This Oyibo people want to completely finish Nigeria. Nigeria problem started with this IMF loan thing. That was when Naira started falling. Now they are advising the govt to remove not only fuel but electricity subsidies where there is no guarantee of providing good jobs and increase of wages. This yeye people think say e go work for Niger. The kind of hungry that will come if these subsidies are removed will be unimaginable. They are yet to remove subsidy but price of things are rising everyday. You can imagine when Petrol is now sold for 300 per liter how price of goods and services will skyrocket. Africans must come to terms with the reality that the white man does not love her. A whiteman is rather looking for how to benefit from Africa’s plights.

luizpippo:


It is laughable for you to expect an electricity distribution coy that has refused to meter their customers but sit down in their office to allocate bills indiscriminately would start buying electric poles and transformers suddenly.

Not AEDC abeg.

They would if they made enough of a profit to do so.

Unlike now, where they sell power at a loss, and the subsidy they pay them just covers most of the loss...but they still lose money. No profit.

You should read this report by PWC that I have linked here.

funshint:
I shiver anytime I hear IMF giving a country advise. Those people are demons!

Real demons oooo

If it's a nation where things work logically your assumption will turn out as expected. However, here if we increase the price of petroleum products and electricity the impact will spread to things that have nothing to do with them. At the end the people who you are planning to help would be badly affected. Therefore, let government ensure we produce these things locally and adequately before considering IMF advice. This is a familiar path to us as a nation. Do a little research on Structural Adjustment Programme which was done following IMF's advice. The negative impacts were more than the gains. In fact, many companies closed down and many lost their jobs.

Barryseal:

With the teaming number of unemployed people in this country, how the hell do you expect them to pay the high tariffs ensured by the removal of these subsidies. The IMF advicing you to remove all the subsidies pay their people unemployment benefit and Covid-19 allowance in the United States.

backbencher:


Yes, compared to other African countries with similar purchasing power, and standard of living, we pay a very low price for fuel.

We even pay lower than Chad, Niger, and Central African Republic which are poorer than we are...also lower than Liberia and Sierra Leone...and Chad and Niger are 'oil producers'.

We are the fifth cheapest in the world self. See this chart.

I don't really like the idea of subsidy because I dislike socialism. But in the case of Nigeria, removing subsidy on fuel and power will mean making more money available for politicians to steal. It will never reflect on the masses.

GSM will not be a good example here because it's not a core driver of our economy. As you know, the power sector actually drives the economy and we depend largely on importation. Unless we develop capacity and produce our goods locally, we may end up worse than we are presently.

backbencher:


It did...I present to you the GSM sector.

Obasanjo

1.Did not tell GSM Companies to charge N5 for a N50 calll

2.Did not promise them that he would pay N20 to cover the loss made charging N5 for a call that cost N50.

As a result...GSM companies made huge profits...which also attracted more and more investment...and at the end of the day, we have things like home internet (in 2001, internet was very very limited) and an expansive telecoms sector...providing lots of jobs and taxable income.

Subsides in power mean that power companies have not been making enough to even pay local taxes self.

dallyemmy:
GSM will not be a good example here because it's not a core driver of our economy. As you know, the power sector actually drives the economy and we depend largely on importation. Unless we develop capacity and produce our goods locally, we may end up worse than we are presently.

GSM is not a core driver of the economy?

Okay.

I have to disagree with you there

thebosstrevor1:


Unemployment can't be a history, even if government pay attention to small scale businesses, employers will still employ those who they can pay salaries to.

If electricity can be fixed, unemployment will reduce to the minimum in Nigeria and Africa as a whole
Millions want to go into business but electricity is the major deterrent

jeffoe:
What IMF is saying is just common sense. Nigeria is going the way of Venezuela and Argentina. It is so glaring even with my basic knowledge of economics.
Sane Countries that provide subsidy do it in social services like education, health, public transportation etc but this countries have very high taxation rate that can go up to 60% of ones income and the market determine the prices and not govt.

Govt job is regulation which is to prevent any person from gaming the system or forming cartel unfortunately Nigeria is a member of the opec cartel.

Govt should provide services to companies that would make then internationally competitive e.g High quality workforce, research, efficient service to bussines etc

The Nigerian government first have to be completely transparent with it finances, With monthly information about who get what and the purpose it for. This would build citizen trust in the system and then gradually phase out subsidies maybe on monthly basis till it is completely removed.

Labour union law should be modified to meet international best practice examples would be providing unemployment benefit for a fixed period of time if a union member loses is job.

Build a robust citizen credit rating system and ensure that rent and other bills are paid monthly with one month deposit, govt should bare the cost of possible one month default and then retrieve it from the defaulter while putting that info on the person credit info which is available to everyone.

I can keep going on and on

State capitalism can only work in an authoritarian society and/or a very very transparent (less corrupt) society

This is brilliant!

backbencher:


The refinereis don't work because of subsidy

In order to keep fuel prices cheap...government since the 1980's has been forcing refineries to refine fuel at a loss, and to sell it at a loss..and marekters to transport the fuel at a loss. The money paid to cover such losses is called a subsidy.

And because the cost of making a liter of fuel and transporting it is not static....the amount needed to pay for the subsidy rises year in year out. Government of course cannot afford to pay higher.

Which means no profits made, and thus refinereis cannot be repaired on time, or upgraded when needed...so they fail. And here we are.

The reason why you have GSM is because Obasanjo refused to subsidse it...despite people screaming about how the GSM companies were exploiting us...meaning they make enough profit to expand and upgrade services.

"The money paid to cover such losses is called a subsidy"
simply means the refineries and power stations are making profit if really the subsidy is being paid to cover the losses to them.
I expect IMF to tell Nigeria to repair and build more refineries so that 99% of the crude will be refined in Nigeria. Nigeria has spent almost #1 trillion naira since January on subsidy . This huge money could have been saved or used to create more jobs

Kubernetes:


"The money paid to cover such losses is called a subsidy"
simply means the refineries and power stations are making profit if really the subsidy is being paid to cover the losses to them.
I expect IMF to tell Nigeria to repair and build more refineries so that 99% of the crude will be refined in Nigeria. Nigeria has spent almost #1 trillion naira since January on subsidy . This huge money could have been saved or used to create more jobs

Because the cost of production is always increasing , the amount paid in subsidy has to increase in order for prices to remain low.

In practice ,.it doesn't work that way because oil revenues are never enough to fund the subsidy due to fluctuations in crude oil prices and also because production costs keep on rising.

So no profit as a result. Because subsides can never adequately cover losses.

You can reduce the time you spend on your phone but you cannot decide to leave your goods half way because of increase in the price of fuel. You'll most likely add the differences to the price of your goods and services. Have you considered the domino effect of what you are proposing- such as increase in the prices of interrelated goods and services? Again, we don't have a government that will give account of such savings at the end of the day and readily channel same into job creation. They will rather divert the savings into unprofitable programmes.

backbencher:


GSM is not a core driver of the economy?

Okay.

I have to disagree with you there

dallyemmy:
You can reduce the time you spend on your phone but you cannot decide to leave your goods half way because of increase in the price of fuel. You'll most likely add the differences to the price of your goods and services. Have you considered the domino effect of what you are proposing- such as increase in the prices of interrelated goods and services? Again, we don't have a government that will give account of such savings at the end of the day and readily channel same into job creation. They will rather divert the savings into unprofitable programmes.

GSM does help drive the economy

Or those millions of jobs created directly and indirectly by GSM companies were for nothing?

Please do your research very well. I don't think you are correct here Backbencher

backbencher:


We ended up in SAP because in 1982, oil prices collapsed and left us in a severe lurch

By 1986, we had two choices...either do SAP or take a loan. SAP we chose.

But even then, because oil prices were still low, and were to remain low till 1990/1 when they rose briefly before falling...our revenue was still low, hence things were hard. SAP was just a reality check.

And even then we were still subsiding fuel...UNDER SAP...and expanded it in 88...making matters worse.

Mind you we weren't the only one..the 1980's was a tough time for oyel producers. (Low oil prices is partly why Saddam attacked Kuwait in 1990...largely because oil prices were low, and Iraq was broke from the recently ended eight year war with Iran...and Kuwait oil wells looke attractive. )

What I am saying in essence is that you can double the price of recharge card and have little impact but when you increase the price of fuel and power ... funny enough it affects the price of garri in the market...even house rents and many other things.

backbencher:


GSM does help drive the economy

Or those millions of jobs created directly and indirectly by GSM companies were for nothing?

Moferere:
And see master of all protests January next year.

Nansense IMF

IMF should know better that Buhari government has no business with people's welfare.

dallyemmy:
Please do your research very well. I don't think you are correct here Backbencher

I did do my research, thank you.

Good evening

Google for managing the Dutch disease in Nigeria by Dr Emmanuel ojameruaye. There is Sap in that article and how it came to be.

Modified

Here is the quote from the article.

Corden and Neary (1982) have demonstrated how Dutch disease occurs in an economy. According to them, in a country experiencing "boom" in the export of a commodity, the economy can be divided into three sectors: the "booming" export sector, the "lagging' traditional export sector and the non-export sector. The Dutch disease occurs when the traditional export (tradable goods) sector is crowded out by the booming export sector and the non-tradable goods sector. The lagging traditional tradable goods sector may include cocoa, palm produce, cotton, rubber, coal, copper, textiles and some manufactured goods while the booming export sector may be crude oil, coffee, gold, etc. The non-tradable (non-export) goods sector covers all those goods that are produced for domestic consumption only, e.g. staple food items, clothing, building materials, locally-assembled cars. Where crude oil (and gas) is the booming export sector, the non-oil export sector may be crowded out by the oil sector and the non-tradable goods sector of the economy. This can happen when the oil revenue windfall increases domestic demand for non-tradable goods and pushes up domestic prices leading to an appreciation of the real exchange rate which in turn reduces the competitiveness of the non-oil export sector. This will in turn lead to a reduction in non-oil exports in both quantum and value terms. The oil windfall may also lead to movement of the factors of production in the economy. For instance, capital and labor (and land) may shift from the non-oil export sector to the oil sector (in order to maintain or increase reserves and production) and the non-tradable goods sector (to take advantage of the growing domestic demand). This explains why the increase in oil prices and the subsequent oil revenue windfall in many oil-exporting countries have tended to depress their non-oil export sector while at the same time generating a boom in both the oil and the non-tradable goods sectors. With capital and labor shifting from the non-oil export sector to the oil-sector and non-traded goods sector, firms in the non-oil export sector are forced to either close down or reduce their scale of operation. The boom in the oil and non-traded goods sector increases the demand for imported goods. This may not be a problem in the short-term so long as the country has enough foreign exchange to pay for the imports. The depression in the non-oil export sector and the boom in the other two sectors have medium to long term implications for the economy because the oil windfall will not be permanent given the volatility, unpredictability and exhaustibility of crude oil. For instance, if there is a decline in oil prices and oil revenue, the lagging and collapsing non-oil export sector will not be able to compensate for the drop in oil revenue while domestic demand for the non-traded goods and imports remain sticky. Consequently, the country will be forced to borrow from the international financial market to compensate for the decline in oil revenue. Over time, external debts will increase and so will the debt service obligations. Even when oil prices go up later and there is another round of oil windfall, it is difficult to correct the earlier damage or distortions created by the initial or previous oil windfall. In some cases, the oil exporting country may be forced to adopt some form of structural adjustment program (SAP) to correct such distortions or imbalances. Some of these SAPs are painful and may increase the prevalence, depth and severity of poverty

.

In 1973-82 we had high oil prices. From 1982, oil prices crashed, and by 1986, we had to take on SAP.

Nigeria in a nutshell.

I am saying that SAP Structural adjustment programs consist of loans provided by the International Monetary Fund and the World Bank to countries that experience economic crises. Their purpose is to adjust the country's economic structure

backbencher:


I did do my research, thank you.

Good evening

Google for managing the Dutch disease in Nigeria by Dr Emmanuel ojameruaye. There is Sap in that article and how it came to be.

Modified

Here is the quote from the article.

.

In 1973-82 we had high oil prices. From 1982, oil prices crashed, and by 1986, we had to take on SAP.

Nigeria in a nutshell.

GEJ would have been the best if we allowed him to remove the subsidy.
Alas, we preferred a primary six certificate holder to a PhD holder, why won't we retrograde?

maridrug:
GEJ would have been the best if we allowed him to remove the subsidy.
Alas, we preferred a primary six certificate holder to a PhD holder, why won't we retrograde?

While I agree that we should have allowed GEJ remove fuel subsidy in 2012, I do not necessarily concur with the opinion expressed subsequently. Recall GEJ earned the highest revenues as President but what happened? Didn't result in infrastructure as we are now witnessing, in fact that govt started borrowing towards the end to pay salaries. Many of those who looted massively at the time are still being pursued.

On the IMF advice regarding removal of fuel and electricity subsidies, my take is to focus on completing the refineries and putting the power infrastructure in place. On refineries, the cost of fuel will marginally go up in a way that won't cause debilitating inflation. Refineries themselves will be operating at a profit as shipping, demurrage and other ancillary costs associated with importation will be eliminated from the cost structure. It will also boost local jobs as thousands will be sustainably employed either directly or indirectly. Furthermore, we won't be constrained by opec quota as we can refine as much crude as we want locally thereby satisfying local consumption cheaply and even having enough to export to our African neighbours and make forex revenue. Our neighbours will be glad to import from us because it will be cheaper than importing from Europe, America or from elsewhere.

On Power as a whole, once the generating and transmission capacity is built, everything else will fall in place. We have abundant gas reserves to run gas fired power plants and generate no less than 25 GW in say 3-4 years' time. I will encourage govt to fund gas supply projects and power plants to build this capacity. Once that is done, it will be easy to convince consumers to pay more for electricity as it will be abundantly available. To be practical, you focus on charging high tariffs to rich neighbourhoods and businesses (some of that is happening now but not sustainably as power is still being rationed). The rich folks will not mind paying higher tariffs as this will still be cheaper than what most of them pay on electricity today. Govt can then use those higher tariffs to compensate the poorer areas who can't yet afford the high tariffs until such a time when there is a general uplift in standard of living to support higher tariffs by this set of our population. The solutions above are practical if a sincere govt cares about leaving a legacy than winning the next election as some of these may be long term in nature with no immediate gains.

optionalY09:
If these institutions really want to help the Nigerian people they should help us divide the country. That’s what the progressives want

They should stop these misleading and experimental advises

Nigeria should not be divided. Cannot be divided

imf-tells-fg-to-remove-fuel-electricity-subsidies.


Retaining subsidy is Looting. Removing subsidies is further Looting.

Subsidies need to go, but also taxes must be raised on property, vehicles, clothes and phones. Any other policy we pursue will have us headed for a Venezuela style economic crisis.

If Nigeria wants to progress, saved funds should not be channelled into electricity or energy firms, but must be used to provide quality basic education for the masses. You cannot put the horse before the cart. Democracy and industrialisation only work with an educated population.

In Rwanda, private schools are shutting down because parents realise that the quality of education in the government schools is better. This needs to happen in Nigeria to stop our mad craze for embezzlement.

Good luck Nigeria.

funshint:
I shiver anytime I hear IMF giving a country advise. Those people are demons!

I guess this government has exposed us to the level where imf has started putting mouth in our matter. Possibly he has gone to beg them for loan too.
When last did you hear of imf commenting on Nigeria?