and Lagos States.
- Completion of the East West road across major towns in the Niger Delta.

Same as above. Besides I thought it was mentioned that private investors will build refineries. Renovate and maintain the present ones.

trw:
This struggle is not between the government and the masses because government is squarely on the side of the masses. The fight is between the government and masses on one side, and persons who are bent on continuing their age-long “milking” of the system for their personal benefits, on the other side. Let us support government’s efforts at defeating these persons, and creating a better country for all Nigerians.

Nonsense ! The justice system and corruption agencies are obviosly lacking if you can't trust them to deal with such persons.

Ngozi, Ngozi! this is just a pretty theoretical speech, stop bamboozling us with all this long story, long in rhetorical but short in basic. The koko of the matter is that we just don't trust you- the government. Prior to this, what has the government achieved with funds saved from previous deregulation regimes- more allowances, inflated contract awards inflated funds spent on refinery turn around maintenance and now you want more. if u couldn't manage the little that accrued earlier you certainly cannot manage the much that would accrue from total deregulation. Subsidy is not sustainable, that's an established fact but before you wake up one morning and completely remove it without addressing certain fundamental issue, you r just precipitating towards disaster.  How long will the ordinary Nigerian continue to pay for governments inefficiency and spineless approach to combating corruption. i can assure you that with out addressing the fundamental issue of corruption in governance, the money you presume to save from fuel subsidy removal would just be wasted elsewhere through either inflated contracts or some sort of security vote. I remember a time during Obasanjo's administration where $9b was purportedly spent on refinery turn around maintenance, where has that gotten us. The same amount that could have been used to build at least two brand new refineries and here you are drumming up support for complete deregulation.  if i were you i would partly deregulate, say to about N90, the money saved which should amount to hundreds of billions of naira would then be used to build more refineries and execute one or two of those lofty ideas you listed, then you can have the moral justification to ask ordinary Nigerians for more money. outside that what you are just telling Nigerians is simple- the government cannot afford to pay these cabal these outrageous sums so Nigerians like it or not pay them- without providing the enabling environment.  Madam please Phase your deregulation, account for the little saved then ask for more. Abeg!

There is a saying that goes, you can also kill a fly with an elephant gun, but you can also use a swatter. The thought behind it, is that one shouldnt be blinded by the intention, but should take the ramifications of such also into consideration. In both cases the fly dies, but in the former, you can imagine the damage to the surroundings, but o well the fly died right.

I think that any well minded Nigerian with no political inclinations is aware of the issues of fuel subsidy. That its removal, be it partial has its advantages is well understood, though Id like to remind everyone that most petrol producing countries (US, Venezuela, Gulf Countries) actually give their citizens rebate, I mean why not, its on their turf. Pretty silly that a product you produce costs you more to use it than elsewhere, but thats a moral question. We have been able to sustain this because of one word which we all know, ALL TOGETHER: CORRUPTION. Thats the main issue. The government created these loopholes because then they could use these inefficiencies to fill the lining of their pockets. I have lots of respect for Dr. Iweala, but was she the first to see that we borrow to maintain the subsidy? Of course not, so all those before her saw this trend too.

That she has good intentions is without a doubt, but I wonder if the method of implementation is just and fair for the masses, who once again will suffer. They suffered under the subsidy and will suffer now that its gone. Why not:

1) Educate the masses by carrying out campaigns to explain to them whats going on. I can tell you my elders in the village may have NO IDEA what the advantages are.

2) Why not phase it out in say 5 years time. I mean it has been there for donkey years, I dont think that if we dont implement now we are doomed.

Now what will happen, students can go to school, traders will have issues, and the list goes on. This will lead to mega inflation of which the masses were already having problems making ends meet. Are these politicians so far away from the masses that they dont see how they live. How can anyone survive on NGN 18K.

Chuba1:

This is why removing the subsidy is good for Nigeria (and why there are no bakeries in Nigeria).

1.  In the 1970s and 80s Naija-land built two bread bakeries. The bakeries were owned by the state. Two decades previously, Naija-land had discovered large quantities of oil. Flush with income from the oil, the government decreed that the bakeries should sell bread at N65, even though it costs about N140 to bake a loaf of bread.

2.  So from the outset the bakeries operate at a loss and have to rely on government subventions to remain operational.

3.  Incidentally, the government also adopts a similar policy for the other sectors of Naija-land. Its spanking new universities and hospitals are free, it creates monopolies to provide cheap power and cheap telecoms, and its banking sector is heavily regulated and consists of only 5 or 6 banks. Almost everything in newly rich Naija-land is provided for free by the government.

4.  But as the years go by and the government's revenues declines, and Naija-land's population increases (from 50m to130 to 170m), it becomes increasingly difficult for the government to fund the bakeries (and the other sectors).

5.  By the end of the 1980s the government is broke and heavily indebted. Creditors and multilateral agencies put pressure on government to streamline its obligations and reduce its spending. They suggest that the government should deregulate the bakery sector, the power sector, the telecom sector and the financial sector. The government (led by Gen BIB), and supported by the trade unions, refuse but later relents and in 1989/90 deregulates only the financial sector.

6.  The result is spectacular. The newly deregulated financial sector go on to become one of the most dynamic sectors of the economy and some of the banks created in 1990 (Zenith, GTB etc) go on to become some of the most successful businesses created in Africa since the end of the colonial era.

7.  But the government (supported by the trade unions) refuses to implement any further restructuring. Naija-land limps on, broke, economically stagnant and politically unstable. By the late 1990s, the bakeries are practically moribund (after billions had been spent on them, much of it siphoned off corruptly). Naija-land now starts importing bread from abroad. Licensed traders buy the bread abroad for N140 and sell locally at N65. The government refunds them the balance of N75. Naija-land’s forex reserves come under pressure, as the purchases are now made in hard currency. The new system fuels corruption, with the middle men becoming some of the richest people in the country. Some appear in the Forbes list of the richest people in the world.

8.  By the year 2000, as the government’s finances continue to deteriorate (and with Naija-land now among the biggest sovereign debtors in the world), the government makes another push to streamline its finances. The new civilian government of Chief JOB, despite opposition from the labour union, decides to deregulate the telecom sector (which like the bakery sector was totally dependent on government funding and barely functional).

9.  Again, the result of the liberalization is spectacular. The total number of phones in Naija-land soars from about 250k to about 60 million in a decade. Naija-land becomes the largest telecom market in Africa and one of the fastest growing in the world. The telecom sector becomes the biggest contributor to Naija-land’s non-oil GDP growth.

10.  Buoyed by the successful of the telecom deregulation, the government decides that it will deregulate the bakery and the power sectors too. But to do that it would first have to remove the price caps on bread (N65) and power. Nobody will build a bakery if they have to produce at N140 and sell at N65. And nobody is ready to sell at N65 and then go and lobby and bribe government officials to be paid the difference (N75), especially at a time when it was becoming obvious that the government could not afford to pay. But again there is vocal opposition from the trade unions and some Naija-land citizens and so the government backs down. The government manages to remove the subsidy for diesel-bread, but not for the more popular (and more financially burdensome) regular bread.

11.  So the status quo remains unchanged and by 2011 the government is spending about a quarter (25% of the annual federal budget) to import bread from abroad. The impact of this on Naija-land’s forex reserve and currency is devastating. Despite oil at over $100 a barrel, Naija-land’s forex reserves continued to decline partly because of the increased forex cost of buying bread abroad and reselling at N65. The Naira comes under severe pressure, forcing the CBN to further deplete the reserves in other to protect the currency. And of course, attempts to attract private sector investment into the bread sector are futile.

12.  Meanwhile, increasingly desperate about the power sector, the government (despite opposition again from the unions and after spending billions on a National Integrated Power Project) finally announces an ambitious deregulation of the power sector, in the process removing all price caps in the sector. Private sector interest is immediate and strong, and there is now the possibility that the power sector will over the next few years see significant investment and improvement.

13.  Finally, in 2012, the government ends the bread subsidy. It mismanages the communication of the new policy, focusing on the savings to the government (in a country where, for good reason, governments are not trusted) rather than on the savings to the economy via new investments into the bread sector and forex savings when domestic bakeries emerge. Predictably, the trade unions oppose the new policy and call a nationwide strike.

14.  Nigeria is poised for a big fight whose outcome could determine the fate of the country for perhaps another decade—economic stagnation and possibly political instability if the subsidy is maintained; or economic prosperity and political stability if the distorting, corrupt and unsustainable subsidy goes. I hope the government prevails.

You are comparing apples to oranges.

The situation here is far different from that of Banking and Telecoms which have undergone true deregulation. What we are fighting here is not deregulation but the creation of corruption opportunities for Govt officials

Whether you like it or not, you have to subsidize a sector to stimulate production (and sometimes consumption) to create opportunities and jobs. Oil is a natural resource that Nigeria has in abundance and one that the country can leverage to create an industrial base. Reputable local refineries should be justly subsidized.

Cheap energy is required for Nigeria's industrial development and job creation. Cheap energy (oil) is a major contributor to the industrial development of the USA and many western economies. No reason why Nigeria should not do the same but it must be done properly by subsidizing the right sector. Nigeria administrators have either been too dumb or too insincere about which sector to subsidize

Local refining will create jobs all over the country. Why ship crude to a foreign land only to ship back petrol at global prices? You can imagine all the jobs that have been created in those countries at the expense of Nigeria.

What the subsidy removal will do is to simply raise the price of this imported fuel and make more money available for Govt officials to steal at the expense of the common man.