2027: Why Fuel Subsidy Must Never Be Returned. - Politics - Nairaland
Nairaland Forum › Nairaland General › Politics › 2027: Why Fuel Subsidy Must Never Be Returned. (5447 Views)
| 2027: Why Fuel Subsidy Must Never Be Returned. by Penguin2(op): 8:20am On Aug 22 |
As the campaign for 2027 presidential election kicked off, Atiku Abubakar, presidential candidate of the ADC, has ignited a very troubling conversation by suggesting he would return fuel subsidy if elected. While the suggestion is populist, like most people have described it, and appealing to the ignorant masses who do not understand the dynamics of macroeconomics, there’s need to educate the electorate against such proposition. First, returning fuel subsidy means returning to square one of what successive governments have been trying to solve before Tinubu eventually damned all consequences to remove it. If you return subsidy today, agreed their might be some temporary relief for the masses as the price of fuel might drop drastically, and with it the price of transportation and basic commodities in the short term, in the medium and long term, Nigeria will simply return to the Egypt that it is currently trying to exit. What I mean is this…. After about 6 months paying subsidy, government finances will begin to strain. The money going to State Governments will reduce from what it currently is, and with time, States will start finding it difficult to pay salaries again. Then in the long term, government will, all over again, begin the campaign for fuel subsidy removal to free up funds. After some years, another president that is not Atiku will come and decide that fuel subsidy is no longer sustainable, again, and we will hear that evil phrase again - “subsidy is gone.” Do I need to tell you what will happen again? Fuel prices will skyrocket again. Cost of transportation will balloon again. Prices of basic commodities will start flying again. And then what? We return to this current situation that Atiku is proposing to save us from; all over again. So, before you jump to support Atiku, think it through. The mistake you are going to make in jumping to support Atiku because he’s promising to return fuel subsidy is the same mistake that some Nigerians made in 2012 by joining political jobbers to protest against Jonathan when he removed subsidy during his presidency. What later happened? The same person that led that protest became president 12 years later and removed the same subsidy that he led ignorant people to protest against. So, before you support Atiku, ask yourself if you want Nigeria to keep running round a circle or to move on from every stage and hurdle we have crossed? The effect of fuel subsidy removal is biting hard, admitted, but the solution is not to return it, rather we should continue to bear it until we achieve equilibrium. That way, we are sure we and our children are never going to have to suffer the effects of subsidy removal again. Penguin is a bird of reason.
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Thiefobi1: 8:25am On Aug 22 |
Any one supporting return of fuel subsidy should be given life prison sentence. Atiku does not mean well for the country. A desperate man with nothing to lose. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by AMINDA: 8:40am On Aug 22 |
Tinubu is paying more on fuel subsidies than previous administrations did. He has only found a new name for it, "energy security." Tinubu has also outborrowed all previous administrations who paid subsidies with less infrastructure to show for it. "Only living people can enjoy future gains. A government that starves people in installments cannot redeem itself with a hypothetical prosperity scheduled for an undefined tomorrow." - Farook Kperogi
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Nobody: 8:41am On Aug 22 |
Thiefobi1:Can you explain fuel subsidy? |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by AMINDA: 8:49am On Aug 22 |
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by favor914: 8:52am On Aug 22 |
Beautifulday:Please leave the thread, and go to the entertainment section. No be by force to put mind for matter wey u no understanding . |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Nobody: 9:13am On Aug 22 |
favor914:This is not for people like you who have nothing sensible to contribute to humanity. You came to nairaland since 2020 but you have only created a Topic which is in foreign affairs section. I came in 2024, I have created over 20 topics of impacts though I don't spend as much time as you spend here. In your opinion, who should be in the entertainment section between both of us?
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Qadaffi2idiamin: 9:30am On Aug 22 |
Somebody woke up in the morning and decided to spew trash. How can anyone in his right state of mind say subsidy has benefited Nigerians? It has only benefited the Abuja bandit and his Rivers state Temu Hitler. There's nobody that can point to a single Nigerian related capital project from this administration. Where is it? If government builds roads is that a project to dance on? Put it right, Tinubu brought poverty to Nigeria and he has promised to take it to another level by taxing Nigerians to the teeth in the name of economic reforms while they create fake agencies of government to fleece that money from Nigerians. If you don't know what to say, go to an ogogoro joint and listen to people who have space for you to talk back. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by nairalanda1(m): 9:44am On Aug 22 |
AMINDA:That was for a period of time between October 2024-March 2025, when fuel prices did not pass N900 per liter...and government was at one time spending N1 trillion per month, or close to it. Had he not paid it, fuel would have been more expensive And at the end, it probably worsened our debt. It was not the best decision that tinubu ever made. Also, our population has not remained static over the last 20 years, so subsidy costs would go up, and then there is the devaluation of the naira. I am not a fan of tinubu, and want him out, but you are responding with the same type of populism that he used to decieve Nigerians in 2012. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by nairalanda1(m): 9:52am On Aug 22 |
Beautifulday:Basically, for several decades, the government set the price of fuel below it's production and market costs...meaning that fuel was sold at a loss. The monies paid to cover for that loss was the subsidy. The problem was 1. Government cannot control production and market costs, largely because bringing out crude and refining it is so expensive. A profit has to be made regardless, and the above arrangement did not let profits be made. 2. Also, oil prices have been a major source of income for the government. When oil prices fall, two things happen a) Not enough money to pay for subsides b) Naira gets devalued, which means the cost on paper of maintaining the subsidy 'goes up'. 3. At the end, government starts cutting corners to save on subsidy costs. For the NNPC refineries, government stopped maintaining and upgrading them from 1994-2009. And they became scrap as a result. THe degeneration was slow...not fast. 4. ANd also, government does periodic partial removals of subsidy to save some money and reduce subsidy payments...which is why fuel today does not cost 15 Kobo as it did in 1981. But even then, production costs keep rising, so partial removals kept on happening over and over again...manifesting as 'price increases' which did not cover the productiion and market costs. The problem with subsidy is , just as a farmer cannot expect his farming costs and a food stuff seller cannot expect his costs to stay the same year to year, but would probably increase year after year....due to inflation and so forth...and cost of living, etc....it's the same for the fuel industry. At the end, government , as Penguin2 has said, ends up struggling to pay the subsidy, and the result is routine scarcity, borrowing, and so forth. It's better to remove the subsidy, and let the market set the price, yes fuel is expensive, but now, they can pay for production, market and so forth. One can hold the above beliefs and still believe tinubu is not a good leader. MODIFED Once the refineries were in a bad way (we went from 400000 in 1991 to 61000 in 2011, and 9000 bpd in 2019)..importation commenced. Which even made the cost of subsidy rise even higher. Attempts to control costs were made by 1) doing crude oil swap, 2) refining it in refineries that did not produce standard, up to date fuel...which by the way most African countries did, which is why Dangote has been a game changer....but even then, it was still IMPORTED bad fuel. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Penguin2(op): 9:59am On Aug 22 |
Qadaffi2idiamin:If Tinubu is mismanaging our subsidy gains, why don’t we focus, rather, on getting a replacement that will properly channel those funds to things that will benefit the generality of Nigerians instead of talking about returning subsidy. Meanwhile you have not answered my question… So, if Atiku returns subsidy, is the subsidy going to stay permanent or after some years it will be removed again and will start this cycle of adjustment to subsidy removal all over again? |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Penguin2(op): 10:01am On Aug 22 |
AMINDA:Oya tell me… If Atiku returns subsidy, is it going to be permanent or after a few years it will be removed again and we start suffering again? |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by AMINDA: 10:06am On Aug 22*. Modified: 1:29pm On Aug 22 |
Penguin2:What Atiku is proposing is not a return to the previous model of subsidising imports. He wants to subsidize production as was done by the government in the 80's. This has been done in the past before and that was what Buhari and Emefiele were hedging on to do by waiting for the Dangote refinery to come on-stream before implementing the naira-for-crude deal. Tinubu just came in and abruptly removed the subsidy without any buffer only to end up paying more as energy security due to the resultant shock. That was what tanked the economy. Watch the video below for an explanation.
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by FSBoperator: 10:23am On Aug 22 |
AMINDA:Atiku once campaigned on unbundling NNPC. So is it the same NNPC he is going to revive their moribund refineries to begin producing refined fuels ? You should also factor that 400,000 barrels of crude from JVC operations are allocated by the Federal govt for local refining to which Dangote is the major buyer of such at prevailing market prices. Will FG now deny Dangote refinery and then gift NNPC the 400,000 barrels for free so they can produce refined products at a fraction of the cost at a loss to the refinery which the FG is expected to cover only for the discounted fuel to find its way across the border to neighbouring countries to be sold at a much higher profit? And when NNPC products are not supplying the market owing to diversion and Dangote is forced to import crude from overseas, you will expect Dangote to sell at NNPC subsidized rate only for Dangote stock to find its way across the border . This is pure retardation of the highest order . The Federal and state govts will become bankrupt over night if this policy is announced because the increased allocation to states comes from money saved from sustaining this wasteful subsidy that only benefited smugglers and NNPC staff. The new minimum wage states have implemented is only possible due to savings made from subsidy removal. How will the states pay salaries ? What of existing liabilities and obligations to banks that state govts entered into to carry out projects based on their new financial status? How will they pay staff salaries and meet their obligations to contractors and financial institutions ? Atiku is really daft. Instead of campaigning on the grounds of seeing to the strengthening of the naira to improve purchasing power , he is talking of returning subsidy No state governor will ever support that rubbish because it will see to a scenario where states will require federal bailouts to meet their obligations . You are going to see a return to long queues at filling stations , scarcity regime, fuel being diverted to neighbouring countries which only benefit the smugglers and a scenario of serious insolvency for both federal and state governments not able to even pay electricity bill talk more of salaries of staff. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by FSBoperator: 10:28am On Aug 22 |
AMINDA:Liar That was money spent to subsidize electricity and not fuel . There's no subsidy on fuel . The only existing subsidy the FG pays is to GENCOs to produce energy as GENCOs are struggling over high cost of LNG. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by AMINDA: 10:30am On Aug 22 |
FSBoperator:This was Tinubu protesting against Jonathan for removing subsidy only for him to declare that subsidy is gone, less than 5 minutes after being sworn in. Nigeria is yet to recover since then. Needless to say that everything he said would happen has happened.
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by nairalanda1(m): 10:30am On Aug 22 |
AMINDA:Well here is how the government did it in the 1980's.. Price Regulation: The Price Control Act made it illegal to sell petrol above government-mandated caps.Running any business on government run price controls is going to wreck the business...as seen with electricity and eventually with the NNPC refineries..and domestic refining pre dangote. Plus, are you going to agree to government bringing in price controls on the dangote and other private refineries? That is going to end private refining in Nigeria because no bank or investor would put their money in a refinery that under price controls could operate at a loss. The former communist countries of Europe did price controls. For everything. It did not end well, by 1971, the USSR was borrowing money from the G7. A superpower... Crude Allocation: Local refineries received crude oil allocations at discounted, fixed domestic rates instead of fluctuating global prices.Again, it means potential losses for the people who drill for oil. Losses means job losses,and more oil workers japaing...because your average oil rig competes with the international scene. If oil rigs are not earning enough to pay workers premium...they will run off . Something similar happened in Venezuela... State Absorption: The state absorbed any widening cost gaps when global oil shocks or inflation pushed real values higher than the pump price.With a wack revenue situation, a wack budget, and a massive debt, I doubt Nigeria is in a position to do that. Doing that in the 1980'S worsened our economy. Chronic low oil prices LED TO chronic low oil revenue which forced us to accept SAP which made importing components for the refineries and keeping them well maintaned more difficult...and led us down the road to start skipping TAM. Atiku is just being populist for votes. In cold reality he would make tinubu look like a nice guy if he won and reintroduced subsidy |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by AMINDA: 10:35am On Aug 22 |
FSBoperator:We never got the memo that NNPC now subsidizes electricity.
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by FSBoperator: 10:38am On Aug 22 |
Penguin2:FAAC allocations are in the public domain. The State and local govts get 26.72% and 20.60% amounting to 47% FG keeps 52% and this is what the FG is using to maintain a federal civil service , military, federal police force and other paramilitary outfits , Federal courts and Judiciary , diplomatic corps and embassies across the world, financing of debt , federal projects, maintaining federal tertiary institutions and research centres ,etc. Now your state governors have all hijacked local govt funds and they are holding on to a sizeable chunk of total revenue What are they doing with it? For instance, your dwarf is constructing substandard roads at #6bn per kilometer. Budgeting #250 Millon for one photocopier. 1.5bn for one Hilux truck. The level of corruption at the state level and lack of accountability and demand for such is what is killing this country. Go and hold your governors accountable for their share of subsidy funds |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by byinks(f): 10:46am On Aug 22 |
The common Nigerian on the street doesn't understand why fuel subsidy should not return. All the technical jargon here mean nothing to them. Removal of subsidy brought hunger hardship and devaluation. That's what they know. Atiku has captured the imagination of the common Nigerian and he just might get away with it. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Parachoko: 1:15pm On Aug 22 |
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| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by oneMalik: 1:19pm On Aug 22 |
Desperation is forcing atiku to start jonzing. He know he will not and he thinks even if he return it , he will not be here anymore to bear any consequences. We understand him very well. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by OneCandleAway(f): 1:21pm On Aug 22 |
FSBoperator:Since we know the governor will not use the funds for the benefit of the people what's the point of giving them excess funds |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by fasho01(m): 1:21pm On Aug 22 |
The campaign has indeed started |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by eldoradoxx: 1:22pm On Aug 22 |
Thiefobi1:You will put everyone in the North in life in prison then because from what we have seen, they are voting for fuel subsidy return and they have the votes. Obi and Tinubu will share Southern votes. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Ofunaofu: 1:22pm On Aug 22 |
Thiefobi1:While those who supports the Tinubu regime’s removal of the subsidy without safety nets, thereby plugging this country into the worst economic crisis in its history, telling Nigerians to continue to bear the brunt and make sacrifices, while refusing to account for the money saved from subsidy removal should be facing the firing squad. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by CodeTemplar: 1:25pm On Aug 22 |
What about Hajj and Islamic subsidies? |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by WantsandMore: 1:25pm On Aug 22 |
Tinubu knew the reason why he opposed subsidy in the first place then he got in there and became a technical person rather show compassion, like the Civil service is the only earning population in Nigeria. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by Nobody: 1:25pm On Aug 22 |
The conversation should be on how to protect government revenue so they are utilized for the benefit of citizens and are not stolen by corrupt government officials. The issue is not removal of subsidy, the issue is that gains from the removal have been stolen by people. Citizens are then suffering the pains of subsidy removal with nothing to show |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by damoobaba: 1:27pm On Aug 22 |
Thiefobi1:Atiku just want to be President. |
| Re: 2027: Why Fuel Subsidy Must Never Be Returned. by byinks(f): 1:28pm On Aug 22 |
oneMalik:A lot of Nigerians who found themselves in desperate times also understand Atiku too. That's what's making APC jittery. |
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