ekt_bear:

Those sanctions have devastated Iran, imo. They are a great and talented people (at least based on the Persians I've met here from there, results in these international math/physics/science competitions), and would be much more further developed economically if it weren't for these sanctions.

I studied with Iranians for years – they are nothing special, just normal beings; But of course sanctions can slow a nations economic growth no doubt.

all4naija:

^^^^
JEEZ! Sorry!

Cleaning up the system? I don't think increasing of workers salary cleans up the system. All I was saying was for the ordinary workers to have more money so that they can afford what they want. If there is increase in pump price the rich are bound to pay more why the poor using public transport will pay fairly increase price thereby having something to fall back on. Just an observation. It can make money to circulate if the leaders are really ready to move things forward.

There are NO PLANS to increase salary for Ordinary workers. I am not sure if you have been following the news lately but the plan the government has is to REDUCE worker pay.

Also, IF there is an increase in pump prices, don't you think that increase will translate into an increase in BUS/Public Transport fare? Or do you think that somehow these will be IMMUNE to impact of higher cost of gassing up? Please think about this a bit more. I don't know if you have ever experienced a jump in pump prices, because it usually means higher cost of transportation and higher cost of goods and necessities(we are talking higher cost of food, amenities etc.)

all4naija:

I don't get what you mean by abandoned projects not due to lack of money has anything to do with the increase of salary, because that amount per a month is enough to increase workers salary by 10% - by my guess.

Here is a link to the story   https://www.nairaland.com/nigeria/topic-745718.0.html

all4naija:

Anyway, if your take is to allow the subsidy to continue that would be eating deep into the govt. pocket where the rich also benefit just like the poor. The only area I can see the subsidy is going to have effect on the poor is the Kerosene use by them. If govt. is trying to prevent them from using the product it should provide cheap gas as alternative - Nigeria has gas in abundant.

Are you sure it is eating DEEP into the pockets of a government that itself probably spends about 20 times of that amount each month on projects that are never realized? Are you sure it is eating DEEP into the pockets of a government that probably spends about 10 times that amount paying ghost workers(workers that do not exist) each year? I mean you got to think a bit about these things.

My take is this --- subsidies ARE NOT EVIL--- in an oil producing country, it should be a right that people have access to. I mean other oil producing countries offer subsidies to their people -- why shouldn't Nigeria? What we have is a problem whereby there are so many holes in the system for the rich, and conniving to take advantage of. Why DEMONIZE subsidies when the real problem is still out there and no one seems to be trying to do much about that issue --- tackling corruption in the system.

Some have suggested that the money from this can be injected into subsidizing Agriculture or something else -- but reality is the same problem that plagues the fuel subsidy program also plagues the other -- yes, millions of dollars go to 'subsidizing' farmers in Nigeria BUT because of the many holes in the system that essentially allow corruption, about 90% of the funds also go to line the pockets of the rich farmers as well.

@nolongTing

That is due to the Nigeria weak currency!If Nigerian exchange rate was to be in the same rate as Iran Nigeria GDP by purchasing power parity(which best method) would be 496.9 billion dollars that is more than half of what Iran has at 818.7billion dollars.  It doesn't change the fact that Iran is richer not until Nigeria start to exploit his abundant resources - both human and natural - things will only move gradually.

^^^^ I actually took that to be an error of some sort since I don't see how increase in fares is something to fall back on. Could you please explain that one, if that is what you mean there.

Majority of the poor already rely on public transportation. How does an increase in fare translate to something they can fall back on? What about increase in cost of fueling their generators, buying kerosene for their lamps, and stoves, or the increase in cost of food for them. How will that translate to something they can fall back on that?

^^^^
I meant the workers would have to pay fairly increased price out of the increased salaries and still have little money to fall back.On the other hand would have to spending all as in the case of no increase in salary. I am not so good in economics - just my observation!

all4naija:

@nolongTing

That is due to the Nigeria weak currency!If Nigerian exchange rate was to be in the same rate as Iran Nigeria GDP by purchasing power parity(which best method) would be 496.9 billion dollars that is more than half of what Iran has at 818.7billion dollars.  It doesn't change the fact that Iran is richer not until Nigeria start to exploit his abundant resources - both human and natural - things will only move gradually.

Very well put.  But lets be honest, the value of a country's currency is quite a good indicator of the state of that entity's economy – even if its being manipulated by the central bank.  Iran has a  more diversified economy than Nigeria, with a developing energy and manufacturing base.  On the other hand Nigeria's economy is too reliant on oil; and even when it comes to oil, Iran has more oil and exports more than Nigeria.

@Kobojunkie

I meant the workers would have to pay fairly increased price out of the increased salaries and still have little money to fall back on .On the other hand would have to spend all as in the case of no increase in salary. I am not so good in economics - just my observation!

all4naija:

@Kobojunkie

I meant the workers would have to pay fairly increased price out of the increased salaries and still have little money to fall back on .On the other hand would have to spend all as in the case of no increase in salary. I am not so good in economics - just my observation!

There are no plans to increase worker salaries so lets not even bother with that. What we have are people with already stretched incomes, needing to find ways to stretch that even further to cover the jump in cost of living as a result of subsidy removal.

I am not great with economics myself but I am aware of my environment on the most part and able to figure out how things impact me, and those around me, and how they don't.

^^^^
That is where you get me wrong. I never said there was a plan to increase salary. I said if the govt. could remove the subsidy and use it to increase the workers salary we could experience a good situation coming out of it all.

^^^ What I am saying is that is NOT the plan . . . so there is NO need to bring that up. The Government has no plans to increase salary on removing the subsidy.

^^^^

Anyway, thank you! You are only explaining what we already know here, that the govt. is not having any plan to increase salary upon the removal of subsidy.

We are making our different opinions on this spending of huge amount on subsidizing fuel in the country and,that's mine view.

nolongTing:

I studied with Iranians for years – they are nothing special, just normal beings;  But of course sanctions can slow a nations economic growth no doubt.

I study with Iranians now. Both those directly from Iran and those who grew up in the Western world. I am not claiming they are super aliens or something. But their top end talent (e.g., their Sharif University of Technology students/graduates) can compete with anybody in the world.

all4naija:

^^^^

Anyway, thank you! You are only explaining what we already know here, that the govt. is not having any plan to increase salary upon the removal of subsidy.

We are making our different opinions on this spending of huge amount on subsidizing fuel in the country and,that's mine view. 

Cool . . . check these out

http://oneworldgroup.org/2010/08/04/fuel-subsidies-by-us-government-exposed

http://www.progress.org/2003/energy22.htm

deenee, you make me laugh, where did you get that information. I know what I am doing. If you look at the oil. you will never solve anything in Nigeria. So we edo,delta and Yorubas have to close our eyes to the Oil  and move on.

Look this is south africa. Do they have oil. But they are developed. This is why i want to be president, if they remove us. Look I have lived here for 20 years, and I know what to do. you cant compare to people who live in nigeria or only use 3 or 4 years abroad. I know what to do.  This is the different between 20 years abroad and what fashola and the governors can offer you. 20 years is enough time to know alot. I will transform our economy.

My mind have been trained to think different, and all this egunje and bribe of nigeria will not be there. I have been trained to do this thing.

^^^^

Hehehe! Lol! What about those who were born abroad? Hehehe! Who gives you the position of a president only ruins everything! Dream on dude.

What about thousands of those who have lived their generations in the USA, if you thought SA qualifies you to be president of Nigeria!?

I live in canada not south africa. according to the united nation, it was the best place on earth to live in for 7 consecutive years. And I was here for that 7 years period , i saw what they did. Look you can go on the mainland and see if there is road in lagos. they keep on showing you marine st in lagos island, 

I know what to do to make a better society. It is 20 years we are talking about. Nigeria born here who never lived in nigeria, will never want to come home. they dont know anything about our people. my brother, the people who mostly come home are the bad nigerian. But I know how my people suffer. Look i came  there when he was governor. My brother. I pity people. That why all they show you is Lagos Island which is less than 5% of lagos. because they did nothing in other part

We can not live nigeria and return back to the same nonsense with the same people who have destroy our people lifes in nigeria. With God all things are possible.

johannesburg




Durban



Cape town


Pretoria



Polokwane




port-elizabeth



East London

why rule you ask.  Look i have been to ethiope severa time living in canada. And I know the place very well. this is what the people who live here did,, they went back to rule the place. Go and see development coming to the country. When I went there less than 5 year.  this is how the place now look like.  This is about the same time fashola was governor of lagos state. Note that their budget is less than what fashola get in a years.

they are using there years of been abroad to rule their people.

^^^^
Hahaha!Hehehe! I think you are very funny! I like this ! Keep on dreaming. One thing - stop posting those shitty images. The next image to that of Ethiopia is London!

Hahaha!Hehehe! I think you are very funny!
I like this ! Keep on dreaming. One thing -
stop posting those shitty images. The next
image to that of Ethiopia is London!

Word

There is the repeated fantasy or myth that local production will force down the price of petrol.

Why do people think so?

If the refineries are buying crude at $120, how much do you think the refineries will sell the petrol? 65 naira? Lets not kid ourselves.

And that brings us to the second question? What determines the price of petrol/diesel?

It is not the cost of production but strictly demand and supply!

That is why many marketers got into debt. In 2008 many bought diesel when the price was sky high and only to find the price collapse before their very eyes.

The market no send you!

Those in refining call their business lousy because of this reason.

They buy crude oil at $110 and be forced to sell the refined product at a price based on $95 a barrel.

Local refining will only create jobs. As per bring down the price, forget about it!

Smdh at some myopic responses on this thread. Because the FG has alleged to be spending N72.8bn, then we should believe them right? too bad. Nigerian govt has never been sincere with the citizens. we dont need a spirit to come down to tell us this insincerity of our government.

Subsidy has been removed on Ago=diesel and Kerosene=DPK since early 2000. Can someone please tell me the prices of each of the products per litre?

At my last check a liter of DPK is N100, whilst that of Diesel is N150. At times both products are even scarce to see and purchase. Remove subsidy on PMS and make the masses suffer more

I agree with Kobojunkie and strongly disagree with ekt_bear and friends.


This is all basic mathematics. Anyone who went to school will work out that this fuel subsidy noise is a LIE or at best gross exaggeration.

FIRST OF ALL, ANYONE WHO TELLS YOU THAT NIGERIA SPENDS $500 million ON FUEL SUBSIDIES MONTHLY IS A THIEF.

This is basic mathematics and a fact.
They can claim that the give out $500 million in subsidy money monthly. That is between them and their thieving companies and friends.

Let's break it down:

Nigeria produces crude oil. Other countries produce crude oil.
Nigeria has 4 refineries with total installed capacity of 445,000 barrels per day (or whatever the NNPC claims nowadays).
Nigeria's refineries are not working at full capacity.
Crude oil is refined to PMS (Premium Motor Spirit) aka Petrol.
Nigerians use PMS to fuel vehicles, generators and other things.
PMS is traded internationally at a particular rate that varies.
Other countries that produce Crude oil refine it and sell to their citizens at whatever rate they please (irrespective of international rates).
Nigeria monthly PMS consumption = Locally refined + Imported refined (at International Rates)
Nigeria sells PMS to citizens for N65/litre
Subsidy = Amount paid to PMS importers for difference between International Rates for Imported Refined and N65/litre.

Example = Importers buy fuel internationally today from Venezuela at N120/ litre for example, they bring into Nigeria and sell for N65/litre. In order for said Importers not to lose N55/litre, the Nigerian Government pays N55/litre balance. This balance is the SUBSIDY.

Problem 1: Due to corruption, Nigerian officials collude with Government officials and claim to have imported more fuel than they actually bring in.

Example: Mr. Otedola's company may only bring in 1 million litres per day but claim to bring in 2 million litres per day. And like in previous example, The Government officials will pay N110 million per day (N 55/litre subisdy x 2 million litres) instead of N55 million (N55/litre subsidy x 1 million litres).

Problem 2: Due to corruption, Fuel importers collude with Nigerian National Petroleum Corporation (who by the way are in charge of the locally refined) and Government officials to buy the Locally refined and claim that the said quantities of petroleum where in fact imported into the country at international rates.

Example: Ms. Deziani's accomplices may buy 1 million litres per day of petroleum from the NNPC for N65 million and then claim that this quantity was bought at N120 million internationally (N120/litre international rate x 1 million) . They would then proceed to collect N55 million (N120 milion - N65 million) from the Nigerian Government as subsidy payment.

Problem 3:Due to corruption and inadequate monitoring, Fuel importers collude with Nigerian National Petroleum Corporation (who by the way are in charge of the locally refined) and Government officials to fraudulently under-report the quantities of locally refined PMS so they can purchase the more from the local refineries and claim to have imported said quantities (problem 2)

Example: The NNPC may claim to refine only 2 million litres per day when it in fact refines 4 million litres per day. The remaining 2 million litres would then be sold to their partners in crime at N65/ litre. These partners will proceed to sell these quantities to the Nigerian populace while demanding N55 subsidy per litre from the Nigerian Government after claiming that this 2 million litres/day were imported from Venezuela or other country. This example is highlighted by the inability of the NNPC to give account of the actual quantities it refines daily.


Therefore taking into consideration that

Subsidy = Amount paid to PMS importers for difference between International Rates for Imported Refined and N65/litre.

and the extent of problems 1, 2, and 3, it becomes easy to see why the true cost to Nigeria of the fuel subsidy may not exceed $100 -$150 million/ month.

Once again, I put forward that

ANYONE WHO CLAIMS THAT NIGERIA TRULY SPENDS $500 million ON FUEL SUBSIDIES MONTHLY IS A THIEF.


Why do Nigerians need a fuel subsidy??

Do average Nigerians really benefit from a fuel subsidy??

Interesting questions. Let me rephrase that.

Do average Nigerians benefit from buying PMS at N65/litre instead of N120, N130, or N140/litre
I think a monkey can answer that.

1. The average Nigerian buys PMS to fuel his/her car i.e N500 daily.
2. The average Nigerian takes public transport in vehicles that use PMS at certain amount i.e N50 per trip.
3. The average Nigerian buys PMS to fuel his generator i.e N1000 daily.
4. The average Nigerian buys food (bread, vegetables, fish) which is transported across the country in Vehicles that use fuel.

No subsidy equals

1. The average Nigerian needs PMS worth N1000 for his/her car daily.
2. The average Nigerian takes public transport at a new amount i.e N80 per trip.
3. The average Nigerian buys PMS to fuel his generator i.e N2000 daily
4. The average Nigerian buys food (bread, vegetables, fish) at a much higher price.

it doesn't take a genius to figure out that the average Nigerian benefits significantly from the lower cost of PMS.

It would be hard to find a Nigerian in Nigeria who wants the price of PMS to rise. It is a slap in the face of average Nigerians for ekt-bear and friends to claim that removing the subsidy will not have a tremendous negative impact on Nigerians. It is easy to sit in the U.S.A and claim that doubling the price of PMS in Nigeria will have no impact on the populace. Akin to saying an increase in gasoline prices in the U.S.A to $7/gallon today will have no significant effect on the populace.

Does corruption allow unscrupulous individuals to benefit from the subsidization of PMS?? Yes.
But why does the average Nigerian have to get shafted for this?? Why not tackle corruption instead??

Solutions.

A. Ascertain the true quantities of PMS locally produced daily.
B. Ascertain the true total quantities of PMS consumed daily nationwide.

Subract A from B and arrive at the true quantity of PMS imported at international rates (This value will then be subsidized)

By tackling corruption, the cost of subsidization can be brought down to no more than $100 million per month.


Solution Part 2 - By bringing refineries to optimum operating capacity and building new refineries.
Locally refined PMS can exceed Locally consumed PMS.

Mythical Solution= Remove the subsidy and hope that the supposed $500 million/ month that is currently being used to compensate corrupt entities will translate into development and improvement for the average Nigerian.

The question now remains, does increasing the burden on the average Nigerian guarantee the resolution of the problem??


PS: Problem 4: Overestimating the total nationwide PMS consumption allows fuel importers and the NNPC to further perpetrate fraud.


Also, please note that selling locally refined PMS at N65/litre is still a profitable venture for the NNPC.

^^^^^^Good point. Abeg tell them. Theres what we call multiplier effect on all products should fuel price be increased by just N1

musiwa.,.:

johannesburg




Durban



Cape town


Pretoria



Polokwane




port-elizabeth



East London

Musiwa for the president in 2015 - you have my vote!

jensinmi:

Does corruption allow unscrupulous individuals to benefit from the subsidization of PMS?? Yes.
But why does the average Nigerian have to get shafted for this?? Why not tackle corruption instead??

Solutions.

A. Ascertain the true quantities of PMS locally produced daily.
B. Ascertain the true total quantities of PMS consumed daily nationwide.

Subract A from B and arrive at the true quantity of PMS imported at international rates (This value will then be subsidized)

By tackling corruption, the cost of subsidization can be brought down to no more than $100 million per month.


Solution Part 2 - By bringing refineries to optimum operating capacity and building new refineries.
Locally refined PMS can exceed Locally consumed PMS.

Mythical Solution= Remove the subsidy and hope that the supposed $500 million/ month that is currently being used to compensate corrupt entities will translate into development and improvement for the average Nigerian.

The question now remains, does increasing the burden on the average Nigerian guarantee the resolution of the problem??


PS: Problem 4: Overestimating the total nationwide PMS consumption allows fuel importers and the NNPC to further perpetrate fraud.

Also, please note that selling locally refined PMS at N65/litre is still a profitable venture for the NNPC.

Now someone is talking . . . . no be all this disconnected --- disconnected from the reality of the real problem and situation in Nigeria as a whole--- solutions wey people they throw left and right . . . .

Talk about waste at the highest order, we are talking about $450million + monthly, isn't that enough to build two mid size refineries? Think about the economic impact $450million will have. Nigeria has lots of money to waste, anyway, I can see why Dr Ngozi is trying to remove this subsidy.

@ jensinmi

I quite agree with your analysis! That doesn't prevent anybody from talking about corruption. The original poster was interested in people's views. While addressing corruption we can as well talk about this issue, in that case, they are mutually exclusive to the progress of the country.

Yes, build more refineries because the refineries you have been able to succeed at getting them to operate so well(above 45% at least) . . . Nigeria . . . .

all4naija:

@ jensinmi

I quite agree with your analysis! That doesn't prevent anybody from talking about corruption. The original poster was interested in people's views. While addressing corruption we can as well talk about this issue, in that case, they are mutually exclusive to the progress of the country.

I don't think you understand his analysis. I believe the long and short of it is that CORRUPTION is the ONLY problem here. Not the existence of subsidies. He also goes on to posit that removing subsidies WILL NOT solve the problem which remains the high levels of corruption currently ALLOWED by the existing system.

Interesting thread.

A poster made the very valid point that diesel and kerosene prices have been fully deregulated (i hope i'm correct in stating this) and yet we are still beset by supply line shortages and stratospheric prices (particularly for kerosene which is the fuel used by low income earners). What could explain this? We were told ages ago by the RFMAC (or whatever the hell that government department is called) and several other anti-subsidy parties that removal of subsidies on fuel would eliminate supply line distortions, allocate resources efficiently, allow price signals to work properly, etc.

In plain english, we were being told that with the removal of those evil subsidies - the frequent scarcity of diesel and kerosene would become a thing of the past.

Has that been the case for diesel and kerosene? If not, why? I would like to be educated.