₦airaland Forum

Cromcruach91:
Well, customs should do their job properly...and Bauchi isn't that close to the border by the way....but the reason why diversions happen is because fuel in Nigeria is cheaper than fuel outside the country...and because marketers don't make much profit in Nigeria..they sell to the black market...or sell outside the country...make their profit...and survive.

Better to allow marketers sell fuel at the price they want to sell...and we buy from the cheapest one.

In cameroon...fuel costs 1.20 USD, Benin 0.96 usd, Chad 1.08 usd while in Nigeria it is 0.48USD. Hmm....won't you divert?

Source of costs

Going by the reddened part, I can see that you're suggesting deregulation. It makes no difference. Deregulation or not, a fraudulent marketer will still send his fuel across the border if he knows he's getting a better deal over there. And he won't hesitate to buy fuel from there and resell here if it was cheaper over there.

The problem lies with the Customs.

For as long as we pussy foot around this issue of petroleum pricing, fuel scarcity will persist.

There is simply no way the independent marketers who account for the bulk of products sold in the downstream sector, will retail fuel at N145 after importing at between N170 - N175 per litre. The FG/NNPC can also not continue to shell out billions to subsidise the product in the long term...it is simply not sustainable.

The FG needs to bite the bullet and push for full deregulation once and for all. Sadly we lost a great opportunity in 2012 under the last government with the nationwide protests that greeted the new year announcement of deregulation. It was simply a case of wrong timing given the Christmas season, and the fact that there wasn't any prior engagement with the public and sensitisation. I hope lessons have been learnt on both sides. Government must engage and educate the public on initiatives before implementation.

The government must as a matter of urgency begin to engage at all levels in preparation for full deregulation. The engagements should clearly state all of the palliative measures that will be rolled out in the short term to cushion the short term effects of the anticipated petrol price increase. Also government should as a matter of urgency review and implement the long anticipated increase in the minimum wage to reflect current realities.

The downstream must be deregulated! There is no escaping that bitter pill.

eTECTIVe:
Hahahahaha... Clowns... So instead of d ediots to open up and tell Nigerians d truth since last year, dey kept playing hide-and-seek and "Blame d other man" as usual.. So it is no longer sabotage? Or bad roads lol? or PDP? or GEJ??
Tell Nigerians d truth and stop feeding lies and propaganda to Nigerians. Where was d Economic Committee wen d govt claimed to have finally resolved d issue wen dey announced #145?? Both d govt and it's supporters are mad...

Pally, when you've lied effectively for so long, the road back is long and hard. Just pray they have a 'prodigal son' encounter sooner than later. That is why we continue to say this: The quality of life a man, family, community or country experiences is proportional to the depth of their knowledge.... and inversely proportional to the levels of ignorance. You cannot experience what you donot know. Nigerians in quantum must raise the levels of literacy to counter bare faced propaganda. They must raise their levels of economic, social and political knowledge. They must understand how economies are made to prosper, how governments are run and how democracies benefit societies beyond mere thumb printing in elections.

That is why powers that have little to offer often raise the levels of propaganda. More talk, less work, lies, falsehood peddling and fake news. They campaign more in locales where literacy is lowest, where argumentative points are sparse, where objectivity is alien. Look at Nairaland, you see their agents here. No points to support their principals, just insults, rabble rousing and fights. Look at them at the grassroots, what do you see. They engage the lowest, the least in society making even the underaged, kids who should be in school, developing themselves for a better society, stand in queues to vote for them.

How do you expect to experience a better society when the leadership of it is determined by those who are no better than you, those who have not a clue as to how things can be made to work. Do those kids know what is called subsidy.....but they will set the agenda of this country for the next four years....

Reptyle:
For as long as we pussy foot around this issue of petroleum pricing, fuel scarcity will persist.

There is simply no way the independent marketers who account for the bulk of products sold in the downstream sector, will retail fuel at N145 after importing at between N170 - N175 per litre. The FG/NNPC can also not continue to shell out billions to subsidise the product in the long term...it is simply not sustainable.

The FG needs to bite the bullet and push for full deregulation once and for all. Sadly we lost a great opportunity in 2012 under the last government with the nationwide protests that greeted the new year announcement of deregulation. It was simply a case of wrong timing given the Christmas season, and the fact that there wasn't any prior engagement with the public and sensitisation. I hope lessons have been learnt on both sides. Government must engage and educate the public on initiatives before implementation.

The government must as a matter of urgency begin to engage at all levels in preparation for full deregulation. The engagements should clearly state all of the palliative measures that will be rolled out in the short term to cushion the short term effects of the anticipated petrol price increase. Also government should as a matter of urgency review and implement the long anticipated increase in the minimum wage to reflect current realities.

The downstream must be deregulated! There is no escaping that bitter pill.

What do you need to engage the public for. Is this not an admission that the 'public' is grossly ignorant of basic economics...and if they are, what do you expect. I am just sick and tired of Nigerians blaming those in authority for the things they should know and do for themselves and worse is their insistence on knowing nothing about what concerns them. Today the average ignorant Nigerian repeats this sick statement...that Nigeria is a rich country. And the mentality that it has all the resources to cater for anything and everything maternity shops churn out in perpetuity. How do you expect a people like this to experience anything different from what is going on now iresspective of government.

But what exactly is wrong with subsidizing?!!

the only issue I see with it is the fraud that comes with it. which is why nnpc should be the sole importer to at least limit the fraud to nnpc.

When nnpc talks about underrecovery, this amount has already been over recovered by the increase in crude oil price.

You sell unrefined at $40 you buy refined at $50

Now you sell unrefined at $70 you buy refined at $80.

So the loss due to higher import expense has been offset by higher export income.

If we decide not to see it this way and agree on buying at N175 per litre, when oil gets back to it's 2014 price- $110; we will be buying at more than N250 per litre following the same tortoise logic.
The question then is why does $110 per barrel of crude in 2014 translate to N97 and then $110 in 2018 translate to N250 per litre of petrol? It's simply the CBN FX rate. (No wonder our reserves is growing in leaps and bounds) That's a story for another day.



What we should be talking about is increasing the capacity of d NNPC to import 100% of our needs while other marketers buy from them.

Some people blamed lack of local refineries for all these price brouhaha- truth is if there are local refineries, are they expected to buy at int'l price and in dollars? if they are, then prices will still be high subject to int'l price.

Let's see what these stupid people come up with,

Is the government really shelling out?

What you imply is despite that we are an oil producing nation, we the citizens should buy fuel at int'l oil price. and that money should be used for capital expenditure. But then what's the point- our consumption is less than 12% of our crude production- with a 25% under recovery, this translates to about 3% net income reduction for the NNPC- why subject people to hardship because of this? especially when you realize that the money could even be embezzled.

Reptyle:
For as long as we pussy foot around this issue of petroleum pricing, fuel scarcity will persist.

There is simply no way the independent marketers who account for the bulk of products sold in the downstream sector, will retail fuel at N145 after importing at between N170 - N175 per litre. The FG/NNPC can also not continue to shell out billions to subsidise the product in the long term...it is simply not sustainable.

The FG needs to bite the bullet and push for full deregulation once and for all. Sadly we lost a great opportunity in 2012 under the last government with the nationwide protests that greeted the new year announcement of deregulation. It was simply a case of wrong timing given the Christmas season, and the fact that there wasn't any prior engagement with the public and sensitisation. I hope lessons have been learnt on both sides. Government must engage and educate the public on initiatives before implementation.

The government must as a matter of urgency begin to engage at all levels in preparation for full deregulation. The engagements should clearly state all of the palliative measures that will be rolled out in the short term to cushion the short term effects of the anticipated petrol price increase. Also government should as a matter of urgency review and implement the long anticipated increase in the minimum wage to reflect current realities.

The downstream must be deregulated! There is no escaping that bitter pill.

joudini:
Clowns.

There is nothing like NNPC paying millions out of it's own money.

NNPC does not have it's own money. It is a govt agency. Fully owned and run by govt. All agencies of govt are within purview of govt in it's income and expenditure.

These clowns have been paying subsidy but want to confuse people by naming it "under recovery".

The effect on the balance sheet is the same.

My dear, I could not believe my eyes when i saw someone comment and seperate nnpc from govt. For Gods sake nnpc as a unit of the govt, it accounts to govt, it is run by govt.

I will keep on saying it... deregulation is a myth and cannot and must not be implemented, because deregulation on its own is a form of regulation, due to how vital and crucial the petroleum sector is to our government it needs to be highly regulated. I'll say it again deregulation would lead to economic sabotage and vertical consolidation.
Thank you. I hope you have all heard.

cnwite:
...

Question for you

How do we keep on subsidizing fuel....and making marketers sell at a loss of N30 per liter?

Ungodly or not...deregulation should have happened long time ago. As far back as 1990...when the current long queues started.

Partnerbiz:
Each time comparisons are made, you people will just be making baseless dollar to naira conversion..

So people make money in naira in the US?

Simple economics.

Very foolish dimwits with no knowledge of subjects they dabble into. The most annoying is the fact that these group of people only heard this statement from somebody somewhere and are propagating it blindly without base analysis.

ninetiethcrown7:
I will keep on saying it... deregulation is a myth and cannot and must not be implemented, because deregulation on its own is a form of regulation, due to how vital and crucial the petroleum sector is to our government it needs to be highly regulated. I'll say it again deregulation would lead to economic sabotage and vertical consolidation.
Thank you. I hope you have all heard.

Sorry, but you don't get it.

1.Under the current regulation....marketers are being forced to sell at a loss

2.If govt keeps on regulating...marketers won't make a profit...and would start sacking workers, or paying their workers very low salaries.

3.Deregulation means prices go up...we buy from the seller selling at the lowest price...forcing prices to go down. Meanwhile money flows in, and is used for new facilties, even new refineries. And more foreign investors come in'

4.We did the same thing for our GSM. IN 2003, my dad bought his first GSM line for N10000. (It hit his pocket heavily then, by the way...and he was not that rich). Now, the same line goes for N500. If govt had regulated...GSM business would have collapsed.

Reptyle:
For as long as we pussy foot around this issue of petroleum pricing, fuel scarcity will persist.

There is simply no way the independent marketers who account for the bulk of products sold in the downstream sector, will retail fuel at N145 after importing at between N170 - N175 per litre. The FG/NNPC can also not continue to shell out billions to subsidise the product in the long term...it is simply not sustainable.

The FG needs to bite the bullet and push for full deregulation once and for all. Sadly we lost a great opportunity in 2012 under the last government with the nationwide protests that greeted the new year announcement of deregulation. It was simply a case of wrong timing given the Christmas season, and the fact that there wasn't any prior engagement with the public and sensitisation. I hope lessons have been learnt on both sides. Government must engage and educate the public on initiatives before implementation.

The government must as a matter of urgency begin to engage at all levels in preparation for full deregulation. The engagements should clearly state all of the palliative measures that will be rolled out in the short term to cushion the short term effects of the anticipated petrol price increase. Also government should as a matter of urgency review and implement the long anticipated increase in the minimum wage to reflect current realities.

The downstream must be deregulated! There is no escaping that bitter pill.

Excellent post. Thanks.

Mobsync:
Going by the reddened part, I can see that you're suggesting deregulation. It makes no difference. Deregulation or not, a fraudulent marketer will still send his fuel across the border if he knows he's getting a better deal over there. And he won't hesitate to buy fuel from there and resell here if it was cheaper over there.

The problem lies with the Customs.

No, they won't.

Deregulation means that the marketer can now sell at the price he wants...which means he or she won't need to send it across the border...because he is making his profits at home.

It is the ordinary car driver that would be sneaking across the border to buy fuel...

Originality007:
will u keep quiet? The price will come down, the price will come down, that was how we found ourself in this mess, by voting a dullard

The argument i made was not made by the current admin intially....it was made years ago in the 1990's.

The current admin, when they raised prices , also sabotaged themselves by stopping at N145. Then, crude oil was selling at $30 and below...so it made sense. Now crude is selling at $70...we still import a lot of fuel...so prices have to go up.

But govt...still keeps fuel price at N145...even though it is not practicable.sadly....and forces marketers to have a loss of N30 per liter...hence the scarcity.


BUT....if govt removed price controls, and allowed marketers to set prices...you know, like what every other businessman does in Nigeria....prices will shoot up, but more money will flow in...leading to more investment, more people coming into the business, more competiton, more funds for NNPC to improve facilities, and eventually prices come down.

That is what happened with GSM. We went from a N7000-10000 for a sim to N500....because GSM companies used the excess money they earned from selling those N7000 sims to invest....and new investors are being attracted (9MOBILE has at least 5 foreign investors lining up to buy it, once etisalat left).

What's your solution? And it isn't more refineries...because the builders of the refineries too have to make their profits, hire staff, pay staff, etc...and that can't be done on N145 per liter PMS.

baralatie:
because at the time of lower oil prices the price of importation was so low that the sale price of 145 was an overprice but now with an increase in price of oil comes an increase in import and with an increase in the exchange comes a bigger issue of cost in the naira.
2.there was no plan or execution that prepared the nnpc for this stage therefore wahala of subsidy was not resolved.
3.pmb is putting all his hopes and dreams that dangote refinery will start production.dangote is looking at pmb with corner eye

Lol at no 3

Dangote, and anyone building a refinery in Nigeria...all of them don't like the N145 price. They need to make their profits too

Good analysis!

khunz:
People are recommending deregulation forgetting the fact that we all use petrol to power generator for electricity supply.How many people can afford N300/N400 per liter to do this when deregulated?

Also, just like dollar did last year and year before ,after which it stabilized at price far above the initial rate ,petrol price will go to close N450/liter before it will settle for around N250/N300 finally ,but it will never go below N200 when deregulated.

It is deregulated in Ghana and it goes for Ghc4.60/liter(direct conversion to Naira is N460/liter)


Food for thought, let us keep fighting for minimum possible price under current regulated policy,my take though.

Yes, I know..and I argue for deregulation myself.

BUT....the current system isn't working.

Say you run a business, and the government comes in and says that you should sell your goods at a price lower than what you bought them for...?

Would you agree...or fight?

That is what has been happening in the petroleum industry for years...and that is why we have queues, scams, crisis, etc. Yet...we have to keep prices low...when we are not earning enough revenue from selling our oyel in the first place.

So..we deregulate....or we keep on suffering...or we use the money we could have used for projects like rail, roads, etc to subsidize fuel...and take more IMF loans to balance the books.

Cromcruach91:
No, they won't.

Deregulation means that the marketer can now sell at the price he wants...which means he or she won't need to send it across the border...because he is making his profits at home.

It is the ordinary car driver that would be sneaking across the border to buy fuel...

Deregulation will not work in Nigeria.
I don't see a big deal in government subsidising Petroleum products.

Reference:
Okay. Na now day dey break for Nigerians. Unfortunately for this government the question of subsidy was one of the waves they used to ride into power and now the water must return to the ocean, it will definitely drag them out to sea. Now they wished they never opposed subsidy removal during the Jonathan government. Now they wished the Otuoke man carried the can instead.

If GEJ had been allowed to increase prices....we would have been seeing the benefits by now...but he would have lost the 2015 election by a very very wide margin than he actually did.

It makes me sad that Nigerians cannot see a sensible economic decision...even when it looks at them in the face.

The Emir of Kano is GEJ's 'enemy'....and even he thought that GEJ was right to remove subsides..and he thinks that Buhari should do so.

But Politicians aren't good economists.

Gej talk am

otr1:
Deregulation will not work in Nigeria.
I don't see a big deal in government subsidising Petroleum products.

Well

1[b].If you owned a business, and govt was forcing you to sell your goods for far less than you bought them...would you be happy? Would you find it easy to stay in business?
[/b]

That is what happens under subsidy.

2.Venezuela heavily subsidies fuel....they sell it four times less than we do...and their foreign reserves are so low that they are in crisis.(They are down to their last $10million, we are up to $40million in reserves)

3.There is no big deal in govt subsidizing fuel...so long as govt could afford it. Thing is...we can't afford it...and even if we could...marketers would still be losing money...and scarcity would happen

4.And even if we build more refineries....see my point one. Refinery owners cannot survive with fuel at N145 per liter...they want to make their money to pay staff, etc.

Yet we are not there.

Cromcruach91:
Sorry, but you don't get it.

1.Under the current regulation....marketers are being forced to sell at a loss

2.If govt keeps on regulating...marketers won't make a profit...and would start sacking workers, or paying their workers very low salaries.

3.Deregulation means prices go up...we buy from the seller selling at the lowest price...forcing prices to go down. Meanwhile money flows in, and is used for new facilties, even new refineries. And more foreign investors come in'

4.We did the same thing for our GSM. IN 2003, my dad bought his first GSM line for N10000. (It hit his pocket heavily then, by the way...and he was not that rich). Now, the same line goes for N500. If govt had regulated...GSM business would have collapsed.

I understand your point with deregulation. It is a very valid point, but you fail to take into account that independent marketers have their own association.

For you to import fuel you need a license. And having that license allows you to be part of the ipman. If deregulation is allowed these people would connive togeher and sell at their own price, trust me there is no competition. When it comes to fuel in nigeria.

Secondly when I meant deregulation is a myth, I meant there is nothing like deregulation. The government cannot completely deregulate the fuel sector, that would lead to anarchy, no checks and balances on how fuel is imported, how much they are buying and also if a situation like what we are experiencing should happen again that would be even worse because the government would not have any powers to interfere.

All in all the sector is regulated and you can see the funny business that is going down, when it is not regulated just watch what would happen.

The part of GSM is different, GSM does not need to be refined, it does not need to be refilled anytime it finishes, if GSM business collapses in Nigeria it will not cause a world crisis unlike oil.

You have read about the first and second energy crisis, especially the one between Syria and iran.

If our oil should collapse we would have a west African energy crisis. Because we provide most countries bothering us either pms or gas.


The best solution is to strengthen our forex. All others are false solutions.

Max24:
This govt has no Creative solution to d fuel scarcity other than increase in prices. At best they will wait till after 2019 reelection and then effect the increase if they win. Analogue Presidency.

Which solution do you propose.

It is either we build new refineries or continue to increase the price of pms

Dindondin:
No apologies to GEJ. He's as guilty as PMB. Cos he too would v increased it go N145 if he's still the president. Nigeria needs a totally different option from APC and PDP. We need sincere technocrats, not politicians.

Without refining locally, there is nothing a technocrat can do.

There are things you need to balance and factor in.

Reducing the exchange rate might make the price of pms reduce. The con is that you have less allocation to share and it also discourages export.

Increasing the price of pms would cause inflation to some extent.

Dindondin:
If PMB announce any further increment in fuel price we ll occupy like 2012. Even though PMB is more intimidating than GEJ. Your GEJ was loved in 2011. Majority of Nigerians especially southwest supported him in 2011. But he misruled and brought in different idio ts.
Just like PMB is now doing, both have misused their chances.

Nobody will protest, trust me. Nigerians are fully informed these days and the sensible ones understand if you remove sentiment

Reference:
Okay. Na now day dey break for Nigerians. Unfortunately for this government the question of subsidy was one of the waves they used to ride into power and now the water must return to the ocean, it will definitely drag them out to sea. Now they wished they never opposed subsidy removal during the Jonathan government. Now they wished the Otuoke man carried the can instead.

But we need to move on as a country. No need looking at mistakes of the past

being:
But what exactly is wrong with subsidizing?!!

the only issue I see with it is the fraud that comes with it. which is why nnpc should be the sole importer to at least limit the fraud to nnpc.

When nnpc talks about underrecovery, this amount has already been over recovered by the increase in crude oil price.

You sell unrefined at $40 you buy refined at $50

Now you sell unrefined at $70 you buy refined at $80.

So the loss due to higher import expense has been offset by higher export income.

If we decide not to see it this way and agree on buying at N175 per litre, when oil gets back to it's 2014 price- $110; we will be buying at more than N250 per litre following the same tortoise logic.
The question then is why does $110 per barrel of crude in 2014 translate to N97 and then $110 in 2018 translate to N250 per litre of petrol? It's simply the CBN FX rate. (No wonder our reserves is growing in leaps and bounds) That's a story for another day.



What we should be talking about is increasing the capacity of d NNPC to import 100% of our needs while other marketers buy from them.

Some people blamed lack of local refineries for all these price brouhaha- truth is if there are local refineries, are they expected to buy at int'l price and in dollars? if they are, then prices will still be high subject to int'l price.

You need to put your points together, you know everything but keep contradicting yourself. It would cost the govt about 500bn a year to subsidise pms not to talk of the fraud through diversion that would be involved.

NNPC does not touch the excess crude account.

Not tortoise logic but the truth, except you build refineries or you reduce your exchange rate with the increase in foreign earnings

Cromcruach91:
Problem is...govt cannot afford paying subsidies anymore....and the marketers of petroleum..both big and small cannot continue to sell fuel at N145...when it costs N171 to import it.

Infact, most marketers cannot afford to import fuel because NNPC is forcing them to sell at a loss.

And more refineries won't solve the problem.

Honestly...we should have deregulated since the idea was mooted in the early 1990's.

When more refineries are built the sector will be fully deregulated and if marketers want to import and sell lower than the refineries it will benefit all and if the refineries sell lower it will also benefit all . so its a win win when refineries are built. The only draw back might be not deregulating.

being:
Is the government really shelling out?

What you imply is despite that we are an oil producing nation, we the citizens should buy fuel at int'l oil price. and that money should be used for capital expenditure. But then what's the point- our consumption is less than 12% of our crude production- with a 25% under recovery, this translates to about 3% net income reduction for the NNPC- why subject people to hardship because of this? especially when you realize that the money could even be embezzled.

Forget all these percentages you are dishing out. How much will the govt spend to subsidising pms in a year? about 500bn.

How much is the nations budget of which we cannot be finance.

Indirectly, you are saying we should keep borrowing for pms subsidy that the big men with 5 V8 SUV in their convoy are the major beneficiaries

The inherent fraud is why I said importation should be limited to NNPC. Touching excess crude account or another account is irrelevant. it's all govt oil income and expense. And apparently, the CBN isn't ready to strengthen exchange rate otherwise FX rate should be less than N300/$ now.

Pesuzok:
You need to put your points together, you know everything but keep contradicting yourself. It would cost the govt about 500bn a year to subsidise pms not to talk of the fraud through diversion that would be involved.

NNPC does not touch the excess crude account.

Not tortoise logic but the truth, except you build refineries or you reduce your exchange rate with the increase in foreign earnings

Pesuzok:
Without refining locally, there is nothing a technocrat can do.

There are things you need to balance and factor in.

Reducing the exchange rate might make the price of pms reduce. The con is that you have less allocation to share and it also discourages export.

Increasing the price of pms would cause inflation to some extent.

and that's what technocrats ll do. Cos if someone has a reputation to protect, he/she ll explore quick n effective solutions to Nigerians enormous needs. Not to compound it like PMB and his APC family.