₦airaland Forum

Kobojunkie:
Mass recruitment into Security Agencies? Really? Really??

mikeapollo:
PDP may not be a party with a history pf good performancce. But the truth is, people are angry and mad at the deceits and some harsh experiences under ACN govt, especiallly in Lagos.
Fashola has turned out to be a corrupt, untrustworthy and deceitful governor who likes to use anything and everything to extort money from the people, without any compassion/plans for the poor masses. No wonder he used all means to block the investigation of his government

In the SW, once people are mad at your govt, you can be swept off in a protest vote. The party that may benefit may not necessarily be a popular party!

Except they reverse the unpopular policies of this government, 2015 will be very difficult for ACN. The last LG elections showed clearly that people cannot be deceived, exploited and fleeced just because a governor is planting flowers and resurfacing roads in VI and S/Lere while the poor market women/artisans are suffering.

I am 100% ACN but totally disappointed in Fashola's style of governance, Medical doctors to go on strike for almost 3 months in an ACN state(Lagos)? Unheard of!

Gbawe:
I Thank you all. The Nairaland Political section (the most important and transformational in my opinion) does not need 'strong' men. It needs all of us , as much as possible, contributing our views towards the efforts to transform our nation. My faith in Nigeria, even with our troubles, was renewed because GEJ (even as I dont back most of his actions) conducted elections that gave people the leaders they want. We should move on from that to demand loudly , through forums like Nairaland, that leaders do the right things always.

I can 100% assure you all that Politicians read this forum. I have an Uncle who is a Senator and was glued to Nairaland during the run up to the the elections. My cousin, one of the most influential Government official after Amosun in Ogun State, also reads this forum. He actually joked that some characters here scare him

I think we all underestimate the importance of this forum in a blogging age where opinions are formed reading , in real time, what others write. We also make the mistake of thinking politicians are different. Not so at all. They are like all of us. We should keep them on their toes so that the nation we want emerges.

ekt_bear:
Koruji, as a fraction of GDP, these Western countries spend a lot less on subsidies than Nigeria does.

GDP of the US is nearly 15 trillion, ~60 times that of Nigeria, and Nigeria spends 8 billion a year on fuel subsidies alone.

In fact fuel is heavily taxed in the US, not subsidized.

efisher:
True word Beaf. Ghana has realized itself and I hope we allow Nigeria realize herself too. Developed countries subsidize things like power generation from renewable energy in order to stimulate growth. As soon as a desired threshold is reached, subsidies are cut or removed. A classic example can be seen in the Spanish power sector which experienced tremendous growth in solar power generation partly due to government subsidy. As soon as the market began to experience excessive influx, subsidies were cut. At that point, the desired objective had been met.

It is extremely foolish to subsidize a commodity / technology that can easily be transferred to other countries. Imagine China subsidizing electronic production simply because it's in abundance.

To further explain my point on regional economics, Imagine for a moment we remain at N65 and all our neighbors
Move up to N185. This will mean increased smuggling across the borders with greater profit margin for the smugglers. It will not be difficult to get past customs with an ROI of over 130% in view. This time they will even kill to get the products across. That is if the customs officials do not have their own tankers.

For those who want to politicize the issue, Gov Oshiomhole is an ACN member and former labor leader, yet he openly supports the idea knowing the benefits. Fashola has also shown his support though he is less vocal about it. Our own world renowned economic gurus like Okonjo Iweala et al have also presented very sound arguments enough for every well meaning Nigerian to consider for the greater good. If we truly mean well, we will look beyond the man supposedly behind the policy and see it as it should be seen.

Beaf:
The bolded is pitiable. Nobody should be racked with so much hate.

@topic
I wonder when Nigerians will finally realise that they have been sold cheaply into slavery for N65.00 per litre petrol? I feel really pained when folk make passionate arguments to remain in economic chains, it really makes one wonder.
What sort of country subsidises consumption? All developed oil producers DO NOT subsidise fuel for consumption, its only the backward developed countries that do so; instead, they see subsidies as investments to be poured into productive areas like research, education, agriculture, health, manufacturing etc. But not Nigeria, cos everything we do is upside down.

Relax101:
People wey dey benefit from subsidy na dem dey whine for NL.
Dem go hala tire so tey dem go begin talk wetin no make sense.

How can less than 100 people in greedy Nigerians keep holding the country down by sharing 1trillion. haba!

frosbel:
Absolutely not, I am not a proponent of Radical Islam , on the contrary I am of the school of thought that this menace must be removed from the country once and for all and decisively at that.

What we should not condone are actions which we ourselves have condemned on innocent Muslims who have nothing to do with the violence in the first place and in many cases are also victims.

So attacking Muslims in the South because of what happened in the North is a NO NO !!

Nchara:
Wednesday, December 28, 2011

S'East to benefit from planned refineries, says Ben Obi

From Chuks Collins, Awka

MORE light has been shed on government's plans to establish three new refineries in Kogi, Lagos and Bayelsa States, with assurance that more parts/zones in the country would benefit, including the South East geopolitical zone, soon.



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This was disclosed in Awka yesterday by President Goodluck Jonathan's aide on Inter-Party Relations, Chief Ben Obi.

Speaking on the proposed new refineries and the removal of petroleum subsidy, Obi urged Nigerians to see government's programmes on their merit rather than from sectional, zonal or other divisive perspectives.

The new refineries, he said "were to be wholly private sector-driven, and the one for Bayelsa was to be sited at Oloibiri, the location where the first oil well was discovered in Nigeria.

He said Kogi plays a very central role geographically in the nation's affairs, same as Lagos in terms of commerce and industry too.

He therefore called for calm and understanding, assuring that the project which is coming in phases would in the next phase be extended to other zones in the country especially the South East.


Obi who condemned the recent spate of bombings in parts of the country, admitted that it was worrisome, but added that there would be a change in terms of security in the coming year.

"You can see that most of the suspects behind the recent bombings have been apprehended. Our security agencies are working round-the-clock to tackle the challenge, bring the situation under total control and keep citizens safe. The various arms of government have carried out a progressive training and retraining of all security officers.

On the subsidy issue, Obi appealed to Nigerians to give Jonathan a chance, because he has given his word of honour on it.

"In the past such packages come without any working document of all issues involved or what and where to channel the proceeds and why, but the present administration has put the whole cards on the table for all to see," he said.

frosbel:
Something has been nagging my mind for a while now, though I seem to be at the forefront of exposing radical Islam , but definitely not denigrating peaceful Muslims.

But what if ? What if there is a sinister ploy that will unleash the greatest genocide against a people that the world has ever seen

The hatred for Muslims is hitting earthquake proportions worldwide , and while it is true that radical islam is a threat that must be contained and removed permanently , we should not allow ourselves to be used as tools for the muder or massacre of our fellow Nigerians and Muslims for that matter.

Remember Rwanda ? almost a million dead in a few weeks.

From where I am in the UK , to what I read on forums across Europe, Asia , Africa etc, there seems to be a violent hatred and almost maniacal thirst for revenge on all and every Muslim within sight.

The only obstacle now is the laws of the land and a seemingly stable economy in the US and Europe.

My fear is that when it gets to a stage where people have nothing to lose, they could show their true colors, just like the aftermath of the 1930s recession in Germany ,which was the massacre of 6 million Jews.

While I will , and we must continue to combat this menance of fundamental Islamic terrorism, we should be on guard , lest we become participants in a violent uprising that will make Jihad look like kindergartem.

Take all sincere Muslims as your brothers and sisters, be prepared to protect them in times of dire need, refuse to join the bandwagon of murderous gangs.

Now I have got this off my chest , I can sleep well tonight

Beaf:
Its not just ACN's Lai Mohammed that talks senselessly like ACN is a pack of traitorial subversives. Bisi Akande also said boko haram is a revolution!
I could burst into tears.

Nchara:
I agree that ACN is a runny-mouth party.

Tsiya:
Wrong concept.

We are producing about 2 million barrels of oil per day. and our population is estimated about 150 million. our consumption is less than 300,000 barrels/day (including the imported refined petroleum product)

If our living standard and economy will rise to a level of a country like Malaysia,  then 2 million barrels would not be sufficient for our domestic consumption.

Malaysia, a population of 28million, consumes 550,000 barrels/day.

baby-boy:
So if Eko Rail decides to expand their venture into the aviation sector, would you support the idea of acquiring a 30 years old reconditioned plane?

They are some industries you don't CUT CORNERS!!!

High_Chief:
In a free and fair election, am sure PDP will sweep SW cos ACN has not been any difference

paragonpro:
I have always known the us has bigger oil reserves, but I was shocked to learn Canada, china, Mexico, Brazil produces more crude, and they do not shout about it.

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

russellino:
@topic - has ghana started producing oil yet. As far as i know he havent, they are still importing their fuel. Our case is different so we should be careful how we compare the two countries

~Bluetooth:
How does pdp intend to do so when the yorubas have freed themselves from the bondage of the party ?

slap1:
Things like this usually yield nothing in a country like ours, but I support it. The issue is beyond fuel price hike, ASUU strike or similar matters that may be resolved with mass protest. It's really up to GEJ to end this or let it end him.

BlueDiva:
What would the march achieve?

We have a weak president who can't handle the nation.
We should march to support GEJ's removal.

D. CONCLUSION[url]http://nao.nigeriaanew.org/fuelsubsidydec232011.html
[/url]In conclusion, the fuel crisis in Nigeria is an embarrassing one and deserves to be addressed with urgency, but also with thoroughness. It is imperative that government pay attention to citizen welfare effects, first of all, and the long-term fallacy of an IMPORT dependent fuel supply policy. There is no reason why Nigeria should not be selling fuel to the entire sub-Saharan Africa and beyond. This is because we have an advantage over imports from Europe since taxes and transport costs included in the import prices will be eliminated. We will not only be expanding Nigerian exports but helping to improve the economy of fellow oil-poor ECOWAS countries without having to subsidize anything. I have a feeling that the government which resolves this problem in Nigeria without excruciating welfare pains will remain with Nigerians for a longer time than usual and vice versa.

C. MANAGING THE TRANSITION[url]http://nao.nigeriaanew.org/fuelsubsidydec232011.html
[/url]
FACT #1: Nigerian government and citizenry alike cannot afford to keep subsidizing profiteers forever.

FACT #2: The economic, social and environmental effects of an abrupt fuel price hike cannot be justified. In fact, it would produce such upheavals as to ground the wheels of state to a halt.

Therefore, the real challenge in resolving the fuel crisis is  MANAGING the transition. What then are my recommendations?

The thrust of my proposal for a sustainable solution is to:

1.         Privatize the entire fuel sector from refining to the pump.

2.         Build a 1-2 year transition period into the deregulation process to minimize the adverse effects on citizen welfare, and turn Nigeria into a petroleum product exporting country rather than an importing one.

The elements of my proposal are as follows:

1.      A 3-6 month program to transfer the fuel depot/trucking/pipeline system to 4-5 consortia of private companies with at least 30 percent Nigerian participation (20 percent government). These consortia will be responsible for zones of the country allocated to them according to location of facilities. They will be the ones that link up with marketers to ensure delivery of products to the right fuel pumps. The privatization exercise could be done using the auction process recently used for GSM licenses under the following carrot and stick rules.

1.                  Companies must submit cost profiles under assumptions on various parameters that might affect costs, including fuel import/refinery delivery, for each zone of the country for which they submit a bid.

2.                  Government would eliminate the following taxes and surchages (1) NNPC workers insurance and medical – N1 per litre (2) Tax – N3.10 per litre (3) Surcharge N2 per litre .

3.                  Government would apply normal company taxes but no consumer taxes e.g. VAT on petroleum products for now.

4.                  Performance contracts would be signed between companies and government with respect to prices of fuel, regular supply and handling of workers under the current system. This performance agreement should include liabilities for fuel shortages lasting more than 3-days, 1-week and so on in any zone. These agreements would be subject to review every three months until full pricing takes effect (see below the recommendation on full pricing).

2.      A simultaneous 6 months-1 year process of privatizing the three government controlled refineries to three consortia of private companies under similar set of rules as above. Rules for this process should include:

1.                  3-6 month plan for complete overhaul and production from allocated refineries.

2.                  2-5 years plan for additional capacity additions. Since the capacity of each of the three refineries is between 100-200 thousand bpd, bidders could bid for these refineries or a new 100 thousand bpd capacity.

3.                  A 3-year tax and import tariff waivers for refinery parts and new refineries, and generous conditions for land allocation for refinery expansion or new construction. With respect to the latter, government would facilitate the negotiation process between landowners and refiners.

4.                  Performance contracts on the operation of the refineries should also be signed and subject to revision until full pricing takes effect (see below the recommendation on full pricing).

3.      Government should maintain current subsidies till the end of the privatization program lasting between 1-2 years. If the proposal in (1) is completed within 6 months immediate improvements in fuel supply will be achieved. After the transition period subsidies should be removed and a government/citizen body set up to monitor the consumer price index for 6 months. Depending on the extent of price increases resulting from the subsidy removal a special provision to cushion the effects through increases in wage rates, reduction in other taxes, increases in transportation allowance, etc should be implemented.

B. AN ECONOMIST'S VIEW: GOVERNMENT AND CITIZEN ARE BOTH HALF-RIGHT.[url]http://nao.nigeriaanew.org/fuelsubsidydec232011.html
[/url]

First the problem definitions
On the one hand, government-controlled activities are usually saddled with inefficiency and mismanagement. Unlike the common viewpoint, this is not because governments are made of "wicked" individuals. The primary reason is that exercising control over market transactions require enormous amounts of information. For the government to perform as well as the market, it would not only have to have the required information, but must be able to replicate how the market uses the information. This is an impossible task, and is the singular reason why both the citizenry and the government are both half-right about the problem of petroleum subsidies in Nigeria.

The citizenry is half-right in that lack of information and weak laws/law enforcement enable fuel to be intercepted by middlemen who exact illegal profits from consumers. In the extreme, these middlemen and their collaborators are billing government for subsidies on fuel that was never supplied. It is the incentive for these rents that breed corruption, and what the government refers to as sabotage. So, the government is also half-right. However, it really has nothing to do with attempts to bring the government to disrepute per se, although it could be exploited for that end. For such middlemen, it is first of all a trade-off between illegal profits and the probability of being brought to justice. They are simply exploiting inherent weaknesses of government-controlled activities to make profits.


What about the proposed solutions?
Taking the citizen solution first, it incorporates two elements that may not be immediately clear. First, the that government should endeavor to supply all fuel needs by increasing production/imports. If there is no change in the system of fuel production/importation and distribution this implies that government would have to meet the demands of smugglers and citizens alike. It would also have to continue carrying the burden of subsidizing fuel ad infinitum. The second aspect of the citizen solution is to tackle the diversion of fuels through a comprehensive monitoring of the entire distribution system. Again, this solution will not resolve the problem. Law enforcement in Nigeria is not mature enough to take on this task and indeed no country has the system to perform this task. Just look at the problem of illegal immigration and drug smuggling around the world. Let's assume that all avenues for smuggling can be plugged, does this make for hitch-free fuel supply? Again the answer is NO. To see this point, take a look at National Electricity Power Authority (NEPA) where electricity smuggling across national borders is a physical impossibility. Inherent weaknesses of government controlled activities, i.e. inefficiencies and mismanagement from both corrupt practices and inability to perform like a true market will imply continued epileptic fuel supply just as sure as we have epileptic power supply.

To summarize, the citizen solution is like knocking our collective head against the wall, it is only half-right. It is a double loss for both government and citizenry alike. Government will keep playing father Xmas to rich middlemen, while supply bottlenecks continue to strangulate economic progress.

Thus, the government's proposed solution is to remove the subsidy entirely, and deregulate the market. This sounds like the ultimate solution, but, like the citizen proposal, is only half-right. What are the implications of the government's proposal, which effectively implies an ABRUPT jump in fuel prices and continued dependence on fuel IMPORTS.

Economic Disruption and Damage to Citizen Welfare: A sudden fuel price hike will lead to immediate cost-push inflation in the economy. The argument put forward by President Obasanjo in his June 15 2000 remark that:

" an assessment of this sector (transport) reveals that the fuel component of transport operation varies from 2-7 percent. Therefore, there is no rational basis for the recent 50 percent hike on transport fare"

reveals an intuitive, but partial and misleading view of how fuel price changes work through the economy. The problem with that view is a neglect of what economists refer to indirect economic consequences of price/policy changes. The focus of President Obasanjo's statement was on the direct effect. However, with goods like fuel indirect effects are often several orders of magnitude larger than direct effects. Consider the effect of a fuel price hike on a person who relies on transportation income for a living. In deciding what he must charge for his services he would not only consider the costs of fuel but its effect on his take-home or profits, as well as opportunity/replacement costs of transport equipment. His take-home would be based on his need to meet his obligations: food, health etc. Ditto for transport equipment costs since these costs encapsulate his future sources of income. Prices for all of these will be affected by new fuel costs. Thus, a fuel price hike affects some activities directly and then ripples through the economy. The ultimate effects would be determined by the price hike, availability of alternative fuels and how essential these fuel-driven services are. Given that majority of Nigerians are already living on the borderline (an average per capita income of about 40 thousand Naira per year and 60 percent living below the poverty line) most of these services are already at their barest minimum. Nigerians cannot endure another round of serious belt-tightening that deregulation as proposed by government will entail. In the simplest terms, the government is saying that citizens would have to pay an additional 120 billion Naira for fuel annually. The question is, where is this going to come from?

Exchange Rate Effect: The government's proposal relies on massive IMPORTS and turns a blind eye to a crucial factor, the exchange rate. It is in fact this factor that has rendered all previous government efforts at "appropriate pricing" ineffective. However, its effect under the proposed deregulation will be different. In the current system, depreciation of the Naira increases the Naira value of profits that middlemen can make by smuggling, while at the same time increasing the implicit Naira subsidy by government. The proposed system will eliminate these two problems and create another by subjecting fuel prices to the unstable exchange rate situation in Nigeria. Every time the Naira depreciates, as it will continue to do, (see Central Bank of Nigeria commentary on recent depreciation of the Naria) fuel prices will have to follow. The same goes for changes in international crude oil prices. Whenever there is a price jump in the world market, fuel prices will also increase. For the avoidance of confusion, these two forces are also at work in countries with deregulation, but in most of these countries, a relatively stable exchange rate obtains and governments have strategic fuel storage (both crude and finished product) that are used to cushion the effect of crude price movements over short periods of time. These stabilizing effects are completely absent in Nigeria either in the current system or in the proposed system. Thus, if the petroleum sector had been deregulated in June 2000, according to government plans, fuel prices would have increased by up to 50 percent, if changes in the exchange rate and crude oil prices are taken together. In another sense, the need to source foreign exchange for fuel imports by itself can exert pressure on the exchange rate and cause its depreciation. All this will compound the welfare and economic disruption effects highlighted above.

Environmental Effect: In the attempt to cope with fuel price increases, people will either do without energy services or look for alternatives. For cooking which is an absolutely essential service, experience has shown that Nigerians turn to coal, sawdust, fuelwood and charcoal. I am especially reminded of the price hikes of the Babangida years when trees planted on sloppy areas of Ibadan for erosion control purposes disappeared overnight in the desperate search for cooking fuels. Fuelwood and charcoal use contribute to deforestation and desertification. In this respect, Northern Nigeria is especially fragile because the vegetative cover is already on the margin and desertification is expanding southward. These alternate fuels are also less clean and more cumbersome to handle, generating many harmful byproducts. These byproducts in turn lead to health problems and contribute to national and global environmental problems.

Political Upheaval: The Nigerian citizenry can readily discern the impact of a sudden fuel price jump on their welfare. This will be resisted until government can find a way to ameliorate the unavoidable welfare effects of such action. Again according to Prof. Gana "It is a most wicked and unfounded lie for anyone to think that an elected and popular government like ours could turn around to deliberately punish those that elected us." The problem is that deliberateness or not of the punishment is not the issue here, but that government's current proposal will PUNISH the citizenry while multinationals, and profiteers smile home with their bounties. Let the government that has an ear, hear – the current proposal will lead to a political upheaval (as it always does) that will make nonsense of whatever the Obasanjo government has achieved so far.

In some way both citizenry and government proposals for resolving Nigeria's fuel crisis are coins with one genuine and one fake side.

http://nao.nigeriaanew.org/fuelsubsidydec232011.html
Fuel Crisis in Nigeria: The 1001 Look at the Issues and Options

By Debo Dosu

Rather than rehash the long-standing history of this chronic impediment (among many) to the welfare of Nigerians, I will begin this write-up by outlining the issues surrounding the current fuel crisis. Nigeria's fuel crisis has become an "a generation is going and a generation is coming, but…remains forever" one. Fuel as used in this article refers to petroleum products, except otherwise indicated.

A. VIEWPOINTS FROM THE TRENCHES

Government Definition of the Problem
As the first co-principal player in the fuel palaver, the government holds the ace in addressing it. According to commentaries by top government representatives, the fuel crisis is due to two factors:

1.      Sabotage activities of unpatriotic elements surrounding the production/importation and distribution of fuel in Nigeria such as hoarding, smuggling and damage to government-owned refineries.

2.      An unsustainable amount of funds is needed to keep subsidizing fuel supply.


Government Solution
In simple terms, the government proposes to deregulate the petroleum sector. But one must be careful to examine what the government means by "deregulation". In his fuel crisis resolution speech of June 2000, President Obasanjo gave one definition:

"Deregulation means that the government will stop interfering in the oil industry. Marketers will be free to IMPORT and sell at prices that are no longer determined by the NNPC. One direct consequence is that prices of fuel will vary from fuel station to fuel station….With deregulation, adjustment of prices will not always be upwards, prices may fall from time to time."

In essence, the government would no longer be responsible for any part of the price of the imported fuel. In other words, this so-called deregulation is effectively an IMMEDIATE JUMP in the domestic price of fuel to match full import and distribution costs.

Citizen Definition of the Problem
The other co-principal player in the fuel crisis is the grouping of average citizens. Represented by the vocal Nigeria Labor Congress (NLC), social critics, and religious leaders among others, it feels the ultimate effect of a fuel crisis and not only has a big influence, but must be the main consideration in addressing it. From the citizen perspective, the fuel crisis is due to:

1.      Inefficiencies and mismanagement of government operations, which in plain terms refer to the inability to keep all three government owned refineries functioning at full capacity.

2.      A sinister plan by the government to force its proposed solution, contorted under the tutelage of the IMF, World Bank, etc, on the populace by creating artificial scarcity

3.      Plain government corruption.

Citizen Solution
The citizen solution to the fuel problem is driven by the following viewpoint: Crude Oil is God-given to Nigerians, the only cost of supplying its derivate (fuel) should be the cost of refining, transportation and distribution plus a minimum amount charged for crude oil extraction. The most articulated proposal is by the NLC:

1.      Repair all refineries.

2.      FG/NNPC should hire all products storage spaces in Cotonou for imports and supply to Lagos, Ogun, Oyo and contiguous states.

3.      FG/NNPC must use strategic and innovative steps to halt the problem of intractable products supply and distribution.

4.      Lagos Ports to be used for source of bridging products to Lagos

5.      FG/NNPC in the spirit of ECOWAS cooperation should contract to exclusively use Abidjan refinery and pay a refining fee.

But what is the true nature of the fuel problem from which a realistic solution can be distilled?

efisher:
If we remain adamant, regional economics will have us in even worse positions than we are now with the removal of subsidy in Ghana and other neighboring countries.

Developed economies will not subsidize a commodity that cannot stimulate local growth or that doesn't have any future strategic impact on the economy. Even worse is a global commodity in a mature market. In other words, subsidies in these countries usually act as economic stimulants for long term gains.

HNosegbe:
@ Koruji But the subsidies you refer to are given to domestic manufacturers and farmers, not importers.

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

gregg2:
What is worth doing is worth doing well.
Besides, Fashola should tell us how much
each scrap train cars costs.