₦airaland Forum

Ok, now i understand it better in a layman language. Those arguing why you have to keep some for the family...as the owner of the mango tree, i must eat the fruit of my labour...lol. If you sell everything and then still go back to the market to buy the same fruit you had in your compound, what sense does it make?

Increase salary wage of workers both in private and government. In better living standards. At least we have all overcome to long fuel cues

Ebydeb:
Ok, now i understand it better in a layman language. Those arguing why you have to keep some for the family...as the owner of the mango tree, i must eat the fruit of my labour...lol. If you sell everything and then still go back to the market to buy the same fruit you had in your compound, what sense does it make?

And you must sell the mangoes you do sell at a price that helps you recover the costs of mangoes consumed at home plus mangoes sold.

nairalanda1:
Yep, come and invest in drilling for oil in NIgeria...as a local investor. The catch is that you will sell your crude at 50% of the price.

It's like me saying that all mango sellers in nigeria should sell the mangoes they sell in nigeria at half price to make life easy for the common man. Ya think they go do am?

Everyone does things for money and everyone wants to make a profit. You damage that, you go see palava.

Again, we tried it in the 1980's Crude at half price. It did not end well.

Okay, lemme explain it in a roundabout way since you just don't get the gist. The government will subsidize the refiners ( I have been using dangote since because he's by far the largest refiner) so the masses will get cheaper fuel. For instance, if refiners are selling for, say, #1000, the government may decide to pay #300 DIRECTLY to the refinery for every litre of fuel supplied to Nigerians. That way, the masses get to pay only #700.

This process is not prone to abuse since dangote now supplies directly to retailers. There are no importers or middlemen involved. The process is auditable and government only pays for petrol delivered directly to Nigerians at the pump.

Mynd44:
The first flaw in your argument is thinking Nigeria owns the oil it drills.

The crude oil are joint venture businesses with oil companies and they will not be interested in giving their own when they can sell at international price

When Tinubu awards 30 years PPP to Chargiury's Hitech, it is not Joint Venture abi.

Mynd44:
We have oil in the ground, we don't have the tech, machinery and investments to bring them out.

So Mobil, shell, Chevron comes to invest billions to drill for oil and then pay taxes and share the profits with us.

So the oil doesn't belong to the government, what belongs to the government is the shares NNPC have, taxes, royalties etc.

But the government has been paying subsidy in the past despite all these factors you mentioned. No?

If it was possible then, why can't it be possible now.

akingold2:
It doesn't belong to NNPC. Yet they get paid for what doesn't belong to them.

Do you know about royalties? There is google and AI. Find some few minutes to learn through those platforms.

chicfarmer:
Okay, lemme explain it in a roundabout way since you just don't get the gist. The government will subsidize the refiners ( I have been using dangote since because he's by far the largest refiner) so the masses will get cheaper fuel. For instance, if refiners are selling for, say, #1000, the government may decide to pay #300 DIRECTLY to the refinery for every litre of fuel supplied to Nigerians. That way, the masses get to pay only #700.

This process is not prone to abuse since dangote now supplies directly to retailers. There are no importers or middlemen involved. The process is auditable and government only pays for petrol delivered directly to Nigerians at the pump.

Government subsidsing the refineries is also not going to work for the simple reason that government cannot control production costs.

Once production costs rises, the N300 would not be able to cover everything it was meant to cover, so either the government stops paying it and allows dangote to set its prices, or the government borrows to pay the increased costs...worsening our debt

The major driver in increased costs is crude oil prices, as well as the costs of maintenance, upgrades (remeber that grades of fuel change from time to time, meaning refinery has to upgrade from time to time to meet standard), costs of expansion, and costs of salaries, pensions and even taxes to the same government.

The matter is made worse by the fact that Nigeria is not earning enough from crude to fund its budget adequately without borrowing, AND because of decades of borrowing due to chronically low oil prices the costs of servicing the debt are growing, which makes subsidy payments difficult.

(For example, Nigeria has a subsidy on electricity. And in the year ending April 2026, out of 1.1 TRILLION Naira subsidy owed, government was able to pay N75 billion naira. I guess they can afford to pay a much higher costing fuel subsidy...not).

Also, if oil prices fall, the monies available for paying for subsidy are going to fall, meaning government would have difficulty paying the N300 PER Liter (plus the value of the naira would fall, further raising subsidy costs)..which means again, more borrowing.

Goverment may also have to charge more tax, either way it goes.

See the problem. A refinery has to make a profit to run well, and government subsides don't let it run well.

Gbadugbakun:
But the government has been paying subsidy in the past despite all these factors you mentioned. No?

If it was possible then, why can't it be possible now.

They were, at the expense of refinery maintenance, uncompleted projects, and also at the expense of a lot of borrowing too...which generated the debt that is causing your government to borrow more despite subsidy payments.

There is fatal flaw in your argument which I'm inclined to situate in ignorance....The model being proposed by Atiku suggest that crude oil will be sold to local refineries at a lower price than sold in international markets...It is being called subsidy because it is related to the market price and not the cost price...That is a clever accounting trick...So now let me hit the hammer in the heat...Where is the subsidy if the price of crude oil sold to local refineries is higher than the cost of producing the crude but lower than the price sold at the international market?...Let me restate it with an example...If the cost of producing one barrel of crude oil is 1000 naira and it is sold to refineries at 1500 naira even if it can be sold at 2000 naira in international markets, what exactly is wrong with that...So please those of us that have some basic understanding of the economics must not mislead with disingenuous opinions presented as facts...

nairalanda1:
The problem is you cannot sell crude at lower prices.

Drilling for oil is very expensive business.Add the fact that most of the machinery used is imported from abroad, which adds to the expense. Selling crude at cheaper prices would mean that the owners of the oil rigs would not make a profit to pay for their running costs and their worker costs as well as taxes. The result would be a decline in crude production.

Expecting the revenue from the 1.5 million bpd to pay for the expected loss is an exercise in futility. Right now, our budgets since 2016 have been funded more by borrowing than by oil. This year's budget is just 59% oil funded. Most of the rest is loans, and we have debt servicing. And it is all for 230 million people.

Also, if oil prices rise, the cost of paying for subsides rise. If oil prices fall, the amounts available for paying for subsides fall, and either way more borrowing is needed.

That's why your plan is problematic, and as I have said, it won't work. It may even drive away investment in the domestic crude sector, because no one is going to sell crude at half price, and having a government whose revenue is largely from borrowing assume the cost is a recipie for more borrowing

You do not have to agree with me, and you are free to abuse me and assume I support APC. I don't I support your right ,and their right to make a profit that is enough to cover your running costs, and pay for future expansion, which means more jobs and which guarantees more productivity and more revenue overall for our country.

Good morning.

Zionmdde:
The problem is not subsidy removal
The problem is that masses are now paying for the fattening of politicians' pockets. Reason why it is very easy for governors and LGA chairmen to rather threaten Voters than see tinubu defeated

No subsidy
No defending Naira
Yet we are borrowing more than any other government

Ask questions now, they will tell you coastal highway and sokoto badagry

GEJ only partially removed subsidy and everybody felt it. But this regime, Evil!!!!

So we should now go to subsidy again

Borrowing money shows that your country is viable. The reason why we complain about GEJ is because there was no reasonable projects

nairalanda1:
Government subsidsing the refineries is also not going to work for the simple reason that government cannot control production costs.

Once production costs rises, the N300 would not be able to cover everything it was meant to cover, so either the government stops paying it and allows dangote to set its prices, or the government borrows to pay the increased costs...worsening our debt

The major driver in increased costs is crude oil prices, as well as the costs of maintenance, upgrades (remeber that grades of fuel change from time to time, meaning refinery has to upgrade from time to time to meet standard), costs of expansion, and costs of salaries, pensions and even taxes to the same government.

The matter is made worse by the fact that Nigeria is not earning enough from crude to fund its budget adequately without borrowing, AND because of decades of borrowing due to chronically low oil prices the costs of servicing the debt are growing, which makes subsidy payments difficult.

(For example, Nigeria has a subsidy on electricity. And in the year ending April 2026, out of 1.1 TRILLION Naira subsidy owed, government was able to pay N75 billion naira. I guess they can afford to pay a much higher costing fuel subsidy...not).

Also, if oil prices fall, the monies available for paying for subsidy are going to fall, meaning government would have difficulty paying the N300 PER Liter (plus the value of the naira would fall, further raising subsidy costs)..which means again, more borrowing.

Goverment may also have to charge more tax, either way it goes.

See the problem. A refinery has to make a profit to run well, and government subsides don't let it run well.

Oga, the refinery is not losing ANYTHING.
I cannot help you reason if you cannot. The refinery will recover all its costs fully. That money wey una dey thief na him government go take subsidize the fuel for the masses.

zbigniew:
There is fatal flaw in your argument which I'm inclined to situate in ignoranc

Okay, I am ready to learn, you know...

....The model being proposed by Atiku suggest that crude oil will be sold to local refineries at a lower price than sold in international markets...It is being called subsidy because it is related to the market price and not the cost price...That is a clever accounting trick.

And how would you compensate those who brought out the crude for you for selling it at half price?

If you owned a business selling bread that cost you N2000 to bake, would you sell it to customers at N1000 per loaf because hard times? How would you recover costs?

..So now let me hit the hammer in the heat...Where is the subsidy if the price of crude oil sold to local refineries is higher than the cost of producing the crude but lower than the price sold at the international market?...Let me restate it with an example...If the cost of producing one barrel of crude oil is 1000 naira and it is sold to refineries at 1500 naira even if it can be sold at 2000 naira in international markets, what exactly is wrong with that...So please those of us that have some basic understanding of the economics must not mislead with disingenuous opinions presented as facts...

And at the end you are still saying you would sell crude below it's production and market price, which means you still have to compensate them for the losses they would incur

That is where problem starts because right now, government financing is half from loans, the other half comes from crude oil and tax revenue.

And..we are still servicing a debt that is over 150 trillion naira, and growing.

The result is, government is struggling to pay electricity subsidy which is why our power supply is bad, and even health subsidy which is why hospitals are awful.

So, you want them to pay crude producers their losses incurred from forcing them to sell below production cost...(let me even point out that Bonny Light , our local grade, is even more expensive than OPEC priced crude self)....from monies that are half borrowed.

You know that when crude oil prices rises, the cost of covering for those losses are going to rise drastically? When crude oil prices fall, the costs of covering for those losses are going to be even more difficult because no money?




Please, don't quote me again, before I kpeme from too much laughter.

Imagine when you rent a shop for restaurant and you paid your landlord his rent complete. Then the land land wants to buy food from the restaurant, he will pay according to how others are paying. That will benefit the owner but when landlord started bringing entitlement mentality because say na him get the shop after all he built it with his hard earned money. Their will always be a problem.

Dangote will just be laughing at your comment if he comes across it. Do you think it is only Crude Oil that determines the price of petroleum products?

chicfarmer:
Read my commentary again. We will sell to dangote at 50% of international oil prices. He will in turn give us refined products at 50% of what we're currently buying. He loses NOTHING.

chicfarmer:
Oga, the refinery is not losing ANYTHING.

It is.

Let's say that out of Dangote's cost of N1000 (theory) , you pay 300 per liter. This is based on the international oil price being at 91 dollars per liter.

If the price goes up to say 120 dollars per liter, dangote's ex gantry costs can go up to as high as 1300 per liter.

That means that in order to keep costs low, either your government pays dangote about N300 extra, meaning it is paying N600 extra, OR government allows pump prices to go up by N300, so that they can pay the N300 from their revenue

Either way, there is a price increase.

Add the fact that government has to borrow to pay for half the budget and has been doing so for years. Any money taken from our revenue to pay this would have to be replaced by loans or salaries and projects won't be paid

This worsens our debt.

That;s why your idea, good intentioned as it is, won't help much at all.

The problem with your idea is that it always runs up against the expensive nature of refining petroleum and drilling for oil anywhere in nigeria.


Now, to round up ,

The best way to reduce the price of fuel is to reduce transport costs. This is done by

1. Reviving the railways

2. Piplng fuel around the country from refinery to a series of fuel depots around the country. Also, refineries can be set up in the North and crude can be piped there to them, so that they can refine fuel. I estimate that tthis would reduce prices by at least 200 naira naitionwide.

We used to have this system in the 1980's but sap and subsidy induced losses meant that there was no money to keep it up, so it fell into bits. Below is the image of the same system

Mynd44:
People who don't understand a business are saying those explaining how it works are saying rubbish.

This is funny

Big Bros

Okay I have heard

I leave you with one question, I don't need a response from, this for you to ponder

Has the so-called removal of subsidy improved the lives of the citizens? Their standard of living? Has it led to creation of more jobs? More millionaires? Has it led to creation or closure of more small and medium scale businesses? I could go on and on but I'll just stop here.

The irony is that the common man facing the sufferings of subsidy removal are all over here supporting their oppressors.

What a shame.

VeeVeeMyLuv:
Big Bros

Okay I have heard

I leave you with one question, I don't need a response from, this for you to ponder

Has the so-called removal of subsidy improved the lives of the citizens? Their standard of living? Has it led to creation of more jobs? More millionaires? Has it led to creation or closure of more small and medium scale businesses? I could go on and on but I'll just stop here.

Not the guy , but any improvement in nigeria's standard of living starts with us developing an economy that uses our raw materials to make productive and industrial products that the world can use.

That's how China, South Korea , Japan, and a host of other countries went from being backward agricultural backwaters into strong industrial powers, that can even, at least in the case of China , send men to the moon. Oh and both of them used to send millions of their citizens abroad as japa, until they got too prosperous to do that.

And to do that, you have to let the bits that power your industries run on free market principles, and you also have to fight corruption to a point where if your party loses power, so be it. Nigeria above party.

Our governments have followed the 'share money equitably' route to get people out of poverty road since independence...which not only has not worked, but helped to provoke a violent civil war and has made us go from being ahead of China in the 1960's to borrowing from them today.

And none of our past governments, especially this current ones, have done polices that would take us there. Because it means that a generation would have to do the hard and dirty work before benefits result. That does not win votes or people.

Mynd44:
The first flaw in your argument is thinking Nigeria owns the oil it drills.

The crude oil are joint venture businesses with oil companies and they will not be interested in giving their own when they can sell at international price

Sorry to ask, are you still a Nairaland mod? I just want to check something ni o.

Eniitan19:
Dangote will just be laughing at your comment if he comes across it. Do you think it is only Crude Oil that determines the price of petroleum products?

It's a broad outline. The details can be worked out. In fact if you go into the nitty gritty, we may even get further discount if you factor all derivatives from crude oil including amonia for fertilizer, polystyrene etc etc. Oga, government dey chop us wetin no good o.

They claim that states monthly share of federal allocation has quadrupled. Abeg, make I ask you: Have the masses welfare also quadrupled? Even double we no see
Where are the monies? Na that money we must divert to subsidy that will benefit EVERYONE not only governors and politicians.

Mynd44:
The first flaw in your argument is thinking Nigeria owns the oil it drills.

The crude oil are joint venture businesses with oil companies and they will not be interested in giving their own when they can sell at international price

Mynd44:
Sauidi has 37 million people
UAE has 12 million people, are you seeing the problem?

Its always possible to completely remodel the system we are working with.

Mynd44:
We have oil in the ground, we don't have the tech, machinery and investments to bring them out.

So Mobil, shell, Chevron comes to invest billions to drill for oil and then pay taxes and share the profits with us.

So the oil doesn't belong to the government, what belongs to the government is the shares NNPC have, taxes, royalties etc.

Is this what the situation is with other oil-producing countries ?

Nigerian President in person of Chagoury's decision is the action his representative in person of Mr. Amoda - a.k.a Tinubu - takes.

The man in Aso Villa can't decision on his own

Hussein035:
So we should now go to subsidy again

Borrowing money shows that your country is viable. The reason why we complain about GEJ is because there was no reasonable projects

So as long as there are 2 reasonable projects, you can borrow the entire world plus subsidy savings and no accountability whatsoever

GEJ showed workings with different masses-oriented projects. But what do we have today

chicfarmer:
I fully support a return of fuel subsidy to Nigeria. Here is how I'll explain it to a primary six pupil. If you don't understand this, then our politicians will just keep sharing our wealth amongst themselves while we wallow in poverty.

Imagine that you had a big Mango tree in your compound and that tree produced much mangoes. You decide to pluck and sell the mangoes but you have kids and family members living with you, you'll definitely put some aside for your household consumption and then take the rest to the market for sale.

In the same way, Nigeria produces about 2m barrels per day of crude. Government should remove say 500,000 barrels for local refining and consumption and sell that to dangote at 50% while they export the remaining 1.5m barrels at international prices for foreign exchange.

Dangote then refines the 500,000 barrels set aside for local consumption and then sells/distributes it locally at 50% of the current prices of petrol and other products derived therefrom. Simple.

Anybody telling you that this model is not possible is simply trying to deceive you so that they can continue sharing and chopping our money.

The only thing the common man benefits from Nigerian government is subsidy. A mother that harvests her mangoes and takes everything to the market without setting some aside for her children is a bad mother. As oil producers, we must derive direct benefits from our resources. Anything Short of this is corruption and grand deception.

It shows that even you need to go back to primary school to better understand how oil exploration and investment works.

Nigeria has already given out the license to explore the oil to international companies for some years (some spanning decades, so it predates Tinubu. So there is little Tinubu, Obi, Atiku or Sowore can do about this; all their grandstanding is lies only geared to get votes).

So the companies have the machinery and wherewithal to explore for and drill oil and sell it in the INTERNATIONAL market.

As part of agreements, they share part of the profit with us (So we are joint partners on mutual agreement). So technically, we do not own the oil for the duration of the contracts.

Before 2023, we had been using our share of the profit to subsidize petrol and even borrowing to do so often (because there are other public services - roads, schools, hospitals, salaries, etc. - competing for the same share of oil profits). That's why doctors, teachers, NLC used to go on strike in those days, since the bulk of our share of the oil profits had already been spent on subsidies, and we even borrowed to maintain the subsidy.

So now, armed with this understanding, re-explain your theory again.

Tinubu till 2031.

creativejagaban:
It shows that even you need to go back to primary school to better understand how oil exploration and investment works.

Nigeria has already given out the license to explore the oil to international companies for some years (some spanning decades, so it predates Tinubu. So there is little Tinubu, Obi, Atiku or Sowore can do about this; all their grandstanding is lies only geared to get votes).

So the companies have the machinery and wherewithal to explore for and drill oil and sell it in the INTERNATIONAL market.

As part of agreements, they share part of the profit with us (So we are joint partners on mutual agreement). So technically, we do not own the oil for the duration of the contracts.

Before 2023, we had been using our share of the profit to subsidize petrol and even borrowing to do so often (because there are other public services - roads, schools, hospitals, salaries, etc. - competing for the same share of oil profits). That's why doctors, teachers, NLC used to go on strike in those days, since the bulk of our share of the oil profits had already been spent on subsidies, and we even borrowed to maintain the subsidy.

So now, armed with this understanding, re-explain your theory again.

Tinubu till 2031.

Oga, it's called a production sharing contact. We can well do as we please with our share.
The era of governors and politicians feeding fat on the people's Commonwealth is gone. That money must be funneled back to the people.

A system where the governors sit on the people's money and chop it as they like is over. The government claims it is no longer paying subsidy yet debts keeps ballooning and poverty keeps increasing. E don do, the money from oil should be for all Nigerian.

chicfarmer:
➜The only thing the common man benefits from Nigerian government is subsidy. A mother that harvests her mangoes and takes everything to the market without setting some aside for her children is a bad mother.
➜ As oil producers, we must derive direct benefits from our resources. Anything Short of this is corruption and grand deception.

She is not a bad mother if she sold all the mangoes and then instead used some of the profits from selling all of the mangoes to buy her children necessities such as clothing and many other foods other than mangoes day and night. That way, those of her kids who don't like mangoes or would rather have other things can also benefit some. 😐😐

2. Fuel subsidy should not be sold as the only way to derive direct benefits from those resources. 😐😐

Kobojunkie:
She is not a bad mother if she sold all the mangoes and then instead used some of the profits from selling all of the mangoes to buy her children necessities such as clothing and many other foods other than mangoes day and night. That way, those of her kids who don't like mangoes or would rather have other things can also benefit some. 😐😐

2. Fuel subsidy should not be sold as the only way to derive direct benefits from those resources. 😐😐

So where are the other things our 'mother' Nigeria has bought for her 'children'?
No be for our eyes poverty dey triple?
No be for our eyes people dey sleep for road due to bad roads?
No be for our eyes debt dey quadruple?
Abeg tell me wetin we dey benefit from our oil money.
Is it not better for the children to eat the mango wey Dem see rather than wait for Mama wey go market go sell and chop all the money all alone?

chicfarmer:
So where are the other things our 'mother' Nigeria has bought for her 'children'?
No be for our eyes poverty dey triple?
No be for our eyes people dey sleep for road due to bad roads?
No be for our eyes debt dey quadruple?
Abeg tell me wetin we dey benefit from our oil money.
Is it not better for the children to eat the mango wey Dem see rather than wait for Mama wey go market go sell and chop all the money all alone?

He has gone to rhetorics, and insults, when faced with realities he does not want to confront.

That is why people like tinubu would rule over him.Guy does not know, but he is the reason why NIgeria is where it is and why it is bad here.

You cannot promise and implement polices that eat tomorrow's bread today.

chicfarmer:
➜So where are the other things our 'mother' Nigeria has bought for her 'children'? No be for our eyes poverty dey triple? No be for our eyes people dey sleep for road due to bad roads? No be for our eyes debt dey quadruple? Abeg tell me wetin we dey benefit from our oil money.
➜ Is it not better for the children to eat the mango wey Dem see rather than wait for Mama wey go market go sell and chop all the money all alone?

1. Your "mother" Nigeria, has been a terrible mother for a long time now. So, the problem hasn't been mangoes or fuel subsidy, but that your "mother" Nigeria has been a psychopathic, selfish arse of a bitch to her kids for a long time now. All of the complaints you have have existed even while the so-called fuel-subsidy program was running, and you only now seem to see it because the distraction that had been keeping you busy has been removed. 😐😐

2. No! "Children shall not live by mangoes alone". Even while the children had some mangoes, the poverty rate, homelessness problems, and debt also kept rising. Mangoes only served to distract the children from the many issues they were saddled with even at that time. So, suggesting that only bringing back mangoes will make the issues stop being issues is nonsensical. 😐😐

Kobojunkie:
1. Your "mother" Nigeria, has been a terrible mother for a long time now. So, the problem hasn't been mangoes or fuel subsidy, but that your "mother" Nigeria has been a psychopathic, selfish arse of a bitch to her kids for a long time now. All of the complaints you have have existed even while the so-called fuel-subsidy program was running, and you only now seem to see it because the distraction that had been keeping you busy has been removed. 😐😐

2. No! "Children shall not live by mangoes alone". Even while the children had some mangoes, the poverty rate, homelessness problems, and debt also kept rising. Mangoes only served to distract the children from the many issues they were saddled with even at that time. So, suggesting that only bringing back mangoes will make the issues stop being issues is nonsensical. 😐😐

It's not worth arguing with him, his mind is made up.