₦airaland Forum

theoldpretender:
I know...I have used this argument you have given me on Nairaland before.

And every time, I get the same response. 'They will exploit us' .

Nigerians sha. I opposed PDP....yet i know a good idea when I see one.

If there is anything the cabals are good at, it's joining hand to reap the masses off... If u ever think healthy competition will come and it will reduce prices, u are simply new to Nigeria... Phcn is an example... The masses are suffering it now... Only way forward? All these old and useless politicians with their offspring must go...

princetom1:
Atiku selling NNPC means we will start buying fuel at 400, between, if someone should say, let's sell NNPC to a neutral person that has no ties whatsoever to any of these cabals, all of them will immediately say, DONT sell NNPC... Look at phcn now, it's a disaster, nepa is better than wat phcn has become... Stop recycling foolish ediot old men ad politicians una no go listen una go dey follow pdp and apc that has mortgage una future up and down...

princetom1:
If there is anything the cabals are good at, it's joining hand to reap the masses off... If u ever think healthy competition will come and it will reduce prices, u are simply new to Nigeria... Phcn is an example... The masses are suffering it now... Only way forward? All these old and useless politicians with their offspring must go...

The reason why PHCN is not working after privatization has to do with these factors.

1.About 1/3rd of people connected to the grid nationwide actually pay for power

2.DISCOS are forced, under the provisions of the law, to sell power at prices set by the Nigeria Energy Regulatory Commision, which means they are forced to keep prices low...which does not allow them to make a profit and in turn makes it difficult to

3.pay GENCOS. Gencos , the generating companies, buy gas from various suppliers, including Nigeria Gas company. All of these suppliers insist on payment in dollars. , not in naira.

4.Because DISCOS don't have enough to pay GENCOS, it means that money is scarce, and that makes DISCOS reject gas supplies from GENCOS

5. Banks don't want to lend to DISCOS because of 1) uncertainties in billing 2) fact that DISCOS are not making a profit.

Basically, the way forward is to allow DISCOS to charge the price they want, and to allow DIScos to charge across regions, as well as to meter every house. This would increase profits(Ghana pays more for electricity than we do)

Problem is , Nigerians don't want increases, and don't like estimated billing practices.



Selling NNPC and removing subsidy

1.Prices will go up. No choice.

2.HOWEVER...investment would pour in. NNPC would attract competitors SINCE under the new deregulation policy, everyone is now allowed to make a profit. (Subsidy means that marketers buy fuel at N165 , sell at N145 and government pays them N20 now which is the difference .Profit not made. NNPC now is the one importing fuel...which means NNPC is losing money in essence..which is why there is so much corruption because people want to make money, and subsidy ain't letting them)

3.More refineries are built, more investment in oil production and exploration

4.Prices come down within a year or two.

5.Need I say that government SAVES money (at least N1 trillion yearly) and that JOBS are created as a result of all that investment.

it happened before...GSM.

I agree with deregulation of NNPC and petrol. However those arguing that petrol price will come down like telecoms are very wrong.

First petrol is driven by price of crude oil. Telecoms however has a very low marginal cost. Asides those early years of massive investments in base stations etc the additional cost of serving 75mln people may not be very different from 50mln people, cos the masts are already there. To sell petrol to additional 25mln people means you have to buy the equivalent crude, refine it and transport it.

Even if efficiencies set in, but crude prices double, petrol prices will rise.

And if you wonder why international price of crude will affect local prices, there is something called opportunity cost. If my local price is too low relative to international price, then rather than sell local I might as well export my petrol, therefore local prices will have to increase to attract supply. Its simple economics.

Idiots.
NNPC management once said that importing fuel into Nigeria is cheaper than build and operating a refinery.
Come to lekki free zone and see what Dangote is doing!

theoldpretender:
The reason why PHCN is not working after privatization has to do with these factors.

1.About 1/3rd of people connected to the grid nationwide actually pay for power

2.DISCOS are forced, under the provisions of the law, to sell power at prices set by the Nigeria Energy Regulatory Commision, which means they are forced to keep prices low...which does not allow them to make a profit and in turn makes it difficult to

3.pay GENCOS. Gencos , the generating companies, buy gas from various suppliers, including Nigeria Gas company. All of these suppliers insist on payment in dollars. , not in naira.

4.Because DISCOS don't have enough to pay GENCOS, it means that money is scarce, and that makes DISCOS reject gas supplies from GENCOS

5. Banks don't want to lend to DISCOS because of 1) uncertainties in billing 2) fact that DISCOS are not making a profit.

Basically, the way forward is to allow DISCOS to charge the price they want, and to allow DIScos to charge across regions, as well as to meter every house. This would increase profits(Ghana pays more for electricity than we do)

Problem is , Nigerians don't want increases, and don't like estimated billing practices.



Selling NNPC and removing subsidy

1.Prices will go up. No choice.

2.HOWEVER...investment would pour in. NNPC would attract competitors SINCE under the new deregulation policy, everyone is now allowed to make a profit. (Subsidy means that marketers buy fuel at N165 , sell at N145 and government pays them N20 now which is the difference .Profit not made. NNPC now is the one importing fuel...which means NNPC is losing money in essence..which is why there is so much corruption because people want to make money, and subsidy ain't letting them)

3.More refineries are built, more investment in oil production and exploration

4.Prices come down within a year or two.

5.Need I say that government SAVES money (at least N1 trillion yearly) and that JOBS are created as a result of all that investment.

it happened before...GSM.

Seems u follow too much book in this nation, u don't wanna admit that intentionally, things are made this way to favour the cabals... Upon all the complains from genco and disco, are they not making profit? Are the ones who truly won bid, the ones operating? If they say, they wanna sell something in Nigeria, it's because... Some set of people or cabals are about to profit from the nation, doing nothing... U need to study genco issues and discos

When Atiku said he would sell them off, apc got nigerinas railing against the idea... The refinery will never work under any government unless sold off cause it represent an easy source of fund for many in the know... The crude allocated to those refineroes is the main reason it will never be allowed to work

aolawale025:
Those refineries are a drain pipe. And very corruption prone. Endless turnaround maintainance yet no production. They should be sold off.

The integriters will attribute the loss to 16 years of PDP 'misrule', and also that NNPC might not make profit during those years.
My stake: APC is a big disappointment.

princetom1:
Seems u follow too much book in this nation, u don't wanna admit that intentionally, things are made this way to favour the cabals... Upon all the complains from genco and disco, are they not making profit? Are the ones who truly won bid, the ones operating? If they say, they wanna sell something in Nigeria, it's because... Some set of people or cabals are about to profit from the nation, doing nothing... U need to study genco issues and discos

Gencos and discos are losing money.

One disco operator had to be taken over by the government because they were no longer financially viable.

Discos have a cash shortfall running into trillions of naira

Problem dey

theoldpretender:
Gencos and discos are losing money.

One disco operator had to be taken over by the government because they were no longer financially viable.

Discos have a cash shortfall running into trillions of naira

Problem dey

Perhaps u need to stop believing fake news.... Those are fake news, ask ur self, how do u take over a bizz and loose money continually and not do away with it? Was nepa loosing money? Where is all the monies we are paying for electricity not used, going into?

COMPAQ:
Even if efficiencies set in, but crude prices double, petrol prices will rise.

And if you wonder why international price of crude will affect local prices, there is something called opportunity cost. If my local price is too low relative to international price, then rather than sell local I might as well export my petrol, therefore local prices will have to increase to attract supply. Its simple economics.

While everything you've said is true, the same factors are also in play when it comes to NNPC, which is so poorly run that it destroys more economic value than it provides. There are also opportunity costs to subsidizing loss-making state enterprises, and the result of privatization will be a net gain for Nigerian consumer welfare, even if international oil prices increase in the future. The fuel shortages and long queues that accompany any hikes in the price of oil have their own opportunity costs in terms of wasted productivity, and the time of most middle-class workers would be better utilized doing their real jobs rather than waiting around endlessly for "cheap" petrol.

It would actually be cheaper and more effective to use the savings from stopping the subsidies to provide direct welfare payments to the very poorest sections of the population, rather than subsidized petrol whose greatest benefits accrue to those who can afford multiple fuel-inefficient cars and gigantic generators. How much petrol does the average subsistence farmer, street hawker or tailor consume, compared to the "ogas" chauffeured around in Mercedes-Benzes and BMWs?

For all of Atiku's shortcomings as a presidential candidate, he was absolutely right on this score: NNPC has to be privatized, all fuel subsidies ended, and the petroleum sector completely deregulated.