subsidy should please remain

Hell NO! It should not be remove. I bet u guyz dat by 2012 the socalled refineries will not be repaired/renovated.

why shuld Nigerian govt take this kind of step in the first place, its sympathetic

Fuel subsidy should be removed. Lets know the true Nigeria economy and plan from there.
Everything will have to readjust to its natural level/state.

.

My fellow nl. What happened to d last subsidy. No development in any sector. Our leaders are d one killing us.

Diesel subsidy removal have not been accounted for, yet they are contemplating of removing that of petrol, this is totally unfair

Obiagu1:

Fuel subsidy should be removed. Lets know the true Nigeria economy and plan from there.
Everything will have to readjust to its natural level/state.

Yes. Subsidy should be removed.

The refineries cnt function with the subsidy operational hope we all realise reduction in govt expenses includes closing down our numerous unproductive ministries n retrenching thousands of lazy civil servants• Enough of govt freebees started by gowonh

They know it can never happen; removal of fuel subsidy is the fastest way to ensure a revolution and the disintegration of Nigeria

revolt:

The refineries cnt function with the subsidy operational hope we all realise reduction in govt expenses includes closing down our numerous unproductive ministries n retrenching thousands of lazy civil servants• Enough of govt freebees started by gowonh

who tell you that?

I support removal of petrol subsidy for a number of reasons. Will try to present them as they come to my mind.

Reason (1) our borders are porous:

Lets consider an assumed market price of N100/litre, buying at N65/litre means the Nigerian govt will pay N35 to the importers. A huge percentage of the petrol ends up in Benin republic, Niger republic and Cameroon (marketers in collusion with border officials) at N100/litre the market value. So the nigerian govt is effectively enriching the marketers at the expense of the Nigerian people and enhancing corruption in the process. Compare that to a situation where there is no subsidy, the marketers buy at may be 100/litre, will he try to sell in benin republic? Don't forget that in this process, what we import may actually be more than what we need since the demand for fuel in our neighbouring countries have to be met albeit illegally.

But, don't you strengthen our porous border will have been a better way to solve that? Are you saying we can't have a cheaper commodity than our neighbours? ori bibe ko logun ori fifo.

Do you think this incompetent federal govt can strengthen our borders?

In that case, what give you the assurrance that the proceed from the subsidy removal will be channel in the right direction, don't forget diesel is longer subsidies, where is the proceed from the subsidy?

The koko be say the govt is not up and doing ,abi how do we keep going back and forth and every administration keeps doing the same thing and yet the masses suffer for it.Like i said earlier,even if the subsidy is removed,it wont still be the end to issues as regards the oil sector. Can someone help me explain why NNPC spends Nigeria's money without appropriation ?

olawalebab:

In that case, what give you the assurrance that the proceed from the subsidy removal will be channel in the right direction, don't forget diesel is longer subsidies, where is the proceed from the subsidy?

Well, if you asked me I don't think it will be 100% channelled to the right direction! In fact, we will be lucky if 50% get in the right direction. But I am of the opinion that the more we block loopholes, the more difficult it is to steal money.

What we have to consider is how removing subsidy will help the masses, not only how the politicians will benefit. A win-win situation is better in this case.

For example, licences have been issued to various companies to build refineries but they are not building, why? Because it's more profitable for them to import since govt pays them whatever difference in price. What this means is that the importers can't lose no matter what. to build refinery, you need to raise capital, build, operate, manage and sell at competitive price. If the profitable price is N80/litre after taking all the risk and the govt is selling at N65/litre, will you proceed with building refinery? Subsidy on imported products especially the one we are capable of producing locally does not make economic sense at all. It kills our productivity in short. You will agree with me that having local refineries (private) working has more benefits in terms of employment generation and economy diversification than subsidy.

If the international price is N100/litre, chances are that production cost in Nigeria will be cheaper than importing. There are costs associated with transporting crude abroad, processing it in countries of higher wage and transporting back which generally add to the cost of landing refined products here. It will make more sense for investors to build here since the raw material is here, the labour is cheaper etc.


Subsidy is like giving money to beggars. it doesn't help them in the long run.

I can assure you that we most likely will be exporting refined products to west African sub region in the nearest future if subsidy is removed.
Reason(2)

Reason (3) Subsidy subsidizes the RICH more

The most common notion that subsidy is there to help the masses is a fallacy. It helps the rich more

The rich are ones with 5.6L engines, they are the ones with 10, 20 vehicles in their compound. Cars for wives, children, girlfriends; I know people that have up to 30 vehicles. they are the ones with gen sets etc

Let say an average poor man consumes 20 litres(very generous estimate) in a month and the average rich consumes 500litres (very conservative) in a month. if the govt is paying N25 /litre as subsidy, then govt would subsidize the rich by N12500 while subsidizing the poor by N500. How has that helped the poor more. This is a major reason we have waste all over the place, we don't really know the value of things. Remember your government officials too consume a large percentage of subsidized fuel in their official duties.

The idea of helping the masses most times is fraudulent. People that claim to fight for the masses (like the labour) most times end up making masses poorer because the idea is unnatural and prone to exploitation of the same masses.

The only subsidy that has direct impact on poor masses in Nigeria is kerosine, even at that there has to be a plan for a period of time to remove it.

good

The fact that successive governments are running away from remains that we do not need fuel subsidy if our consumption rate is met locally. Very soon they will promote another task force commander for closing down 2500 "illegal refineries" that are trying to help the country achieve this in the absence of government doing their job.

Akanbi_edu:

The idea of helping the masses most times is fraudulent. People that claim to fight for the masses (like the labour) most times end up making masses poorer because the idea is unnatural and prone to exploitation of the same masses.

The only subsidy that has direct impact on poor masses in Nigeria is kerosine, even at that there has to be a plan for a period of time to remove it.

You have an idea how the subsidy removed on diesel was 'appropriated'?

Your points about subsidy affecting the production of fuel in the country is faulty.  .  .

morals not economics now.

1) a disgruntled citizenry should not be held liable for the inefficiencies in governance over time.

If the argument is for total liberalization of the Sector, then a sincere Government should tax itself (cut recurrent expenditure) to make the refineries work before unbundling them to private operators

2) A Government with proven records of fiscal irresponsibility should not be trusted with whatever proceeds that will accrue from the removal. What happens to the common man if the planned floating of refineries by the 'ghost' private operators doesn't  come to fruition

3) I thought there is an arm of economics that is developmental? why not provide the basic amenities first before embarking on this wild goose chase. If we have lights 24 hours a day, the roads are free of potholes, the health centers are 'tushed up', the real sectors can assess finances to produce, farm and provide food for the masses, we can then start talking of removing subsidies. safety nets before subsidy removal NOT subsidy removal before safety nets

like i said, its not about economics for now

The government should act responsibly

Insecurity of lives is all over the polity - It has not been arrested yet

Economy is in shambles

we are struggling to pay the minimum wage

Nothing is working presently. . .

and you think to 'tighten our belts' is the next thing to do?

I can bet the legislators will not let it see the light

Don't Removal

GEJ!! what are your plans to stop refined product importation? That should be your concern at the moment!!!!

Madam Petroleum Minister, you claimed this week that subsidy on HHK(House Hold Kerosene) wont be removed. where is the subsidy? if it is actually subsidized who is collecting the subsidy? cos HHK sells above N 120/ litre or higher, , And point of correction Madam, there is no subsidy on LPG(Cooking gas)

Pricing template for imported products on PPPRA website:

http://pppra-nigeria.org/hhk.htm
http://pppra-nigeria.org/ago.htm
http://pppra-nigeria.org/pms.htm

I seem to like emma's ideology about the whole stuff.Come and build your refinery here and get crude at subsidies rate. With that we can at least get full compliment of job and employment from all the refineries that will be built and the naira wont be messed up the way it is now

Yes but after the books of the NNPC, and other govt. parastatals have been audited.

tkb417:

You have an idea how the subsidy removed on diesel was 'appropriated'?

Your points about subsidy affecting the production of fuel in the country is faulty.  .  .

morals not economics now.

1) a disgruntled citizenry should not be held liable for the inefficiencies in governance over time.

If the argument is for total liberalization of the Sector, then a sincere Government should tax itself (cut recurrent expenditure) to make the refineries work before unbundling them to private operators

2) A Government with proven records of fiscal irresponsibility should not be trusted with whatever proceeds that will accrue from the removal. What happens to the common man if the planned floating of refineries by the 'ghost' private operators doesn't  come to fruition

3) I thought there is an arm of economics that is developmental? why not provide the basic amenities first before embarking on this wild goose chase. If we have lights 24 hours a day, the roads are free of potholes, the health centers are 'tushed up', the real sectors can assess finances to produce, farm and provide food for the masses, we can then start talking of removing subsidies. safety nets before subsidy removal NOT subsidy removal before safety nets

like i said, its not about economics for now

The government should act responsibly

Insecurity of lives is all over the polity - It has not been arrested yet

Economy is in shambles

we are struggling to pay the minimum wage

Nothing is working presently. . .

and you think to 'tighten our belts' is the next thing to do?

I can bet the legislators will not let it see the light

It is the reasons you gave above and more we should support policies that reduces Nigerian government influence in business. it is a very irresponsible government and an extremely incompetent too. Ordinarily, the masses are supposed to have chased them out but that looks impossible because of internal divisions.

Asking them to fix things is like doing the same thing and expecting different results. why don't we consider other options then?

please read the following article to give you more insight into why govt participation in businesses should be reduced.

http://www.vanguardngr.com/2011/08/obj-atiku-killed-privatisation-el-rufai/
By Henry Umoru
ABUJA—FORMER Minister of the Federal Capital Territory Administration, FCTA, Mallam Nasir Ahmad El-Rufai, yesterday told the Senate Adhoc Committee investigating activities of the Bureau of Public Enterprises, BPE, that the overbearing interference of former President Olusegun Obasanjo and his Vice then, Atiku Abubakar, crippled the privatization programme.
El-Rufai who was the Director-General of BPE from 1999 to 2003 noted that the decline of the privatisation programme started when somebody who had earlier been sacked by the BPE, was brought to replace him.
He said that he repeatedly disagreed with the former President when he made moves to dictate to him. He said he also disagreed with Atiku Abubakar when he (Rufai) insisted that the laws must be followed, even as he said that former President Obasanjo blocked the successful privatization of Nigeria Airways following the stories he received from former Minister of Aviation, Chief Kema Chikwe.
Probe targeted me —el-Rufai

El-Rufai who appeared before the Committee at 3.11p.m and was left to go at 4.15 pm., said: “All I can say is that during my tenure in BPE we tried to do everything by the law. We tried to resist any attempt at political interference. There was never a time that either President Obasanjo or Atiku Abubakar told me to sell an enterprise  to A or B  and I listened.
We follow due process. Privatisation was a mechanical process and there was never a time that we deviated from that process. In the 33 transactions that we did we followed the book. If there were lapses that came after I left it was because authorities appointed people that did not understand what privatisation was about but saw BPE as cash cow. Before I left the President called me and said now that you are going to FCT how can we continue what you have started.
The President and I were always quarrelling over privatisation. On Nigeria Airways we quarrelled on the pages of newspapers but he called me and said you have done a decent job give us idea of who should be appointed.  I then wrote a memo addressed to the vice president and suggested that my successors should come  from within because we have spent a lot of  money to train them. I recommended three directors and three deputy directors.
The government of the day decided they were not going to appoint anybody from inside BPE. They brought someone who literarily was fired from BPE and that was the beginning of discarding of rules, doing things capriciously promoting people from one level to three levels and the institution have suffered from it since then. You should have a session with the BPE staff themselves they were 120 in number.
“Except when the vice president called me and said I got call from A and B to help the guy win this bid and I said Mr. Vice president you know the rules. Tell him to bid the highest prices because the highest price wins. He replied saying I know but I want  to tell you in case they contact you I don’t want them to say I didn’t pass on their message.
President Obasanjo blocked the privatisation of Nigeria Airways practically because Kema Chikwe will go and tell him stories and what is the result today? The company is dead. 2000 jobs have been lost.
[b]“We never investigated anyone for corruption except in my last three months and the only person we investigated ended up being the DG so it is part of the problem. BPE can be improved but I think the key is to have the right people in there and protect them from political interference and fund them properly.”
According to him as the DG, ‘’I supervised the privatization of 23 of the 122 enterprises that have been privatized to date (amounting to 18% of the total). These enterprises came from sectors including hotels and hospitality, banking, cement and oil marketing. Most of them are doing well, and a few have even gone international. For instance, Oando is now listed on the Johannesburg Stock Exchange. Some of the companies are listed below: Unipetrol (now Oando) African Petroleum; National Oil (now Conoil) Ashaka Cement; WAPCO, CCNN; BCC Calabar Cement, Capital Hotel, Abuja (Abuja Sheraton); Festac ’77; Nigerian Hotels Limited (now Southern Sun, Ikoyi); Nigerian Hotels (Caterers’ Court, Ikoyi) Nigerian Hotels (House 8 & 9 Lees Road, Ikoyi); and Nigerian Hotels (Audit Section, Ikoyi)”[/b]
Returned N57bn to FG
The former Minister who reminded the public what the goals were when the government decided to pursue the policy of privatisation, said that the government decided to reduce or eliminate the drain inefficient public enterprises constituted on the public treasury, adding that he had 33 transactions, closed 23 and returned N57 billion to the Federal government Treasury, adding that from 1970 to 1999, the Federal government invested over $100 billion in building enterprises, but earned only 0.5% return on investment from the. He said that the companies were costing the government N265 billion annually to maintain.
According to El-Rufai ‘’what has happened by the late 1970s it was a period that public enterprises were not working instead they were  not only a drain on the economy they were providing services, they were not solving the problem they were meant to solve but they were captured by the elites for their own benefits.
“In the BPE then we crafted a phrase which we called the ‘the reverse Robin hood’ they were stealing from the poor and givento  the rich. Because only the rich and the connected get the services. Nigeria’s privatisation was not driven by any ideology.”
From subsidised foreign exchange, to import duty and tax exemptions and not paying VAT, to revenues they don’t remit this is what the FG paid to keep public enterprises. “In that during Abdusalami’s regime, the budget of the Federal government was N300,000 but we spent N265 billion supporting inefficient, corrupt, and epileptic public enterprises.
That was the philosophy behind privatisation and commercialisation of the companies. 33 privatisation a transaction, 23 were closed as at the time we left, and we remitted N57 billion to the treasury. Apart from one of the companies all were doing very well.”
So to blame privatisation for these companies not doing well is being economical with the truth.
‘’We spent over $100 billion USD from 1973 to 1995 to establish public enterprises. But their return  was 0.5 percent per annum it is in the vision 2020 report. Tell who will keep such companies? Only an  will do that.
‘’Example NITEL for 25 years only provided 400,000 telephone lines after putting in $7 billion USD  the most expensive phone system in the world  and they actually think they were doing you a favour if they give you  a telephone line.
‘’So this is where I want  us to begin from. And to say that the purpose is to create jobs is wrong. That was not the mandate to BPE is to reduce these companies from the treasury, make them more efficient, open up the market for competition so that other operators can come in.  NITEL had 11,000 employees, they will lose jobs but how many  jobs were created by the telecom industry?
‘’In the year 2000, as at December, 2000 the total liabilities of 39 public enterprises  was in excess of N1.1 trillion and they have accumulated loses of N92 billion naira and  they consume over $3 billion USD per annum or about N10 million a day. The justification for selling them was very clear and we did it.
‘’The only thing that is working in Nigeria today is what is run by private sector. Today we produced 9000 mega watts of power in our homes with generators and NEPA is giving us 3000.”
When asked to say whether the privatisation process was beneficial to Nigerians as a whole?, he said, ‘’I am reluctant to judge my successors. So when I ever I do job I move on and don’t look at what my successors do.  We were working 20 hours in day and seven days a week.”

No

Fuel subsidy = increased fuel price= increased production cost= increased general prices = increased cost of living=increased fund for d (inefficient)govt.=more fund up 4 embezzlement and mismanagement= harder life for d jobless, d fixed salary earner and d masses. Its a great disaster. Nig. Govt is displaying their heartlessness, their ineptitude, their cluelessness and their insensitivity.

Starting from 18th century britain through to late 19th century US, germany and sweden down to late 20th century france, finland, japan and south-korea, virtually all of today's rich countries became rich through the use of trade protection, government subsidies and regulation rather than free trade, free market policies.

Professor Ha-Joon Chang. Professor of development Economics, University of Cambridge.

Removal of subsidies only paves the way for absolute capitalism which will increase the already gaping inequality in the nigerian economy!
If the government says a cabal is getting most of the benefits of the subsidy then they should deal with the cabal directly, that's why Jonathan is the Commander In Chief of the Armed Forces!
We cannot afford to throw away the baby with the bath water!

For more suggestions on how to improve the economy check out the thread at https://www.nairaland.com/nigeria/topic-764430.0.html

The issue with Nigeria brand of subsidy is that,does it really exist? gpthrough Prof. David Tam article about this issue and you get a better and clearer picture about the issue.

why are we calling it "fuel subsidy" instead of "fuel tax"?
To me, this is tax not subsidy.

Our govt is lying to us.