ericsmith:


just wondering how could you make so much a emphatic statement without mentioning 'Refinery ' even for once.

Refineries are not going to make fuel cheaper...because anyone buidling a refinery has to make money...and if he or she has to sell PMS government controlled prices...well, they would go out of business.

Deregulation is inevitable.

theoldpretender:

1.Our reserve going up from $28bn in 2015 to $40bn in 2017 is not good enough for you?

2.We are borrowing because the oil price is not high enough for us to run an economy without borrowing. Oil was at $75 in May2015, and went down to $30 in May 2016 before rising to $70 now. Any one could see that we had to borrow to make ends meet. Diversification isnt a one day job.

3.Again, we need oil to be at $139 to balance the budget (see the article here). That is why we borrowed, even when GEJ was in power, because even when oil was between $100-120 in 2010-14...we still were not earning enough.

4.If we want to earn enough forex and stop borrowing too much...we need to remove subsidies, allow deregulaiton in things like the price of fuel and the price of electricity...which would in turn attract investors and money. We also need to end our dependence on exporting primary products...and use them to MAKE STUFF THAT WE CAN EXPORT...for higher profits.

Which is why I am no APC or PDP supporter. They run the economy on the idea that we need to keep on selling stuff to grow rich. And we share the money. That is not how we run an economy.

Did Buhari not remove oil subsidy already hence the increase in fuel price to N145 instead of the N40 they promised, even when oil prices were low?
Many of those who foolishly voted for him in 2015 have realised that they were scammed.

theoldpretender:

Refineries are not going to make fuel cheaper...because anyone buidling a refinery has to make money...and if he or she has to sell PMS government controlled prices...well, they would go out of business.

Deregulation is inevitable.

In the long run, with deregulation and refineries promoting competition, fuel will be cheaper after the initial hike.
Was that not what happened to mobile phones , telecoms and cement

seguno2:


Did Buhari not remove oil subsidy already hence the increase in fuel price to N145 instead of the N40 they promised, even when oil prices were low

(Note...I am not into your APC-PDP politics ).

What government announced was a 'partial' removal of subsidy...which really amounted to them increasing the price to take some pressure off the marketers.

At the time it was costing N130 to import one liter of fuel, while the Retail price was N87...plus, there were millions of naira owed from the last admin in subsidy claims.

In other words...marketers were selling at a loss.

What govt did was move the price up...which allowed marketers to make a 'profit'...but govt still set the price.

By November 2017....the import costs had gone up to N170 per liter of fuel. The only reason why we don't see a scarcity is because govt is now the sole importer of fuel...and is selling fuel at N145 per liter...while 'paying a subsidy' to cover lossess (that's where things get murky).

COMPLETE (NOT PARTIAL...COMPLETE) Deregulation would end all this issue...and fuel would flow. And more investment too. Problem is...government is not coragueous enough to deregulate completely..so we continue throwing money down a 1000 foot pit.(And some of it gets stolen).

(Funny thing is, all the elites stand to earn more from complete deregulation. Oridinary Nigerians may suffer intiial increased prices...but there would be more jobs , and eventually market forces driving down prices).

seguno2:


In the long run, with deregulation and refineries promoting competition, fuel will be cheaper after the initial hike.
Was that not what happened to mobile phones , telecoms and cement

Exactly....I only spoke like that because Nigerians don't like high prices, and don't like waiting for long term benefits.

GSM taught us that lesson.

theoldpretender:
It is a good development, but the problem is...



Personally speaking, I don't like this at all. This is how we have been running our economy since independence, and why our economy is forever vulnerable. We keep on exporting primary products...which are processed abroad for higher profits and end up benefiting foreign economies.

(Like now, we export crude...which is processed into all sorts of products, including PMS, and then we import the same PMS...at higher cost mind....and then we pay 'subsidy' on it. And we have been doing that for years. God help us.).

If we could at least be experting stuff like processed products from oil...eg plastics, etc...we could be quite proseprous.

And we are still importing refined petroleum products....and we exepct prices of PMS to remain low. We better be more realistic...we cannot be importing refined products, and selling them at lower prices than we import them for. Or else we are going to keep on having fuel scarcity whether we like it or not...unless we deregulate fully.

Thank you.

uckennety:




What is Niger delta?

The question u asked is stupid.

theoldpretender:

(Note...I am not into your APC-PDP politics ).

What government announced was a 'partial' removal of subsidy...which really amounted to them increasing the price to take some pressure off the marketers.

At the time it was costing N130 to import one liter of fuel, while the Retail price was N87...plus, there were millions of naira owed from the last admin in subsidy claims.

In other words...marketers were selling at a loss.

What govt did was move the price up...which allowed marketers to make a 'profit'...but govt still set the price.

By November 2017....the import costs had gone up to N170 per liter of fuel. The only reason why we don't see a scarcity is because govt is now the sole importer of fuel...and is selling fuel at N145 per liter...while 'paying a subsidy' to cover lossess (that's where things get murky).

COMPLETE (NOT PARTIAL...COMPLETE) Deregulation would end all this issue...and fuel would flow. And more investment too. Problem is...government is not coragueous enough to deregulate completely..so we continue throwing money down a 1000 foot pit.(And some of it gets stolen).

(Funny thing is, all the elites stand to earn more from complete deregulation. Oridinary Nigerians may suffer intiial increased prices...but there would be more jobs , and eventually market forces driving down prices).

Did Jonathan not take the political risk of complete deregulation in 2012

theoldpretender:


Refineries are not going to make fuel cheaper...because anyone buidling a refinery has to make money...and if he or she has to sell PMS government controlled prices...well, they would go out of business.

Deregulation is inevitable.

ALOL !! are you for real or just pretending to be mis informed,,
can anyone really undermine the benefits of refinery or are there oil producing countries like nigeria without refineries.
if dangote opens his refineries will he be selling crude to us @ dollar rate, abi logistics cost of moving oil from nigeria abroad nd shipping it back again go equate cost of logistics within in inter states in nigeria.
have you ever sat down n think what makes our naira valve so worthless on FX market ,,60% of our importation is cruel i.e we pay in dollars, if we own a refinery n importation falls to 20% to support our local productivity, naira will surely bounce back and that we facilitate norms in cost of living which will transmission a better standard of living.
how does deregularization even solve our economical problem without refinery,, do nations with refinery suffer scarcity like we do... lets leave grammar n do the appropriate thing jere

sanandreas:


The question u asked is stupid.

Based on your answer

Quantifying an artificial entity Niger delta is stupid
And doesn't modify you to be reasonable

theoldpretender:


Keep in mind that the economy...the high lending rates, and the bad debts...are because we really don't have enough money in the system, and because we rely too much on just revenues from oil (yesterday it was agric, etc.).

There is a simple route out of this...end subsides, deregulate everything...and while prices go up...investment flows in, jobs get created, and we have an end to bad investments.

Banks will even lend at lower rates because they are sure of getting their money back.

That is what this government needs to do...and that is what the past government should have done. (sigh).

Since the age of 17yrs, the Economist magazine has been my favourite secular mag. I am a fan of the free market and a massive supporter of deregulation and liberalisation.

However, the primary reason why the country is persistently plagued with unnecessarily high lending rates is caused by what Henry Boyo called the Naira aubstitituion policy.

Every month, the FG distributes money earned from oil to the 3 tiers of government. The oil income earned in dollars is substituted to naira before paid to them.

The substitution to naira and disbursements leads to a sharp increase on money supply and the primary cause of the perpetual excess of money in circulation.

CBN is then forced to soak up the excess money using very expensive bonds.

Henry Boyo has advised that rather than substitute the dollar earned with naira, why not pay with dollar certificates redeemable at banks?
It will now be a case of dollars chasing naira.

This will bring an end to the persistent excess money and bring down inflation and inflationary pressure as well.

With a huge reduction in inflation, Nibor rates can come down and with it bank lending rates.

CBN will have no need to continue running the preswnt tight monetary policy eventually loosening it.

This will lead to a collapse in lending cost.

Nigeria, a country that had a budget deficit of barely 1.5% of GDP for about a decade has NP businn with double digits lending rates

Soludo during his time at CBN tried to introduce it but the governors cried to Yar'Adua that they were not used to it. He listened to them and ensured it was scrapped

Niger Delta as a region will probably be like Qatar how I wished.

grandstar:


You're making the mistake blaming people.

The bucks stops at the governments door.

Lending rates in double digits are crushing the real sector of the economy.

How do you expect industrialist to borrow at 28% and you want the sector to boom? Dangote wondered how the government expects agriculture to thrive when interest rates are 20% (as of then)

High lending rates kill productivity which is extremely important for the country's companies to be globally competitive.

If lending rates were in single digits, they would feel confident importing advanced machinery from abroad that would make them highly competitive and productive.

With low interest rates, they can continue borrowing and investing until the Nigerian market becomes too small . They then turn aggressively to exports.

AMCON has been seizing company assets right left and center. Some are not some reprehensible fat cat who refuses to pay his debts but reputable blue chip companies.

I was at Victory Park Estate, Osapa London last year built by UAC.

Apparently, the estate had been taken over by AMCON!

I've wondered about this. It's hard to predict economic growth with the very high interest rates in Nigeria..

At this point Nigeria should have had a huge textile industry, huge petrochemical industry, and even a large agro-processing industry...

There's so much potential in Nigeria, we just the the right leader to unlock this potential.

theoldpretender:


Keep in mind that the economy...the high lending rates, and the bad debts...are because we really don't have enough money in the system, and because we rely too much on just revenues from oil (yesterday it was agric, etc.).

There is a simple route out of this...end subsides, deregulate everything...and while prices go up...investment flows in, jobs get created, and we have an end to bad investments.

Banks will even lend at lower rates because they are sure of getting their money back.

That is what this government needs to do...and that is what the past government should have done. (sigh).

does the government subsidize the electricity sector in Nigeria?

nwoke37:


does the government subsidize the electricity sector in Nigeria?

They set the prices directly,which means (in practice) prices are kept low (for metered customers)....which means DISCOS are chronically short of cash to buy power from GENCOS...who in turn are short of cash to buy gas from suppliers...that want their cash in dollars.

I spend N2000 monthly on power as a metered customer living in a two bedroom.Estimated (at my previous place of residence) was N5000-6000 montly. In Europe,it is N15000 for a metered customer. Then add the fact that the whole estimated billing thing is a racket, plus the fact many people don't pay for power....and you see the problem.

The solution...increasing power bills...is going to meet with protests. Bringing in foreign investors...more protests because they too would charge higher. So,we have a power sector harmed by lack of cash on one hand, and corruption on the other.

grandstar:


Since the age of 17yrs, the Economist magazine has been my favourite secular mag. I am a fan of the free market and a massive supporter of deregulation and liberalisation.

However, the primary reason why the country is persistently plagued with unnecessarily high lending rates is caused by what Henry Boyo called the Naira aubstitituion policy.

Every month, the FG distributes money earned from oil to the 3 tiers of government. The oil income earned in dollars is substituted to naira before paid to them.

The substitution to naira and disbursements leads to a sharp increase on money supply and the primary cause of the perpetual excess of money in circulation.

CBN is then forced to soak up the excess money using very expensive bonds.

Henry Boyo has advised that rather than substitute the dollar earned with naira, why not pay with dollar certificates redeemable at banks?
It will now be a case of dollars chasing naira.

This will bring an end to the persistent excess money and bring down inflation and inflationary pressure as well.

With a huge reduction in inflation, Nibor rates can come down and with it bank lending rates.

CBN will have no need to continue running the preswnt tight monetary policy eventually loosening it.

This will lead to a collapse in lending cost.

Nigeria, a country that had a budget deficit of barely 1.5% of GDP for about a decade has NP businn with double digits lending rates

Soludo during his time at CBN tried to introduce it but the governors cried to Yar'Adua that they were not used to it. He listened to them and ensured it was scrapped

so is there any hope high lending can come down to at least 15% in the next 5 years?

theoldpretender:


They set the prices directly,which means (in practice) prices are kept low (for metered customers)....which means DISCOS are chronically short of cash to buy power from GENCOS...who in turn are short of cash to buy gas from suppliers...that want their cash in dollars.

I spend N2000 monthly on power as a metered customer living in a two bedroom.Estimated (at my previous place of residence) was N5000-6000 montly. In Europe,it is N15000 for a metered customer. Then add the fact that the whole estimated billing thing is a racket, plus the fact many people don't pay for power....and you see the problem.

The solution...increasing power bills...is going to meet with protests. Bringing in foreign investors...more protests because they too would charge higher. So,we have a power sector harmed by lack of cash on one hand, and corruption on the other.

Is there plans to deregulate the power sector, so that the market determines the price?

Who cares about protests, it's for the benefit of Nigeria

nwoke37:


so is there any hope high lending can come down to at least 15% in the next 5 years?

It can touch 10% within 2 years if the naira substitution policy ends.