₦airaland Forum

Things like these, makes me sad

If you will patiently read this mail to the end you will understand my position. I
won't be able to repeat everything I have said over the past few years on fuel subsidy, but in summary; Fraud like theft thrives not only because of the existence of greed and benefit but of opportunity.
Place yourself in the shoes of the average nigerian "businessman" or "entrepreneur"-polite euphemisms for rent seeking parasites.

You establish an elcee for importing 20,000MT of PMS and the PPPRA says this is at a landed cost of N145 for example per litre. So u know that for every litre in that vessel you will get at least N85 as subsidy.
Now you have a number of "possiblities":
1. You can off load 5,000 MT and bribe customs and other officials to sign papers confirming u offloaded 20k MT. Then do the same across the chain with a paper trail showing you delivered 20k MT to a tank farm, and maybe even that u transported it to Maiduguri entitling you to a share of the price equalization fund. Maybe for N20-N30 per litre u bribe all those who sign the papers. The 15k MT you take to Benin or Ghana or Cameroun and sell at market price thus makin an additional "profit" of N55/ltr on 15,000MT!

2 you can just forge documents and have them stamped without bringing in anything and collect the subsidy-PPPRA pays based on DOCUMENTS.

3 you can bring in the fuel, load on tankers, sell some at N65N some at 80 some at 100 some across the land borders.

You can do all this and no one can catch it or prove it because somebody was paid to sign off on docs. And with a high enough margin there is too much temptation to be resisted and firepower for bribing officials.

When I spoke to the house of reps I told them why I was suspecting fraud. It starts from PPPRA "allocations" based on "capacity". You will find a company like Mobil with capacity for say 60,000 MT and a relatively unknown name with a capacity of say 90k MT. Red alert number 1.

Although PPPRA is supposed to give license only to marketers with a national distribution network you see names of companies where you have never seen a filling station in their name.
I was a chief risk officer in UBA and in FBN for many years approving loans so I know the name of every big player in every industry that nigerian banks lend to as these are among the biggest banks in the country. I see names on the list I don't recognise either from portfolios. I looked at or industry studies over the years. Red alert number 2.

I studied the papers presented to PPPRA in a short period in 2010 (I won't tell you how I got them!). And I was surprised that on some days over 10 vessels are said to have discharged cargo in lagos on the same day-clearly the same officers stamping and "verifying" that the vessels were SEEN. Is it really realistic that on the same day 13-15 vessels can discharge in Lagos? Red alert number 3.

Why was I interested in fuel marketing. Because the two sectors that led to the near collapse of the banking industry were capital markets and oil marketing. I am not giving any confidential info out as AMCON MD has already disclosed publicly that two companies alone-zenon and AP-owned by the same businessman owed the nigerian banking industry N220b. And we all saw the amount of subsidy paid to those companies published by BusinessDay.
So money had been taken, subsidy had been collected but loans were not repaid, and we couldn't see the money either as product in tank farms or in fuel stations or credit sales. So I became obsessed with trying to understand how that industry operated and the more I saw the more I hated it and I started the war against subsidies.
It is actually better to do a direct cash payout or add a line item to salaries called petroleum support or transport allowance capped at say N300b p/a than to keep paying it. It goes to pay middle men, rent-seekers and corrupt officers and there is no amount of preaching that will stop this fraud so long as the policy is so badly defined. Everytime oil price goes up and everytime the naira is devalued and everytime the quantity of imports increases the "subsidy" and thus the "rent" increases and there is more gravy to go round. So every year we "import" more and more and deplete our reserves, and the government borrows more and more to pay for subsidy and the beneficiaries are a smal group of marketers, govt officials and neighbouring countries which get fuel without losing forex! And while a person who applies intelligence can see what is happening you can't prove it in a court of law. If the man says he sighted the vessel and it was 20kMT you have to accept it. It was a year ago!

So for two years I have been convinced that this thing is a scam and that it cannot be stopped because the entire controls have been compromised. NNPC sells domestic crude, Pays whatever subsidy PPPRA says and then gives the balance after JVC to the federation account. And while fani kayode is right to speak up, the truth is that it was obasanjo who first subverted the process by allowing NNPC to make the deductions before paying into federation account. Because once money
goes into that account it is to be shared among 3 tiers of government so strictly speaking the deductions have always been unconstitutional as the FG was paying subsidy on behalf of itself and state and LGs without their approval.

So yes, I am willing to take all the criticism and labels and be unpopular but this has to stop and govt can find other ways of alleviating pain. Iran removed subsidies and started cash transfers directly to the poor. It is up to fiscal authorities to figure out
safety nets but from where I sit and what I know this decision is not only correct but necessary and overdue. I also confirm that I have revealed nothing here I haven't spoken about before in public and it is just that Nigerians never listen!

I am not complaining about insults I am used to that. I just believe that an insult is not an argument and when people resort to personal abuse they have run out of logic.

But to then go beyond me and extend it to my dead grandfather and his "descendants" ie my late father his siblings etc I think goes beyond the pale. As a Nigerian-and as an economist- I can take a position on economic matters and this position is one I have had for years even before coming in to the central bank.

I have also explained the position on several occasions and criticised government for not doing this before. In 2010 at a public hearing in the House of Reps on the 25% saga I alerted the nation of what I considered a potential big scam around subsidies and urged for its removal. No one paid attention. The economics is very clear to me. That it is unpopular is also understandable.

The British public is unhappy with Tory budget cuts. The Greeks went on riot over austerity. Italian parliamentarians came to blows before Berlusconi was thrown out of office. The US congress is yet to approve Obamas tax increases.

Economic decisions-by definition-ALWAYS must involve a cost or an opportunity cost since for them to qualify as economic they must involve a choice in resource allocation among competing uses. An enlightened debate is one that weighs the ros and cons of removing subsidy and continuing with it.

Removing it has costs in terms of nigerians paying more for PMS-which by the way is not the fuel for genrators, power plants, production facilities, heavy duty goods transportation trucks and even luxury buses.
It is fuel used by the middle class and car owners to drove around town and from city to city not to employ workers and produce goods and services. Diesel which is critical to manufacturing and employment creation is not subsidized as the subsidy was removed years ago by obasanjo. Nigerians said nothing then because it was blue collar workers that got retrenched by factories.

Those speaking now on the internet and facebook and twitter and newspapers are not workers but middle class elite who use PMS in their smart cars so let's stop all the ideological pretence. This is not about elite and masses but an intra-elite discourse.

I will summarise the issues and I write as a Nigerrian economist and public intellectual not as a public servant:

1. I am a strong advocate for subsidies if they are for production and not consumption, and if they benefit the poor and not middle men and rent seekers. The US government subsidizes cotton and wheat farmers and nigeria spends its reserves importing wheat from america and keeping american farmers employed. The OECD countried pay subsidies to cattle farmers. Today Promasidor imports powdered milk from New Zealand and packages in nigeria using our foreign exchange while we have cattle. WAMCO imports milk from the UK and adds water and tins it and calls it "production" of Peak milk. We use our forex to import
petroleum products and keep refineries and jobs open in europe.
Meanwhile precisely because of market distortions there can be no private sector investment in refineries since no one can make profit seling at the regulated price unless we are going to provide private refineries with crude for next to nothing. Certainly no one can purchase crude at market price, refine it and sell at N65 without huge losses so this explains why there are no private refineries.

2. what I mention above is at the heart of the problem with government
economic policy which needs to be changed. The economy since SAP is one that supports imported consumption and not local production, perpetuating dependency, non inclusive growth and insecurity. Why is it that the economy is growing at 7pct annually but the people are getting poorer. Because growth gains are not evenly distributed. Personal income is skewed towards people in the oil industry,
telecomms, high finance, stock market, real estate and yes civil servants and politicians who feed on corruption. We produce crude oil but import petroleum products (today the UKs highest exports to nigeria are petroleum products). We have a large cotton belt but import textiles from china (thus keeping their subsidized factories open and jobs in china). We are the world's number 1 producer of
cassava but import cassava starch from europe. We have a huge tomato belt in kadawa, jigawa and chad basin but are the world's largest importer of tomato paste-from China and Italy. We can produce rice but we import rice from Thailand and India-most of it from grain reserves that have been in stock for over 5 yrs

3. If above is clear then it is evident that this trajectory can only lead to disaster. We will continue to spend our resources promoting growth and employment in our trading partners. Terms of trade shift against us, we can only have foreign reserves because by the good grace of God we have Oil which will be exhausted soon and with new discoveries may become so cheap it loses value. We don't create any
value added jobs as the only real production is peasant farming. Oil, telecomms, finance and real estate are not employment intensive. So everyone becomes a civil servant as the economy cannot create jobs. Result? In 2012 budget out of a total N1.8tr recurrent expenditure for the executive arm N1.6tr is on personnel costs not overheads. To reduce this you have to cut salaries or pensions or retrench civil
servants. This is the classic trajectory of underdevelopment, de-development and de-industrialisation.

4. For the above reasons I am a strong proponent of structural reform and this begins from the fiscal framework. The limited resources of government should be allocated to supporting production-especially if we are running a budget deficit. We cannot keep borrowing to support conspicuous consumption. To support a job creating economy we need to fund power, transportation infrastructure, market infrastructure and access, technical and vocational education etc. We need to build rice processing plants, produce starch and cassava flour and ethanol, process our tomato and milk locally, regenerate our textiles firms (which used to employ 600,000 workers but now employ 30,000!), refine our own crude etc. We cannot even begin to do this if 30pct of govt expenditure is on fuel subsidy, if out of the balance 70pct is recurrent spending, 10pct is debt service, 10pct goes to the niger
delta and only 10pct is capital expenditure. So it is about a choice-what do we spend money on and how do we allocate resources?

5. We often compare ourselves to other oil producing countries like saudi arabia. What are the facts? With a population of over 160m we produce 2mbpd ie 1 barrel for every 80+ citizens daily. Govt share of revenues if like 50pct of every barrel so it is effectively a barrel for 160 citizens. Saudi Arabia with a 24m population produces over 8mbpd or one barrel for every 3 citizens. In fact in 2010 the nearest OPEC country to nigeria in production per capita was Algeria with a barrel for 30 and algeria is more gas than oil.

With one barrel for 3 citizens dailt saudi arabia is able to provide infrastructure, education, healthcare and social safety nets and have huge savings. It can provide subsidised fuel at a total cost that is a fraction of its savings and even export refined products. It is paying for subsidies ouy od its fiscal savings and not borrowing to pay. We are like a poor man with a rich neighbour. The neighbour buids a good
house, buys several cars, eat expensive food, travel abroad every year and still have huge balances in sevral current accounts. Then you choose to live that lifestyle and mortgage your house, take an overdraft from the bank to finance it. Next year it is time to repay the bank, u don't have the money so u go to another bank, borrow
enough to pay the first bank principal plus interest and also fund the continuation of the lifestyle. It continues till u can't borrow anymore and the bank throws u and your family out of your house and you everything.

A responsible father would have long since faced reality and told his family he doesn't earn as much as his neighbour and expectations need to be moderated if they to keep their roof. Of course the children won't be happy at not going to Hawaii for summer and having to take public transport rather than own cars like their neighbour's children. Maybe they will even abuse the father behind his back and call him a miser. That is the cost of leadership.

Finally: removing subsidy is not a silver bullet that solves our economic problems. And there is a huge trust deficit that government has to address. Government needs to investigate subsidy payments and punish any violations of extant guidelines. It needs to cut on unnecessary and waste ful expenditure. It needs to fight corruption
and show seriousness in that. It needs to deliver on capital projects, power and infrastructure including irrigation, farm-level storage and agri-processing. These are all valid issues that are to be taken IN ADDITION to and not in place of subsidy removal.

Since someone has decided to make insinuations about my grandfather I owe it to him to defend his record. it was my grandfather as emir that repealed an obnoxious rule started from the days of Emir Usman that disenfranchised women from inheriting property. It was sanusi that built the groundnut pyramids to the point where Kano NA was contributing 40pct of the revenues of the northern region. It was emir sanusi who built the Bompai Industrial Estate, and turned kano into the industrial nerve centre of the north. He was acting governor of the northern region, minister for pilgrim affairs, chief Imam of friday mosque, judge and leader of the Tijjaniya order. As for his "descendants" my father was one of the very first batch of 12 Nigerians recruited by the British to set up the foreign service in 1957 and he remained in public service and rose to be permanent secretary before retirement. He set up in the 60s the research dept of the ministry- the present NIA so he was the first external intelligence officer in Nigeria. As permanent secretary he was the architect of Murtala Mohammed's policy on decolonisation of Africa and oversaw the independence of Mozambique and Angola and the final push to liberate Zimbabwe and South Africa.

But why did they use igbo language in a hollywood movie xmen,when wolverine went to Nigeria,if u were a foreigner and watch that movie you will think Nigeria speaks only igbo language,

so i don't buy that from OP

Onyocha:
just shut up your foul mouth!!!

it is same people like you who corrupt the country.you are here selling the interest of the people and their rights and even their right to express themselves because you've being hired and paid for supporting one side against the other.

why dont you feel the guilt?dont you have a conscience? even presidents resign.wont you think of resigning from being a sell-out? you've actually sold your soul!!

alj haram!! this guy u are just a big Bottom coward period,must you change to another moniker?so that you can show your two side of you,i give up on this man.i have warned you stop using igbo names when you are making up ur stupid monikers.

Land of da rising sun we love and cherish

alj harem:
what   he is not me if he is I would tell you

shatap,u ape,why lying?be proud and say it,after all nobody go fit slap u from screen,

Comrade Adams Oshiomhole the anti fuel subsidy removal NLC chairman, now an ardent advocate of fuel subsidy removal governor. How many struggles did he win? None. How many times did the pump price of pms increase under his watch about four times. His strategy? Strike for two days & claim that the masses are suffering end of strike & fuel prices still increased. Under his watch subsidy on kerosene & diesel & domestic gas were removed. Today he is the loudest advocate of subsidy removal i see

slap1:
Some European countries are actually envious of our growth figures? GEJ is so dumb that he doesn't know the difference between praise, flattery and mockery! Dumb son of a boat-maker that went to school without shoes! Taa! Ihe ojoo so kwa gi!

will you stick with ur alj haram, stop acting like a coward aboki

already

Why lament, why bewail mrs. Okonjo-Iweala afterall she is our sister who we brought from IMF & IBRD to come & implement neo colonial policies in Nigeria. We applauded her as the best, now we bewail her. Right from Babangida‘s era, nigerians hv been threatened with the removal of subsidy. We hv lived under this regime of fear for long. We hv been psychologically abused by successive govts on this subsidy thing. Now this fear is gone, IMF & IBRD hv won but we can still laugh last by picketting our leaders & holding them accountable, that will be the real revolution. Let us insist that they suffer with us. Let us not gv them way when they blow their sirens. Let us reduce their convoys to three cars. Let us insist that they live only on their salaries & pay for everything they use with their own money. No more overseas treatment for them. No more foreign goods & investment & bank accts for them etc. That will be our revolution. My brethren it is time to rise. Forget NLC protests those guys cannot be trusted they‘re not even convinced of the cause they fight. Gv them till wednesday some GMGs will change hands & aluta discontinua victoria uncertain. Let us move based on our personal convictions & not on populist hogwash. All revolutions are spontaneous, they are neva planned. Stand up only for what u believe & not what anoda hoodwinks u to believe. Think, judge, act.

[b] ACN [/b]PROPAGANDA MACHINE IS AT WORK

With the population of Nigeria,am not impressed when people compare Nigeria with countries like Kuwait,Saudi Arabia,if you look at those countries by population; Saudi Arabia compare to Nigeria in the real sense is  one person per barrel of oil,but in Nigeria is about (200) to one barrel of oil, can you compare that in a real sense in economic contrast,it does not make sense at all that is why they say Nigeria is an oil producing country,but the people are living in poverty.

The country have a massive unemployment youths and that will cause a big problem in future if time is  not taking;it is better for the country to collectively start working on it cos the youths explosion will finally lead Nigeria to a halt.And is already happening,as long as the funds were Chanel in the right direction,the country will progress.

pls watch this link and see the truth


https://www.nairaland.com/nigeria?topic=839322.msg9899110#msg9899110

ministers,ngozi iwela,alison mmadueke,dangote,sanusi,femi falano,former managing director of new Nigeria daily trust "mohamed haruna"frank agogue,john momo,office attorney general,subsidy beneficiaries,femi adetola,NPAN,president nduka,ben bruce,
pls watch the video first before you comment thank you


https://www.youtube.com/watch?v=RLd8o8z-2CU

But the protest was a good thing, that will keep the govt on their toes,now the country is going through insecurities and corruption.

Accountability must be abide.

This is why is good to spread wealth's,what is the point of praising one or two billionaires in your region,while the rest is living under 3dollars a day.Is not gonna work,to me is kind of practicing Communism,only the elites are well off.

igbo enwe ro eze, that's why we survived,

lol

i dey laugh protest ko protest ni

writejhn27:
I over heard a girl voice, heeee see what they are doing to this boy, why are you guys protesting when you can not bond as one. Police catch one pesi all of una run. Una never ready to protest. Did you guys not see Libya. then fight with unity.

only-truth good for posting this article,shows what umu igbo dey see in Nigeria

so much hatred they harbour for us in that country is shocking, but not to me

interesting

It´s only fools who wld risk their lives protesting at what has come 2stay. This is NOT revolution, it´s sheer selfishness on the part Labor unions, they nor their children are neither on ground . Libya, Tunisia and Egypt had better reasons for their protests;WAKE UP PEOPLE IT WAS ARAB AWAKENING! They fought 4 democracy not government reforms! Ghana removed fuel subsidy, now they are better-off. Nigerians go there to create better job opportunities for ghananians while we rot in unemployment and other poor social amenities over here.
.

Boko Haram is killing innocent citizen and no one is demonstrating. Only for criminals,Hopeless Agberos and jobless students who dont even own a bicycle to waste their lives over fuel subsidy. When it comes to fuel price reduction, christians and terrorists muslims will come together to demonstrate, but they will turnback to kill us later. What a shame?"

dustydee:
Doesn't seem like a protest to me. In any case, they will lose thier jobs if they do protest.

exactly,

"Its very shameful to see how irresponsible nigerians can act and demonstrate on matters of less importance. Boko Haram is killing innocent citizen and no one is demonstrating. Only for criminals,Hopeless Agberos and jobless students who dont even own a bicycle to waste their lives over fuel subsidy. When it comes to fuel price reduction, christians and terrorists muslims will come together to demonstrate, but they will turnback to kill us later. What a shame?"



All am saying is that Nigeria should protest against the top shot sponsors on boko haram,if we succeed on that, then we can protest on  fuel subsidy removal,even if Jonathan suspend it,terrorist will still be killing innocent people

Fuel Subsidy Removal Protester Shot Dead - A protester shot dead in Ilroin by the Nigerian police

http://www.?u=http%3A%2F%2Fsaharareporters.com%2Fnews-page%2Fpro-subsidy-protester-gunned-down-police-ilorin&h=YAQHLdYT3AQGk-QKUWiA2fDIJGlRs_keH4Pod21yhkyZCKg



Fuel Subsidy Removal Protester Shot Dead - A protester shot dead in Ilroin by the Nigerian police

protest on subsidy removal will never work in Nigeria,well not from SS/SE

we shall see