I find it very difficult to wrap my head around the fact that subsidy was removed, and the naira floated at the same time.

Please is there no other better way of going about it?

I need input and education because I think it's aim Is to inflict maximum hardship on the people,especially as even date given for subsidy removal by previous government was not adhered to.

Even the money budgeted was not exhausted.

yeshuasfootstep:
I find it very difficult to wrap my head around the fact that subsidy was removed, and the naira floated at the same time.

Please is there no other better way of going about it?

I need input and education because I think it's aim I to inflict maximum hardship on the people,especially as even date given for subsidy removal by previous government was not adhered to.

Because by May 28 2023, we had two issues

1.A foreign reserve that was effectively below 4 billion dollars

2.Debt service eating 90% (some said 99%) of our income..thanks to the high loans we had to take


That is why we had to end up partially removing subsidy (Tinubu has not removed subsidy, or fuel would be 1000 per liter by now) and float the naira. Thanks to decades of not diversifying our economy, bad policies, wasting of money, etc...here we are. THere simply was no money for the good times to continue


(I don't work for the government, nor am I excusing government polices...and as you can see, if we ended up with the above 2 points, it shows that APC has failed, and tinubu is part of the failure. ).

nairalanda1:


Because by May 28 2023, we had two issues

1.A foreign reserve that was effectively below 4 billion dollars

2.Debt service eating 90% (some said 99%) of our income..thanks to the high loans we had to take


That is why we had to end up partially removing subsidy (Tinubu has not removed subsidy, or fuel would be 1000 per liter by now) and float the naira. Thanks to decades of not diversifying our economy, bad policies, wasting of money, etc...here we are. THere simply was no money for the good times to continue


(I don't work for the government, nor am I excusing government polices...and as you can see, if we ended up with the above 2 points, it shows that APC has failed, and tinubu is part of the failure. ).

How would fuel has gone to 1000 if subsidy wasn't remove?

We want to know how

Beautifulday:


How would fuel has gone to 1000 if subsidy wasn't remove?

We want to know how

1. BY October 2023, landing costs was N720, and since then it has gone up. Meanwhile fuel is still between N580-700 per liter

2.Naira has also been devalued. Yet fuel is still where it was before devaluation.

3.IN Niger republic which refines its own fuel, it is around N1000 only.

(Anyway, that's my speculation...I think it may range from N800-1300per liter if no subsidy.)


P.S Validated has a good synopsis below. It's scary, but necessary reading.

Validated:
In my opinion and backed by statistical analysis, there is no way Petrol should still selling for less than N800 per litre.
Note that we are still importing petrol and have not in anyway produced a litre since Tinubu "removed" subsidy.

On May 29, 2023, Dollar exchanged for N451 and later within one month, it rose to N550, then by Dec 2023, it breasted N1065. Today, officially it is N1365. Black market has gone up to N1515 if I am not mistaking.

Now if at the time $1 was N451, FG and NNPCL moved pump price to N670 per litre., with Naira depreciating 3×N451=N1353; tell me the magic that has kept pumping price stable at N670 per litre. Your answer is as good as mine, SUBSIDY payments.

Empirical proof:
In countries we import gasoline from like Singapore, pump price is $2.76 USD per litre for the cheapest grade. That is about the same price in June 2023. Now assume that Nigeria was buying the cheapest and then dilute it with alcohol to bring the price down (yes, it is done world over) by about 30% per liter. So, let's assume for our analogy that we buy a litre off the refinery in Singapore for $1.986, at June 2023, that was N921 per litre at official CBN rate of N464. Again may be because we supply them crude, we technically are able to lower the ex-factory cost. Hence after adding logistics and shipping plus taxes, we were able to sell at the pump for N670 per litre. Put simply we were buying petrol in June 2023 at the cost of N670/N464 = $1.44 (USD) per liter.
Considering that on June 21, 2023, CBN adjusted the rate to N708/$, that price of N670 became subsidized by as much as N349.5 per litre.

Now fast forward to today with official exchange rate at N1365, I would wonder what magic the FG is making to still be selling petrol at N670, when the approximate landing cost is almost about N1966 per litre. Hence we are still paying subsidy at the rate of N1296 (N1966 cost per litre less N670 selling price).

If we are consuming 52 million daily (Average daily petrol consumption drops by 16.8% to 52m/litre – NMDPRA.), that means that FG is technically paying a whopping 52m × N1296 a day. My calculation is that we are paying a total of N67.37 Billion daily. That amounts to N24.6 Trillion in a year of 365 days.

The APC led FG need to come clean. Nigeria is not moving forward and the government is only built on propaganda.

If you have a counter point, state it here. Do not just type gibberish, counter this and I will learn from you.

Peace!.

nairalanda1:


1. BY October 2023, landing costs was N720, and since then it has gone up. Meanwhile fuel is still between N580-700 per liter

2.Naira has also been devalued. Yet fuel is still where it was before devaluation.

3.IN Niger republic which refines its own fuel, it is around N1000 only.

(Anyway, that's my speculation...I think it may range from N800-1300per liter if no subsidy.)


P.S Validated has a good synopsis below. It's scary, but necessary reading.

First of subsidy is government paying part of the money for her citizens.

Niger republic doesn't have crude oil. So they make no money selling crude but we do.

Removing fuel subsidy caused more devaluation of naira.

What are the factors that contribute to landing cost?

Do you know the importers of fuel in Nigeria is NNPC?

NNPC is government. Because of the rubbish government is doing with subsidy, it sold NNPC to private investors.

It was foolishness of the highest order for the president to have removed subsidy without accessing the situation.

With fuel subsidy, the economic situation of the country would never have been like this.

nairalanda1:


Because by May 28 2023, we had two issues

1.A foreign reserve that was effectively below 4 billion dollars

2.Debt service eating 90% (some said 99%) of our income..thanks to the high loans we had to take


That is why we had to end up partially removing subsidy (Tinubu has not removed subsidy, or fuel would be 1000 per liter by now) and float the naira. Thanks to decades of not diversifying our economy, bad policies, wasting of money, etc...here we are. THere simply was no money for the good times to continue


(I don't work for the government, nor am I excusing government polices...and as you can see, if we ended up with the above 2 points, it shows that APC has failed, and tinubu is part of the failure. ).

Thanks for your input.
But I want to know why he can't atleast guard the naira for sometime, even if he is in a hurry to offload subsidy with no functional refinery.

Beautifulday:


First of subsidy is government paying part of the money for her citizens.

It was driving us into debt because the money was never enough for subsides, plus we were losing probably (my estimate) 33m liters of fuel being smuggled out....

Either we found money via tax, or we kept on piling the debt.

Niger republic doesn't have crude oil. So they make no money selling crude but we do.

Niger's current oil production capacity is 20 Kbopd, which is mainly sold domestically with some also exported to northern Nigeria. Most of the identified reserves in Niger are located in the Agadem area, which currently supplies approximately 15,000 barrels of oil per day to the SORAZ refinery

Fron SAVANNAH ENERGY's country overview pages..

Removing fuel subsidy caused more devaluation of naira.

NO. Having our naira pegged to our oil income (in a manner of speaking) caused our naira's continued fall since the 1970's.

What are the factors that contribute to landing cost?

Ask NNPC...but oil prices, cost of refining abroad, shipping costs, taxes, etc.

Do you know the importers of fuel in Nigeria is NNPC?

SInce 2016, no less.

NNPC is government. Because of the rubbish government is doing with subsidy, it sold NNPC to private investors.

NNPC Is a private company now, and it was not sold per se.

It was foolishness of the highest order for the president to have removed subsidy without accessing the situation

SO, we should have continued paying subsidy until debt eats all our revenue, and all that is left of our forex, and all that we borrow?

You saw what happened in Sri Lanka, right?.

With fuel subsidy, the economic situation of the country would never have been like this.

NO, we would have had even more debt piled on. Iran has a subsidy, and their debt makes ours look like chicken feed.

yeshuasfootstep:


Thanks for your input.
But I want to know why he can't atleast guard the naira for sometime, even if he is in a hurry to offload subsidy with no functional refinery.

Painfully, (a point that has been made by many here) we don't have the cash to do so

Debt, incurred by defending the naira in times past, paying for subsides, corruption, and by the chronically low oil prices since 2014, is why we no longer have the money.

Either the government starts taxing everyone, or we pray for a miracle...or we do something close to what is being done now.

nairalanda1:


It was driving us into debt because the money was never enough for subsides, plus we were losing probably (my estimate) 33m liters of fuel being smuggled out....

Either we found money via tax, or we kept on piling the debt.




Niger's current oil production capacity is 20 Kbopd, which is mainly sold domestically with some also exported to northern Nigeria. Most of the identified reserves in Niger are located in the Agadem area, which currently supplies approximately 15,000 barrels of oil per day to the SORAZ refinery

Fron SAVANNAH ENERGY's country overview pages..



NO. Having our naira pegged to our oil income (in a manner of speaking) caused our naira's continued fall since the 1970's.



Ask NNPC...but oil prices, cost of refining abroad, shipping costs, taxes, etc.



SInce 2016, no less.



NNPC Is a private company now, and it was not sold per se.


SO, we should have continued paying subsidy until debt eats all our revenue, and all that is left of our forex, and all that we borrow?

You saw what happened in Sri Lanka, right?.


NO, we would have had even more debt piled on. Iran has a subsidy, and their debt makes ours look like chicken feed.

Subsidy can't drive us into debt because according to IMF today subsidy is back. Why then did he remove it?

What is driving us into debt is corruption and mismanagement.

Beautifulday:


Subsidy can't drive us into debt because according to IMF today subsidy is back. Why then did he remove it?

Tinubu did what his predecessors did in the past...a PARTIAL REMOVAL

Buhari did something similar in 2015, landing cost then was N132, fuel was N87. BUhari then increased prices to N145, thus subsidy was ended...until landing costs increased above N160, at which point, Buhari started paying subsidy again..to keep fuel at N145.

Tinubu did the same, and it worked...until landing costs passed N720 In october. Back came subsidy.

What is driving us into debt is corruption and mismanagement.

[/quote]

OH yes, and you won't find disagreement with me there. But the main problem is, these are symptoms.

The main problem is, our economy is depenedent on what oil prices are, and we need oil above 100 dollars per barrel before we make an income that makes sense. ANything below that, we have to take loans. Even above 100 dollars, we still have to take loans. It is only when crude is above 130 dollars that we have enjoyment. (It's called our fiscal breakeven oil price).

For Nigeria to be free from debt, oil has to pass our fiscal breakeven of 130 (as at 2020) and remain there permanently.

OR

We raise our tax to gdp and diversify our economy to have more money


I did not say corruption is not a problem, before you start.

nairalanda1:


Painfully, (a point that has been made by many here) we don't have the cash to do so

Debt, incurred by defending the naira in times past, paying for subsides, corruption, and by the chronically low oil prices since 2014, is why we no longer have the money.

Either the government starts taxing everyone, or we pray for a miracle...or we do something close to what is being done now.

You and I know that the 'no money' mantra is just an avenue for government to hide their ineptitude and corruption.

Remove these two and see that there'll be enough money to defend the naira or even continue with subsidy while frantically making sure we no longer import fuel within the shortest possible time.

Is this not the same country that allocates a billion naira for 37 people to sit and discuss minimum wage?

I even read somewhere today that IMF said subsidy is back through back door.
So what actually is the point in rushing to remove it along floating the naira in the first place without adequate preparation?

nairalanda1:


Tinubu did what his predecessors did in the past...a PARTIAL REMOVAL

Buhari did something similar in 2015, landing cost then was N132, fuel was N87. BUhari then increased prices to N145, thus subsidy was ended...until landing costs increased above N160, at which point, Buhari started paying subsidy again..to keep fuel at N145.

Tinubu did the same, and it worked...until landing costs passed N720 In october. Back came subsidy.



OH yes, and you won't find disagreement with me there. But the main problem is, these are symptoms.

The main problem is, our economy is depenedent on what oil prices are, and we need oil above 100 dollars per barrel before we make an income that makes sense. ANything below that, we have to take loans. Even above 100 dollars, we still have to take loans. It is only when crude is above 130 dollars that we have enjoyment. (It's called our fiscal breakeven oil price).

For Nigeria to be free from debt, oil has to pass our fiscal breakeven of 130 (as at 2020) and remain there permanently.

OR

We raise our tax to gdp and diversify our economy to have more money


I did not say corruption is not a problem, before you start.

Buhari removed fuel subsidy and didn't bring it back. He was paying for it throw the back door. It is the same Tinubu is doing.

Both of them don't understand stand governance. It's all too much talk.

Why do you think Buhari said Nigeria will miss him?

He understood governance towards the end of his government and knew Tinubu will fail if he remove subsidy.

If Tinubu had waited and tackle oil bunkery and corruption well. It would have been a different story

yeshuasfootstep:


You and I know that the 'no money' mantra is just an avenue for government to hide their ineptitude and corruption.

Yes, but in this case, we really don't have the money...and that is why any corruption done here should be harshly punished...because they know we don't have enough money, yet they steal

Remove these two and see that there'll be enough money to defend the naira or even continue with subsidy while frantically making sure we no longer import fuel within the shortest possible time.

Maybe, until it runs out, then what?

That is where diversification and raising tax revenues, and becoming an exporter of industrial goods and services comes in.

Is this not the same country that allocates a billion naira for 37 people to sit and discuss minimum wage?

A billion naira won't pay for one month of subsides for petrol. NO, i am not excusing them.

I even read somewhere today that IMF said subsidy is back through back door.
So what actually is the point in rushing to remove it along floating the naira in the first place without adequate preparation?

Because we were literally broke, plus bringing back subsidy is why fuel is not rightly at N800-1000 per liter. And sadly bringing it back is another way of putting us in more debt...

Beautifulday:


Buhari removed fuel subsidy and didn't bring it back. He was paying for it throw the back door. It is the same Tinubu is doing.

Both of them don't understand stand governance. It's all too much talk.

Goes without saying. Total removal of subsidy would not only save us more money, it would cause our petroleum sector to grow...we could even have more refineries self, and more jobs and more income, and help us diversify in a way.

Partial removal, like what Buhari and tinubu did, and all their predecessors (it is why fuel isn't 15 kobo as it was in 1981) is a part of why we have economic issues.

Why do you think Buhari said Nigeria will miss him?

BUhari under whom naira went from bad to worse? Buhari who worsened our already bad debt profile...that forced the removal of the subsidy you want.

And anyway, I don't miss any of our Nigerian leaders, I have seen enough to know we have never had any good leaders, then, and now.

He understood governance towards the end of his government and knew Tinubu will fail if he remove subsidy.

He also ran our forex reserves down to 4 billion from 36 billion and got us into so much debt that the subsidy went. Also failed to improve revenue for tax by much, and diversify our economy.

Yeah, some leadership. Tinubu is just like him, so lol. GEJ and Yaradua are buhari with higher oil revenue, ditto Obasanjo. Not much difference, yeah.

If Tinubu had waited and tackle oil bunkery and corruption well. It would have been a different story

[/quote]

It won't have stopped the increased spending on subsidy, nor would it have dealt with the problem of 90% of revenue going for debt service, poorly diversifed economy, and lack of adequate tax revenue.

nairalanda1:


Yes, but in this case, we really don't have the money...and that is why any corruption done here should be harshly punished...because they know we don't have enough money, yet they steal


Maybe, until it runs out, then what?

That is where diversification and raising tax revenues, and becoming an exporter of industrial goods and services comes in.


A billion naira won't pay for one month of subsides for petrol. NO, i am not excusing them.


Because we were literally broke, plus bringing back subsidy is why fuel is not rightly at N800-1000 per liter. And sadly bringing it back is another way of putting us in more debt...

You're making lots of sense.
Taxes, diversification, good balance of trade are all good.

A government that wants to achieve these needs to plan ahead and implement vigorously while making sure the economy doesn't slip out of their control so the masses don't become this hungry.

Timing is very important in all plans.
There's this type of engine that uses timing chain.
If you fail to align the chain well, that engine can never start.

Timing is everything and that's where I am thinking this government got it all wrong, and that's why I am asking if there's no better way of going about this?

Ok, how can we now level up on our balance of trade to push up the naira when farmers cannot go to their farms.

That they go back to subsidizing through the back door shows the economy has slipped out of their control and it is a desperate measure showing we're back to square -00001 if there's anything like that.

We're worse off now simply because they just wake up one day and say subsidy is gone without any plan.

It's just like removing gear in an unoccupied motor stationed on a hill and running frantically to catch up with the motor as it is rushing down the hill.

We need solutions now because this is just what happened to us.

nairalanda1:


Painfully, (a point that has been made by many here) we don't have the cash to do so

Debt, incurred by defending the naira in times past, paying for subsides, corruption, and by the chronically low oil prices since 2014, is why we no longer have the money.

Either the government starts taxing everyone, or we pray for a miracle...or we do something close to what is being done now.

As much as I agree with much of what you've written on this thread, I have slight reservations about the bold part.

To pay tax is the duty of every citizen, I agree. But how do you get encouraged to do that when corrupt people in positions of authority seem to be in a competition of who can loot the most? Yet, they go practically scot-free!

By the way, there's hardly anybody that doesn't pay tax in this country. Income tax isn't the only type of tax. How judicious has the government been with what it collected in the past?

U1:


As much as I agree with much of what you've written on this thread, I have slight reservations about the bold part.

To pay tax is the duty of every citizen, I agree. But how do you get encouraged to do that when corrupt people in positions of authority seem to be in a competition of who can loot the most? Yet, they go practically scot-free!

By the way, there's hardly anybody that doesn't pay tax in this country. Income tax isn't the only type of tax. How judicious has the government been with what it collected in the past?

That one will tell you to overlook the looting of the tax and just keep on paying like a patriotic citizen.

That ones only job on nairaland is to justify and explain subsidy removal and naira floating. Paid per post things

Straightforward answer: Govt was already DEAD BROKE!

yeshuasfootstep:
I find it very difficult to wrap my head around the fact that subsidy was removed, and the naira floated at the same time.

Please is there no other better way of going about it?

I need input and education because I think it's aim Is to inflict maximum hardship on the people,especially as even date given for subsidy removal by previous government was not adhered to.

Even the money budgeted was not exhausted.

commoditiesnig:
Straightforward answer: Govt was already DEAD BROKE!

Ok.
You may be saying the truth but consider this scenario.

Lanre and Musa are penniless and very hungry. They're from two different communities.

Lanre came up with a plan,cut some fallen logs from the forest, sell to his community and make enough money to eat and even give out.

Musa on the other hand forcefully collect some percentage of food from his community anytime he is hungry, not minding the feeling of the people because he is powerful.
Leaving the community in anguish.

Lanre and Musa have the same problem, but their approach to solving it differs.

While Lanre's solution adds no pain to anyone even as his business continues to grow. His community remains peaceful.

Musa's solution brought untold anguish to his community bringing with it protests upon protests.
And everybody is unsettled not knowing where the next collection and protest will erupt.
Anarchy looms in the community.

So nobody is doubting that the government is dead broke.
The solution is where I think the fault is from.
The earlier the government of the day realise this and make ammends, I think we'll continue hurtling down dangerously.

nairalanda1:


Goes without saying. Total removal of subsidy would not only save us more money, it would cause our petroleum sector to grow...we could even have more refineries self, and more jobs and more income, and help us diversify in a way.

Partial removal, like what Buhari and tinubu did, and all their predecessors (it is why fuel isn't 15 kobo as it was in 1981) is a part of why we have economic issues.



BUhari under whom naira went from bad to worse? Buhari who worsened our already bad debt profile...that forced the removal of the subsidy you want.

And anyway, I don't miss any of our Nigerian leaders, I have seen enough to know we have never had any good leaders, then, and now.





He also ran our forex reserves down to 4 billion from 36 billion and got us into so much debt that the subsidy went. Also failed to improve revenue for tax by much, and diversify our economy.

Yeah, some leadership. Tinubu is just like him, so lol. GEJ and Yaradua are buhari with higher oil revenue, ditto Obasanjo. Not much difference, yeah.



It won't have stopped the increased spending on subsidy, nor would it have dealt with the problem of 90% of revenue going for debt service, poorly diversifed economy, and lack of adequate tax revenue.

There is nothing like partial subsidy removal. All of them removed it and reintroduced it throw the back door.

nairalanda1:


Because by May 28 2023, we had two issues

1.A foreign reserve that was effectively below 4 billion dollars

2.Debt service eating 90% (some said 99%) of our income..thanks to the high loans we had to take


That is why we had to end up partially removing subsidy (Tinubu has not removed subsidy, or fuel would be 1000 per liter by now) and float the naira. Thanks to decades of not diversifying our economy, bad policies, wasting of money, etc...here we are. THere simply was no money for the good times to continue


(I don't work for the government, nor am I excusing government polices...and as you can see, if we ended up with the above 2 points, it shows that APC has failed, and tinubu is part of the failure. ).

I wonder why there is always "NO MONEY", but there is aways MONEY for them to buy 160 thousand dollar vehicles!

A real puzzler.

No money for student loan, N5B, but hey you guys going to hajj, take N24B

No money for salary, but spend $500,000 in New York luxury hotel.

Their supporters cheer, "DO YOU WANT YOUR LEADER TO STAY IN MOTEL?"

ummm, why not

No really, why not? Them say we poor right, so why not stay in motel as the president of a poor country?

Who you dey flex for? So your country poor mean say, you go carry all your poor people money go stay for hotel? chai

I'm tired of Nig politicians, I venture to say 90% of them should be jailed for decades.

VaselineCrew:


I wonder why there is always "NO MONEY", but there is aways MONEY for them to buy 160 thousand dollar vehicles!

A real puzzler.

No money for student loan, N5B, but hey you guys going to hajj, take N24B

No money for salary, but spend $500,000 in New York luxury hotel.

Their supporters cheer, "DO YOU WANT YOUR LEADER TO STAY IN MOTEL?"

ummm, why not

No really, why not? Them say we poor right, so why not stay in motel as the president of a poor country?

Who you dey flex for? So your country poor mean say, you go carry all your poor people money go stay for hotel? chai

I'm tired of Nig politicians, I venture to say 90% of them should be jailed for decades.

That is the question, and that is why people like me don't support any of PDP or APC, they always end up being the same

But even then, if we took the money , it won't have paid for subsides for a month. It would have paid for other good things though...schools, some transformers, a few libraries, etc, etc.