₦airaland Forum

Kobonaire234:
If we want an end to scarcity then we have to remove subsidy.

The biggest mistake any government can make is to 'regulate prices'. We have been regulating prices of petrol since 1973, and in the process we have gone from having 2-3 working refineries to 4 and now to none.

Inherent in subsidisng fuel is the idea that we can sell fuel below the production cost and then pay off the resulting loss via subsidy. As we can see that is not possible. To even run refineries effectively, we need them to make a profit.....which means a refinery is allowed to sell fuel in a way that it can make a profit to pay off the supplier of crude, and its maintenance and upgrade costs, and the marketer is allowed to sell fuel in a way that enables it to pay off its transport costs, the refinery, its supplier. And all have to pay the government its due.

Subsidy does not help the poor. In 2021...it cost N261 to bring in one liter of fuel. Now as at November it was costing N510. The official price of the petrol jumped from N165 to now N179. And we somehow expect to keep it magically that low.?

Nigeria has wrecked our refineries at home because we could not let them produce at a profit....this is the extent of government mismanagement. Government did not let the refineries make a profit. Government over the years prefers to use a large and larger amount of the budget to pay off subsides...because it has no other way of helping the poor that Nigerians like.

The poor are helped in 'sane societies' by heavy taxation, and tax to gdp ratios that are as high as 40-50%...which pay for the welfare of most of the poor. In Nigeria, we do the paying by blanket subsidies, and by cutting prices of petrol. As a result, we end up taking a large chunk of our budget to pay for subsides...because government cannot control the production cost of petrol...whether in or out of Nigeria....and we take loans to cover our asses.


Until subsidy goes....there is going to be scarcity. You cannot bring in fuel at N510 and sell at N180. You cannot refine fuel in Nigeria above N250, and sell it at N180. Petrol, like the phones and rice and stuff you buy...costs money.


Thanks for listening to my TED talk on subsides.

iwaeda:
https://punchng.com/prolonged-petrol-scarcity-is-scandalous/

obi58:
Like I said let government address the massive inefficiencies and leakages in the industry first. These are the things that the cabal is massively exploiting at the detriment of the poor masses. If domestic fuel consumption is accurately put at 30mbpd as against the fictitious NNPC figure of 70mbpd a day and the customs is made to do their job properly smuggling will reduce massively. More duties will be generated at the borders from these tankers going out. If we could successfully combat smuggling of imported rice in this country I see no reason why massive tankers cannot be tracked and made to pay sufficient duties back to government to cover the cheap fuel they buy here. Like I said before the reverse happened some years ago when the Naira was stronger than the CFA and importing cars was much cheaper in Cotonou than Nigeria. Even with Benin government increasing duties and tightening their border controls, Nigerians still kept importing cars from Benin and paying the appropriate duties to the Béninois government. Today the CFA is stronger than the Naira. The Nigerian government in their wisdom have kept increasing importation duties for cars locally when we should be exploiting this situation.

kingjoe:
let me start from you.
Can you afford to buy fuel at 700 naira.
That's the price if we removed subsidy.
Diesel is not subsidized and now cost 800 per litre kerosene 750. gas is used as alternative for kerosene.
We should remove corruption in the process subsidize until we build our refineries.it does not make sense.
We have crude oil we can convert it by ourselves.minimum wage is small.we can't afford to buy unsubsidized fuel.

Kobonaire234:
The leakages happen because the fact is....when you bring in fuel at a high price and sell it at a lower price, you will end up with looting...because in some ways it is the only way to make a decent profit.

Also, the smuggling happens because fuel is sold to marketers at N148. Meahwile it costs N300 and above in all our neighbours. At the end, people will smuggle fuel and have enough profit to pay off the customs man at the border. By the way, it is not only big men involved in the thing...a lot of small boys at all our borders do the same.

Finally, we lose money. We lose dollars to subsidy...meaning our currency falls because no dollars to buffer it, and we waste money that could have been used on new ports and new refineries among other things...which is why we have to bring in cars through benin.

No amount of cutting leakages is going to change the fact that when you sell fuel at N148 after bringing it in at N510, and when it costs aboveN235- N300 to produce one liter of fuel, there will be losses. And to plug the losses.....illegal activity suddenly becomes a necessity.


To end smuggling, and illegal activites...subsidy has to go. No other way out.


The society that lives on subsidies and freebies, is always responsible for a corrupt governance.” ― Dr. Ashok Anand

onuman:
A litre of Petrol in most European countries is about N1800.

Remove subsidy in Nigeria, the economy grinds to a halt. It's a jigsaw puzzle for Nigeria.

Solution should have been getting the refineries working in Nigeria where cheaper labor helps to lower cost of refining crude oil. But shall foreign economic interests in collaboration with Nigeria's profiteers allow Nigeria's refineries to be refurbished?

Patrickker:
In 2019, i was the only person that voted him in my house. I knew he was repeating whether we vote him or not. Here we are today, Lessons learnt in a hard way... This time my father asked me, who am i voting, I smiled in satisfaction and told him Obi, he said, 'Obi, the way to go.'

Kobonaire234:
Yeah I can't afford it most likely....but I also cannot afford the rising debt and budget deficits and corruption and looting , and loss of refining capacity with loss of jobs that come from keeping the subsidy either. I also don't enjoy paying for my fuel at IMF HQ...at the prices they dictate.

Infact, keeping the subsidy is more costly to me than paying N700 per liter.

The society that lives on subsidies and freebies, is always responsible for a corrupt governance.” ― Dr. Ashok Anand.

Your choice...N700 at the pump....or N1500 at IMF HQ.

Kobonaire234:
That's largely because of enviromental taxes, and the regulations that go into their refineries construction..again environment..plus most of them are not oil producers.

And as you said, cheaper labor (That's why some european workers and african workers can have the same level of living despite the Europen earning on paper higher salary)



More like a catch 22

Keep subsidy, and the budget deficit rises...meaning more loans

Remove subsidy and there would be economic issues

Either way, bad news. Why I back removal of subsidy is long term benefits...but long term benefits are not what people want to hear.



The refineries don't work because the subsidy regime means they sell fuel at a loss...plus free money...which means that they can be sabotaged...and the money will still come in.

Meanwhile, our GSM companies work well because government does not set a price for them, meaning that they can make a profit to buy and maintain their facilites. And sabotage won't happen because if it does, they lose money(NNPC if sabotage happens, government just pours in money...).

Sell fuel at a profit, and the refineries would work...especially since there is no subsidy money coming in. No free money...the incentive would be there to make the refineries work.

Plus the profiteers will make far more profit, as would the foreign interests. Our government too would make more money.

Plus, we get more refineries. Since no subsidy means reifneries can make a profit...which means domestic refining makes more sense...and that ends Dangote monopoly.

The people get more jobs, more investment and critically eventually a stronger naira and lower prices

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Kobonaire234:
The leakages happen because the fact is....when you bring in fuel at a high price and sell it at a lower price, you will end up with looting...because in some ways it is the only way to make a decent profit.

Like I said has enough been done to verify how much is actually brought in and at what price by NNPC? Has enough been done to tighten border controls and check smuggling? Has the government made public examples of compromised customs officials and their supervisors? Has enough been done to ensure depot owners sell appropriately after receiving at N148 naira? What is being done to combat this price collusion/cartel by the depot owners? Has enough been done to get our refineries working again?

Also, the smuggling happens because fuel is sold to marketers at N148. Meahwile it costs N300 and above in all our neighbours. At the end, people will smuggle fuel and have enough profit to pay off the customs man at the border. By the way, it is not only big men involved in the thing...a lot of small boys at all our borders do the same.

People smuggle because government allows them to smuggle. Look at the revelations coming out now that government has decide to tackle bunkering. Like I said earlier if the seriousness is there to combat smuggling it will become too hot for the participants to indulge in. I raised the example of imported rice earlier. If it can be done for rice it can be done for fuel. Anyone coming from other countries to buy fuel must pay appropriate duties at the border same way Nigerians pay duties to Benin Republic to import cars from Cotonou.

Finally, we lose money. We lose dollars to subsidy...meaning our currency falls because no dollars to buffer it, and we waste money that could have been used on new ports and new refineries among other things...which is why we have to bring in cars through benin.

We lose money because we chose to lose money. I have shown you how a serious government can not only plug leakages but generate dollars at the borders instead of these monies going to corrupt customs officials. If it can be done for rice it can be done for fuel. Just saddle EFCC and DSS with spotchecking the customs and see the revelations that will start coming out.



No amount of cutting leakages is going to change the fact that when you sell fuel at N148 after bringing it in at N510, and when it costs aboveN235- N300 to produce one liter of fuel, there will be losses. And to plug the losses.....illegal activity suddenly becomes a necessity.

The landing cost of fuel is debatable.... The cost of producing a liter of fuel domestically is debatable. It is the responsibility of government to ensure we get the best prices for domestic consumption. If best practices are adopted a whole lot will change and if we focus on resuscitating our daily crude oil output and export which again we are not seriously monitoring giving rise to significant leakages there too, we will do just fine as a country.


To end smuggling, and illegal activites...subsidy has to go. No other way out.

If other middle Eastern oil producing nations can subsidise their fuel and still remain highly profitable and efficient in their oil production I see no reason why Nigeria can't be the same.

The society that lives on subsidies and freebies, is always responsible for a corrupt governance.” ― Dr. Ashok Anand

obi58:

All developed economies operate some form of subsidy or welfare net for the protection of their people.

MVLOX:
At least it is getting us ready for the removal of the fraudulent subsidy

Kobonaire234:
Not for all their people, for selected groups and those subsides are paid for by heavy duty taxes on everyone. Not our kind of ekuke taxes

iwaeda:
https://punchng.com/prolonged-petrol-scarcity-is-scandalous/

obi58:
Subsidy must stay. Low fuel price is the only thing Nigerians benefit from the government. Instead every effort should be made towards investigating the inefficiencies in the fuel industry. Starting from accurately determining our daily domestic demand to accurately capturing the real volumes imported into the country to effectively Manning our borders to stop oil smuggling, to checking pipeline vandalism and bunkering, to providing incentives for quick setup of modular refineries nationwide to checking the excesses of Nnpc and the private depot owners etc....

A serious government will attack and eliminate all these inefficiencies first, set up domestic production not limited to Dangoté alone, denominate crude oil supply to local refineries in naira and their ancillary inputs likewise to reduce the drain on our foreign reserves thus strengthening the naira and then sell excess crude on the international market.

If even as low as 30% of these things are done you will discover that much of this subsidy burden on the budget will mysteriously disappear, fuel will be everywhere and our daily bpd will increase. If other oil producing countries can efficiently manage their petroleum industry and still subsidise fuel for their citizens so also can Nigeria.

Few years back Naira was stronger than the CFA, but today that is not the case. If Nigerians can go to Cotönou to buy cars and pay appropriate duty before crossing the border back here, I see no reason why people from other countries coming here to buy cheaper petrol cannot be checked and made to pay appropriate premium duties to government which can be ploughed back into improving our local refining capacity. The problem is not subsidy but the gross inefficiencies in the management of our petroleum sector especially by NNPC. This is where the beam must be focused for us to maximise our earnings from oil and improve our country.

Everlastingson:
Thank you. Many of those you hear shouting subsidy should be removed are actually enemies of the masses, agents of the World Bank who have equally been brainwashed by the West. ALL Arab countries have fuel subsidy in place for their citizens but are still light years ahead of Nigeria. Until the Federal Government stops stealing Nigeria is going nowhere.

Kobonaire234:
If we want an end to scarcity then we have to remove subsidy.

The biggest mistake any government can make is to 'regulate prices'. We have been regulating prices of petrol since 1973, and in the process we have gone from having 2-3 working refineries to 4 and now to none.

Inherent in subsidisng fuel is the idea that we can sell fuel below the production cost and then pay off the resulting loss via subsidy. As we can see that is not possible. To even run refineries effectively, we need them to make a profit.....which means a refinery is allowed to sell fuel in a way that it can make a profit to pay off the supplier of crude, and its maintenance and upgrade costs, and the marketer is allowed to sell fuel in a way that enables it to pay off its transport costs, the refinery, its supplier. And all have to pay the government its due.

Subsidy does not help the poor. In 2021...it cost N261 to bring in one liter of fuel. Now as at November it was costing N510. The official price of the petrol jumped from N165 to now N179. And we somehow expect to keep it magically that low.?

Nigeria has wrecked our refineries at home because we could not let them produce at a profit....this is the extent of government mismanagement. Government did not let the refineries make a profit. Government over the years prefers to use a large and larger amount of the budget to pay off subsides...because it has no other way of helping the poor that Nigerians like.

The poor are helped in 'sane societies' by heavy taxation, and tax to gdp ratios that are as high as 40-50%...which pay for the welfare of most of the poor. In Nigeria, we do the paying by blanket subsidies, and by cutting prices of petrol. As a result, we end up taking a large chunk of our budget to pay for subsides...because government cannot control the production cost of petrol...whether in or out of Nigeria....and we take loans to cover our asses.


Until subsidy goes....there is going to be scarcity. You cannot bring in fuel at N510 and sell at N180. You cannot refine fuel in Nigeria above N250, and sell it at N180. Petrol, like the phones and rice and stuff you buy...costs money.


Thanks for listening to my TED talk on subsides.

clinician2x:
You help the poor by taking them heavily you're saying?

Everything you wrote here shows you have zero understanding of the Nigeria problem

When you eliminate fuel subsidy what happens? You sell petrol to about 1k a litre and the cost of everything grows exponentially and salary remains the same. Will the increase in fuel pump price cause an increase in salary to male people afford basic things, if you say the answer is yes, you are a fool.

Subsidy must stay. The problem of nigeria is not subsidy, it is corruption. Even the money they pay on subsidy is not accounted for, it is bogus figures daily. The same way the subsidy situation is handled with zero transparency is still how it will be mismanaged when you remove subsidy.

Subsidy is healthy in all economy. The tuition fee paid by Canadian citizens is far less than what immigrant with student visa pay and it's subsidy in place. You cannot help the poor through taxation, u help them through subsidizing their basic needs. Until Nigeria fix electricity issue to cut dependence on fuel, removing subsidy will be disastrous on the masses.

Millions of Nigerians are poor, million others spend 60% of their monthly salary on transportation to work. When you remove the subsidy they will spend 120% on transportation because the salary will never grow, companies will shut down or even downsize and millions of others will be thrown into misery.

Majority of Nigerians lack functional brains.

Kobonaire234:
If we want an end to scarcity then we have to remove subsidy.

The biggest mistake any government can make is to 'regulate prices'. We have been regulating prices of petrol since 1973, and in the process we have gone from having 2-3 working refineries to 4 and now to none.

Inherent in subsidisng fuel is the idea that we can sell fuel below the production cost and then pay off the resulting loss via subsidy. As we can see that is not possible. To even run refineries effectively, we need them to make a profit.....which means a refinery is allowed to sell fuel in a way that it can make a profit to pay off the supplier of crude, and its maintenance and upgrade costs, and the marketer is allowed to sell fuel in a way that enables it to pay off its transport costs, the refinery, its supplier. And all have to pay the government its due.

Subsidy does not help the poor. In 2021...it cost N261 to bring in one liter of fuel. Now as at November it was costing N510. The official price of the petrol jumped from N165 to now N179. And we somehow expect to keep it magically that low.?

Nigeria has wrecked our refineries at home because we could not let them produce at a profit....this is the extent of government mismanagement. Government did not let the refineries make a profit. Government over the years prefers to use a large and larger amount of the budget to pay off subsides...because it has no other way of helping the poor that Nigerians like.

The poor are helped in 'sane societies' by heavy taxation, and tax to gdp ratios that are as high as 40-50%...which pay for the welfare of most of the poor. In Nigeria, we do the paying by blanket subsidies, and by cutting prices of petrol. As a result, we end up taking a large chunk of our budget to pay for subsides...because government cannot control the production cost of petrol...whether in or out of Nigeria....and we take loans to cover our asses.


Until subsidy goes....there is going to be scarcity. You cannot bring in fuel at N510 and sell at N180. You cannot refine fuel in Nigeria above N250, and sell it at N180. Petrol, like the phones and rice and stuff you buy...costs money.


Thanks for listening to my TED talk on subsides.

obi58:
Subsidy must stay. Low fuel price is the only thing Nigerians benefit from the government. Instead every effort should be made towards investigating the inefficiencies in the fuel industry. Starting from accurately determining our daily domestic demand to accurately capturing the real volumes imported into the country to effectively Manning our borders to stop oil smuggling, to checking pipeline vandalism and bunkering, to providing incentives for quick setup of modular refineries nationwide to checking the excesses of Nnpc and the private depot owners etc....

A serious government will attack and eliminate all these inefficiencies first, set up domestic production not limited to Dangoté alone, denominate crude oil supply to local refineries in naira and their ancillary inputs likewise to reduce the drain on our foreign reserves thus strengthening the naira and then sell excess crude on the international market.

If even as low as 30% of these things are done you will discover that much of this subsidy burden on the budget will mysteriously disappear, fuel will be everywhere and our daily bpd will increase. If other oil producing countries can efficiently manage their petroleum industry and still subsidise fuel for their citizens so also can Nigeria.

Few years back Naira was stronger than the CFA, but today that is not the case. If Nigerians can go to Cotönou to buy cars and pay appropriate duty before crossing the border back here, I see no reason why people from other countries coming here to buy cheaper petrol cannot be checked and made to pay appropriate premium duties to government which can be ploughed back into improving our local refining capacity. The problem is not subsidy but the gross inefficiencies in the management of our petroleum sector especially by NNPC. This is where the beam must be focused for us to maximise our earnings from oil and improve our country.

Kobonaire234:
Not for all their people, for selected groups and those subsides are paid for by heavy duty taxes on everyone. Not our kind of ekuke taxes

clinician2x:
You help the poor by taking them heavily you're saying?

Everything you wrote here shows you have zero understanding of the Nigeria problem

When you eliminate fuel subsidy what happens? You sell petrol to about 1k a litre and the cost of everything grows exponentially and salary remains the same. Will the increase in fuel pump price cause an increase in salary to male people afford basic things, if you say the answer is yes, you are a fool.

Subsidy must stay. The problem of nigeria is not subsidy, it is corruption. Even the money they pay on subsidy is not accounted for, it is bogus figures daily. The same way the subsidy situation is handled with zero transparency is still how it will be mismanaged when you remove subsidy.

Subsidy is healthy in all economy. The tuition fee paid by Canadian citizens is far less than what immigrant with student visa pay and it's subsidy in place. You cannot help the poor through taxation, u help them through subsidizing their basic needs. Until Nigeria fix electricity issue to cut dependence on fuel, removing subsidy will be disastrous on the masses.

Millions of Nigerians are poor, million others spend 60% of their monthly salary on transportation to work. When you remove the subsidy they will spend 120% on transportation because the salary will never grow, companies will shut down or even downsize and millions of others will be thrown into misery.

Majority of Nigerians lack functional brains.

Kobonaire234:
Canada has a higer rate of its income coming in from taxes.

Nigeria does not. Our revenue from oil is very tenous even without the stealing

clinician2x:
So your idea of moving the nation forward is to increase taxation and increase fuel cost. So the person that earn 20k a month will spend 12k on transportation and pay tak of 5k and is left with 3k? I know people that earn 8k from their place of work. They pay about 3k monthly on transportation and when u remove subsidy it will be 6k so they're left with 2k. What do you think will bcom of these millions of Nigerians?