₦airaland Forum

Sangoamadioha1:
1.6 to 1.9 million barrels per day of crude oil sales is serious money but what do we have to show for it.

If the subsidy program is corruption free, I believe the government will be capable of running the program.
Corruption and wasteful spending is the bane of Nigeria's problem and not subsidy itself.

nairalanda1:
Simple, because at the end of the day, band A form only 20% of total consumers, and because most consumers do not pay a cost reflective tarrif.

That means that the money earned at the end of the day is not enough to pay for improvements.

For things to improve, discos would have to be earning the amount of 15 trillion naira from band A consumers....which is not possible.

Hell, the issue is the right of a company or an individual to set its prices....and taking away that right from the power sector is why you don't have light.

fineboynl:
you only knows about textbooks economy. Reality is different and only people with experience can understand how reality works

nairalanda1:
Ah, I wish you were right...but the problem is, it isn't.

Assuming oil prices stay at 80 dollars per barrel...that's 55 billion dollars yearly revenue from 1.9 million barrels.. That is 243 dollars for every nigerian.

Scanty.



Even if we remove corruption (which is kind of impossible, otherwise many nations with subsidy would have told us how they did it)...the palaver is, we would still face the problems of production cost, expansion costs and upgrade costs...both of which would rise without any regard for our revenue, and at a pace beyond which government can keep up with

And I forgot gas costs...gas prices rise as well too. (Add the fact that most gas suppliers in nigeria don't take Naira in payment...they want dollars. Yes, even NGC, which is a subsidiary of NNPC. Government can't force them to change their mind at all.).

(That's why businesses take loans for say upgrades...it is because costs can rise beyond what is expected).

But since government is paying subsidy, that means subsidy costs will rise with the rise in production, expansion and upgrade costs. That means a large hole in the budget...caused by taking money from other sectors like health, educaiton etc...to pay for subsides.

And the hole would be filled by...more borrowing. Extreme amounts of borrowing.

Same issue for power and for petrol.

That's why removing subsides...or restricting subsides to very very poor people ..or paying for subsides like they do in genramy and denmark at very high tax rates...which go up with your income...ends up being the way.

Nigerians do not want to pay high taxes ....(tax uptake as at 2024 to state and goverments came from 44% of the populaition, and the rate was below 24%)...so subsidy removal, or more debt resulteth

nairalanda1:
Well, it isn't textbook economy.

We have been doing subsidised electricity since at least 1978...and since then things have gotten worse.

Ivory coast was doing subsidised electricity until 1993. Back then they had peace, but they also had power cuts, and system collapses (the last major one was in 1984.). Then in 1993, they removed subsides, and privatised power from top to bottom....and the result was 24 hour power supply, despite having a civil war and several severe crisis.

And it is not that Ivory coast is free of corruption (the guy who privatised power was a corrupt bigot)...but since it got profitable, the sector has had money to improve things. Hell, the WOrld Bank invested money in the thing, among other investors.

Now that's practical economics.

NO investor would invest in any sector that has subsidy. That is why subsidy on fuel went when dangote was ready to open his refinery.

fineboynl:
this is a simple logic.

The band A as a test run program failed. It failed and further increament will fall as well.

The band A increased cuase serious issue to the economy. Hotels increased their service. Restaurant and bar increased their service. Frozen food increase their service.

Band A (Min. 20 hrs): ~₦209.50/kWh.
Band B (Min. 16 hrs): ~₦63.35 - ₦68.96/kWh.
Band C (Min. 12 hrs): ~₦51.79 - ₦56.38/kWh.
Band D (Min. 8 hrs): ~₦39.67 - ₦40.12/kWh.
Band E (Min. 4 hrs): ~₦39.44/kWh

Poorer people reduced their electricity consumption. I no longer putting on my air conditioner except for extreme conditions.

All of which didn’t even brought value to the increase. So its failed F9. And out more people in suffering

nairalanda1:
The problem is, the money for subsides will come from the 1.9 million barrels per day we produce here in nigeria...which is not enough for a country our size revenue wise, and that is before corruption comes in.

Also, we need something like 10-15 trillion naira annually in new investment for at leasr 5 years before we can see improvement. That is about a quarter of our current budget. And that is for new investment...doesn't cover subsidy or revenues.

That means that if you want subsides, you got to pay through the nose for it....by massive borrowing and more debt.

Also, Ghana and Ivory coast don't have subsides, and as a result have decent power supply. Egypt, that Peter Obi holds up as an example, removed subsides on power. That's our comparison...not India which is relatively wealthy

Sangoamadioha1:
Ok, in a nutshell, you believe government should not subsidize anything. Everything should be left to the citizens to pay.
Although you make a strong case but I believe the masses need subsidy taking into consideration our wage level in this country.
Without government subsidy basic things we need to survive will be out of reach for the average Nigerian. That is my own opinion anyway.

sirblend:
You are always everywhere on nairaland defending governments incompetence.

nairalanda1:
Well, if I was to defend government incompetence,....I would be defending subsides on power, not adovcating for their removal.

Plus, if we wanted a subsidy that would pay for costs, AND pay for expansion and improvement...that would mean that government would have to drop at least 20 trillion naira annually. Ya budget is not up to 60 trillion naira at the moment.

Dricker:
Anyone still supporting this government will not see the end of this year cus you guys are demons literally,y'all belong in hell

naptu2:
It's inevitable, the ridiculous subsidy has got to go!

Blazebond:
See Dem justifying a price hike in the electricity price like the novice that they are,they think paying 50000 for one kilowatt will automatically make the electricity available.

sirblend:
You are always everywhere on nairaland defending governments incompetence.

ZombieDredd:
How many times will subsidy go?

someone once said "subsidy is gone".

Or didn't it go that time?

Debroslink:
Anywhere electricity is mentioned, the nairalanda1 guy is everywhere pushing his agenda that electricity shouldn't be subsidised anymore.

I'm sure he works with PHCN or NERC and he's really fighting for his pocket and wants to increase his share of the national cake.

sirblend:
For instance you always posted on nairaland that 68% of metered phcn customers bypass their meters which is false.

Over 68 per cent of electricity consumers in Nigeria are illegally bypassing their prepaid meters and consuming power without payment, the Nigerian Independent System Operator (NISO) has revealed.

This disclosure came yesterday in Abuja during the fifth annual conference of the Power Correspondents Association of Nigeria (PCAN), where stakeholders in the power sector called for a balanced electricity tariff that would protect consumers while ensuring commercial viability for operators.

The revelation adds a new layer to Nigeria’s worsening power sector liquidity crisis, as utilities already struggling with poor revenue collection now face widespread energy theft.

Speaking at the event, the Managing Director of Mainstream Energy Limited and board member of NISO, Audu Lamu noted that Nigeria’s harsh economic environment made it increasingly difficult for many consumers to pay for electricity.

Lamu, who was represented by the Managing Director and Chief Executive Officer of NISO, Abdu Bello Mohammed said rising inflation, unemployment, and declining purchasing power, eroded the capacity of households and businesses to meet even basic utility costs.

Blazebond:
See Dem justifying a price hike in the electricity price like the novice that they are,they think paying 50000 for one kilowatt will automatically make the electricity available.

nedu666:
You remove fuel, energy, agric, education subsidy. But you are not creating jobs, not securing highways, not increasing income. What exactly is the usefulness of govt to Nigerians

naptu2:
Do you know the difference between electricity and petrol??

nairalanda1:
The other countries don't subsidise their electricity (or if they do, it's for the really really poor), charge very high taxes at a point that if they brought it here to nigeria, there would be large protests, pay heavy duty fees for educaiton, and don't do renewed hope giveaways.

The result is a working country.

NIgeria, where you people want us to use oil revenue that isn't up to 100 billion dollars per annum to pay for the things you want us to do? Not possible, sadly.

Abee79:
Some of us are on Band A, duh?

Sangoamadioha1:
1) Under the reduction in fuel scarcity is due to local refining of petrol.

2) Transmission of electricity is our major problem. Upgrade the transmission facilities and the situation will get better.

The annual funds being released to the power ministry is enough to remedy these things.

meobizy:
Endless excuses. My solar setup has given zero failure for over five years and counting. Off the grid with peace of mind. Outages are a distant memory. Una go suffer once Aso Rock cut off from national grid.