Npfn:
No body is emotional here you lie and try justify removal of subsidy when the thread is saying the price marketers are getting it to be 140 to 181 and same marketers have regulatory bodies even DSS stated there is economic sabotage and your here to downplay it and try confuse people and blaming the poor masses there is no were fuel is dispatched 510 in Nigeria so stop

NNPC is sole importer. Believe it or not, the marketers likely have to pay a BRIBE to get an ALLOCATION of petrol at 140.

Same way you must pay a BRIBE to CBN officials to buy dollar at 450.

People also pay BRIBE to get admission to Federal Universities, especially the valuable courses....because the tuition is cheap.

So if you want to eliminate economic sabotage, then the practice of fixing prices by government must stop. It makes no sense.

And before you accuse me, I'm not a government agent.

You don't have shame keep lying no body expects you to admit everyone sees your intention an agenda if you want keep mentioning me or trying to play smart you are a liar and will remain so I will be waiting for your comment again on a subsidy related thread subsidy will remain and government will work on strengthening it's regulatory and perfection of strict punishment on defaulters I thank the taskforce here in Lagos and Abuja they are working soon dss raid will happen this week and we will see those selling 300 retrace there steps that's is fact bye continue the job you paid

IbeOkehie:


NNPC is sole importer. Believe it or not, the marketers likely have to pay a BRIBE to get an ALLOCATION of petrol at 140.

Same way you must pay a BRIBE to CBN officials to buy dollar at 450.

People also pay BRIBE to get admission to Federal Universities, especially the valuable courses....because the tuition is cheap.

So if you want to eliminate economic sabotage, then the practice of fixing prices by government must stop. It makes no sense.

And before you accuse me, I'm not a government agent.

CheapHomes1:


1. Why is fuel subsidy removal long over due?

2. What exactly is subsidy?

3. Who is going to increase investments in upstream and downstream? Is lack of money the reason for the lack of investments?

1. It's literally a drain pipe, govt pays subsidy every year in trillions of naira and the populace still end up not having access to that subsidized oil. The opportunity cost of subsidy is investments in other sectors of the economy and social well being of the people, we end up not having a robust economy and oil at rates that are almost prohibitive plus the scarcity.

2. Payment govt makes to offset difference in price between cost of buying and selling of oil in the country.

3. Removing govt inefficient control will automatically resolve in more investments (provided issues like security are taken care of), private sector people will pour in money in the sector (because it's going to bring more money) unlike this case of playing the ostrich.

This country is being run like a charity leading more scarcity of resources.

Npfn:
You don't have shame keep lying no body expects you to admit everyone sees your intention an agenda if you want keep mentioning me or trying to play smart you are a liar and will remain so I will be waiting for your comment again on a subsidy related thread subsidy will remain and government will work on strengthening it's regulatory and perfection of strict punishment on defaulters I thank the taskforce here in Lagos and Abuja they are working soon dss raid will happen this week and we will see those selling 300 retrace there steps that's is fact bye continue the job you paid

All petrol sold in Nigeria is imported and NNPC is the sole importer.

This is the current world price of petrol - it's around $2/gallon OR $0.50 per liter.
https://www.investing.com/commodities/gasoline-rbob?cid=1186975

Using CBN rate of 460/$, you can see that NNPC pays at least ₦‎230/liter to import petrol. Using the black market rate of naira, the cost is actually ₦350/liter, but we will pretend that one doesn't matter

So the minimum cost of petrol in Nigeria should be at least ₦‎230/liter.

That's the hard, cold reality. Nothing else makes economic sense, because no sane person will continue to sell at a loss.

Even Dangote can't sell to Nigerians at less than ₦‎230 and stay in business. If government force Dangote to sell at ₦‎140 or 160, there's two possibilities -

The Nigerian government will pay subsidy directly to Dangote OR the Dangote Refinery will eventually shut down just like NNPC refineries. So don't complain tomorrow when government budget shows ₦‎3 Trillion payment to Dangote for subsidy.

You say subsidy will remain and government will will work on "strengthening it's regulatory and perfection of strict punishment on defaulters". That's interesting because it appears that they haven't been able to stop recurring scarcity every few months for the past 5 to 15 years.

You can have your subsidy...and you will continue getting the usual scarcity and corruption, just like in Universities, electricity, forex and all other subsidized sectors. Enjoy your subsidized Nigeria!

Kobonaire234:


How much do they pay me then?

Kobonaire, I've red your well explained analysis of petrol subsidy on how it continue having negative impact on Nigeria economy. To those guys tackling you, I urge them to be logical for once and reason it out. To be sincere Nigeria can not continue like this. When ugly fuel scarcity started again this December, it was really hell for most motorists, getting fuel is really a tug of war. For how are we going to continue like this? Kobonaire , my question is ,if subsidy is finally removed, don't you think average Nigerian can not afford to buy petrol at 500₦ per litre. When subsidy was removed from kerosene, suddenly poor Nigerians can't afford to use their kerosene stove and many resort to using fire wood which is primitive. If subsidy is removed on petrol, prices will be determined by market forces and as you analysed here, for present time it may sell for 500 per litre, won't prices of commodity skyrocket to extremely unexpected level. How do you think poor Nigerians will be able to cope . Also , this subsidy has linger for too long, can't government gradually be removing this subsidy at least adding ₦10 per litre every two months till all subsidy is finally removed. The same problem of petrol subsidy is what we are experiencing in our tertiary education funding. Government can't continue subsidising everything if we need better economy

acorntree:


Kobonaire, I've red your well explained analysis of petrol subsidy on how it continue having negative impact on Nigeria economy. To those guys tackling you, I urge them to be logical for once and reason it out. To be sincere Nigeria can not continue like this. When ugly fuel scarcity started again this December, it was really hell for most motorists, getting fuel is really a tug of war. For how are we going to continue like this?

At the end, we can't go on.

Kobonaire , my question is ,if subsidy is finally removed, don't you think average Nigerian can not afford to buy petrol at 500₦ per litre. When subsidy was removed from kerosene, suddenly poor Nigerians can't afford to use their kerosene stove and many resort to using fire wood which is primitive. If subsidy is removed on petrol, prices will be determined by market forces and as you analysed here, for present time it may sell for 500 per litre, won't prices of commodity skyrocket to extremely unexpected level. How do you think poor Nigerians will be able to cope

To that, I always answer with the question...can we afford the growing amount of money we must spend on subsidy...a growing amount of money that comes from our revenue....?

Removing subsidy on kerosene and diesel was hard, but if we kept it, by now our entire oil revenue would go to subsides, and our budget would be funded from loans totally...not partially...totally.

Besides, Niger Republic, Ghana, Liberia, Sierra leone are poorer than we are (ok, Ghana is at our level..lol)...and they pay higher for fuel.

God knows I know we can't afford expensive fuel..for me that's N20000 for petrol a week! if prices go up to N500....but we cannot afford continued subsidy.


.

Also , this subsidy has linger for too long, can't government gradually be removing this subsidy at least adding ₦10 per litre every two months till all subsidy is finally removed.

That's what government has been doing for over 40 years...it is why fuel no longer costs 15kobo like it did in 1981! It works for some time...till the cost of producing petrol forces a rise in subsidy costs...then we either remove it partially, or queues form.

The same problem of petrol subsidy is what we are experiencing in our tertiary education funding. Government can't continue subsidising everything if we need better economy

Indeed, to be or not to be.

Kobonaire234:


Like you don't get it...NNPC imports fuel at a cost of N510 as at November and sells it at N140 to market...although it is as high as N180-210 in practice.

That means NNPC is spending about N360 at least to subsidisie one liter of fuel...and when you add that up, that is a large chunk of our budget gone.

At the end, we have to take loans to cover the hole.

And the cost keeps rising. In June 2021...NNPC was spending N261 to bring in one liter. By the middle of the year it was N367...and now it is N510.

Plus rising diesel costs...diesel is now close to N800 up from N400 last year....means that cost of transporting that fuel has gone up.

Either way the poor suffer.




And yes, you are immature. You keep on abusing me, calling me a liar, and calling me an oppressor, and refusing to back down. You are very immature. Better grow up. Abusing people online cannot get you far. Thank you.


Now that is all I have for you. If you don;t get it...sorry.

If we are refining the fuel here, will the landing cost still be #510/litre?

IbeOkehie:


All petrol sold in Nigeria is imported and NNPC is the sole importer.

This is the current world price of petrol - it's around $2/gallon OR $0.50 per liter.
https://www.investing.com/commodities/gasoline-rbob?cid=1186975

Using CBN rate of 460/$, you can see that NNPC pays at least ₦‎230/liter to import petrol. Using the black market rate of naira, the cost is actually ₦350/liter, but we will pretend that one doesn't matter

So the minimum cost of petrol in Nigeria should be at least ₦‎230/liter.



That's the hard, cold reality. Nothing else makes economic sense, because no sane person will continue to sell at a loss.

Even Dangote can't sell to Nigerians at less than ₦‎230 and stay in business. If government force Dangote to sell at ₦‎140 or 160, there's two possibilities -

The Nigerian government will pay subsidy directly to Dangote OR the Dangote Refinery will eventually shut down just like NNPC refineries. So don't complain tomorrow when government budget shows ₦‎3 Trillion payment to Dangote for subsidy.

You say subsidy will remain and government will will work on "strengthening it's regulatory and perfection of strict punishment on defaulters". That's interesting because it appears that they haven't been able to stop recurring scarcity every few months for the past 5 to 15 years.

You can have your subsidy...and you will continue getting the usual scarcity and corruption, just like in Universities, electricity, forex and all other subsidized sectors. Enjoy your subsidized Nigeria!

But we are already buying petrol at 230-250₦ per litre. Why can't Government just leave it like this and gradually withdraw the subsidy till we finally get used to it

Unigrad:

If we are refining the fuel here, will it still cost #510/litre?

No, but it won't cost less than 300 naira either.

Niger produces refined fuel at home, and for export, and it cost them N350 at the pump. Ghana does the same for over N600 per liter at the pump.

It costs money to refine fuel. Keep in mind that the components and materials and equipment in the refinery is not made in Nigeria...it is made abroad.

Kobonaire234:


No, but it won't cost less than 300 naira either.

Niger produces refined fuel at home, and for export, and it cost them N350 at the pump. Ghana does the same for over N600 per liter at the pump.

It costs money to refine fuel. Keep in mind that the components and materials and equipment in the refinery is not made in Nigeria...it is made abroad.

How will Dangote cope then. Or he didn't feasibility very well, because it seems our government don't want to totally remove the subsidy because of fear of the aftermath, which may lead to another uprising like end sars

acorntree:


How will Dangote cope then. Or he didn't feasibility very well, because it seems our government don't want to totally remove the subsidy because of fear of the aftermath, which may lead to another uprising like end sars

We shall see...

Kobonaire234:


No, but it won't cost less than 300 naira either.

Niger produces refined fuel at home, and for export, and it cost them N350 at the pump. Ghana does the same for over N600 per liter at the pump.

It costs money to refine fuel. Keep in mind that the components and materials and equipment in the refinery is not made in Nigeria...it is made abroad.

Let's wait till late next year, when Dangote will start petrol production!! Nigerian problems are just too many and government seem confused on what to do

Kobonaire234:



While tinubu and Buhari did help in mobilizing support against subsidy removal in 2012...which happened, only partially...the fact is, most Nigerians do not support subsidy removal.

Back then, people were of the opinion that we were earning enough money from oil to fund subsidy (not true)....so they marched. All people saw was that fuel was once N65, now it is N140. Even the N97 that it came down to....

Buhari and tinubu just joined in for politics. In politics, you sometimes do the Machiavelli style to get into power.

But the truth is, if subsidy had gone in 2012, by now the same Buhari and Tinubu would be reaping the benefits.

Subsidy is loved by Nigerians. My worry is, whoever takes over, even if it is your Obi, if they attempt to remove subsidy, Nigerians will forget their divisions and remove them. Buhari tried to remove subsidy early this year. DSS warned him of potential national uprising. That's how subsidy is. Nigerians want it. Nigerians want cheap fuel. Politicians hear and obey. Even at the expense of our economy.

What happened to refining locally.or is that not the reason for the subsidy in the first place

njelrapheal:


What happened to refining locally.or is that not the reason for the subsidy in the first place

aHEM, ahem, ahem

Here be the potted history of the subsidy by Professor Kobonaire...gce, bsc, mhd, krd, wwph...

1.Subsides were brought in because of the 1973 Yom Kippur war, which led to a spike in international oil prices, which meant higher pump prices for Nigerians.

2.The idea was that government...very roughly speaking...would pay part of the cost of fuel...to cushion the effect.

(1973 was a bad year. That was the time when there were long fuel queues in the USA....and when fuel cost a lot worldwide).

3.Unfortunately, over the years that has meant that government sets the price of fuel below what it costs to produce and pays the difference.

4.That means that the sector cannot make money to keep itself running well....which is why we have bad refineries.

5.Also subsidy means free cash...meaning corruption and stealing.

acorntree:


Let's wait till late next year, when Dangote will start petrol production!! Nigerian problems are just too many and government seem confused on what to do

Government knows what to do...remove subsidy.

Most Nigerians don't want that.

Kobonaire234:


Corruption and wayo in NNPC happens when you stop people from making profit selling fuel

If you were doing business as a baker, and it cost you N1000 to bake a loaf of bread, and you want to sell the bread at N1500 to make a profit of N500, and then government comes in and tells you to sell that bread at N500 and take a subsidy of N500...MEANING...you make no profit...meanwhile the following month, the cost of baking that bread goes up to N1200...and government is still insisting on you selling it at N500...

Yes, you would do wayo too. And you would violently resist anyone trying to stop you. You have mouths to feed, workers to keep employed, a factory to keep well functioning.

Bro sorry to say but ur argument is flawed. Why don we refine locally..

Kobonaire234:


Government knows what to do...remove subsidy.

Most Nigerians don't want that.

To be sincere their fear is hyperinflation. Cost of commodities may reach unprecedented level. Nigerians are angry now . And their no means of cushioning the effects. But they must take the bull by the horn

njelrapheal:

Bro sorry to say but ur argument is flawed.

You say that because you want cheap fuel. Like Buhari, like you Nigerians.

Why don we refine locally..

Considering that we have 5 refineries plus Dangote coming up, this question is now redundant.

Plus local refining won't give you cheap fuel. Fuel would be at least N300. Refienries have to make a profit.

JASONjnr:


The market is where the prices is hiked....They have their association and they're the filling station owners...

Just like in the case of dollar price....the parallel market is different from the CBN rate....and you can't easily have access to the CBN price...

Although, Buhari using the DSS is actually doing enough to cut down the hike...Of not, before 2023, we should be hoping to buy a litre of fuel for 500 bucks.

What is stopping the minister of petroleum in making sure we have at least one functional refinery,just one that can work in full capacity?

All this subsidy this subsidy that should have been a thing of the past if he was serious about it by making sure out of the 4 refineries,we have at least 2 that is working well,all this we use 66m barrels in the country is a big fat lie.

acorntree:


To be sincere their fear is hyperinflation. Cost of commodities may reach unprecedented level. Nigerians are angry now . And their no means of cushioning the effects. But they must take the bull by the horn

Meanwhile keeping the subsidy is causing us to spend more of our revenue on it, and take loans to cover the resultant deficit....so the economy still suffers if subsidy stays.

Kobonaire234:




You don't know how much NNPC brings the fuel into the country....

Petrol landing cost in Nigeria is N510 per liter. N510.

NNPC then sells it at N148.....

And last year June it was N361.....

Let us not forget that it costs more money to transport the petrol...since petrol trucks run on diesel...whose prices are higher nowadays...at N800 and rising.


The cost is becoming too much for NNPC to bear...hence the queues. DSS is just pretending that it is a matter of greedy Nigerians....


Even if they refine fuel in Nigeria...it won't cost less than N400.


Keep on calling me evil. Meanwhile...petrol costs MONEY.

Government will soon come and pay the sector its money. They know...they all know.

explain how refinig fuel.in nigeria will lead to a production cost of 400 per liter

njelrapheal:
explain how refinig fuel.in nigeria will lead to a production cost of 400 per liter

Simple...in our neighbors who do refine, fuel costs N400-600 naira.

Keep in mind that petrol costs are not just refining costs....taxes, transport costs, etc are all in it. Keep in mind that a refinery needs to be properly maintained, not that we would just build it and let it work sans maintenance....all that adds up.

Any government paying subsidy is paying for all that...not just refining.

Oga, you won't run a business where government lowers your prices to help the poor, would you?

acorntree:

Kobonaire , my question is ,if subsidy is finally removed, don't you think average Nigerian can not afford to buy petrol at 500₦ per litre.

This is the same argument that was used against the privatization & deregulation of telecoms. If you were an adult in say 2001, you will remember that NITEL was the sole and only telecoms company in Nigeria, just like NNPC today. Back then phone lines were subsidized and yet only the very rich had access to phones. And you had to pay big bribes to get a phone line. If you weren't an adult back then, PLEASE, PLEASE ask the older folks who were around at the time.

So when telecoms were finally liberalized, the opposite happened - prices decreased and most Nigerians, even the very poor, now have phones. It's a simple fact of economics, liberalization leads to competition and decreased prices and surplus supply. The same will happen in the petrol market.

acorntree:


But we are already buying petrol at 230-250₦ per litre. Why can't Government just leave it like this and gradually withdraw the subsidy till we finally get used to it

But that's not the OFFICIAL price, it's actually ILLEGAL for petrol stations to sell at that price.

Also note, that price is still far below what is paid in neighboring countries, so smuggling will continue and thus there will be scarcity in Nigeria. Remember, it's ordinary Nigerians that do this smuggling, there's videos and pictures on the internet that prove that. Just search Google.

njelrapheal:


What happened to refining locally.or is that not the reason for the subsidy in the first place

This is one of the mysteries of the whole thing. I'm fairly confident government started paying subsidy for fuel back in 1973, Nigeria had operational refineries back then. It seems...in fact the reason for introducing subsidies was simply to shield Nigerians from high prices which had risen due to the Yom Kippur War of that year.and it was meant to be a temporary program.

Kobonaire234:


No, but it won't cost less than 300 naira either.

Niger produces refined fuel at home, and for export, and it cost them N350 at the pump. Ghana does the same for over N600 per liter at the pump.

It costs money to refine fuel. Keep in mind that the components and materials and equipment in the refinery is not made in Nigeria...it is made abroad.

Niger and Ghana you are comparing Nigeria with, do they source their crude oil from their countries?

Unigrad:

Niger and Ghana you are comparing Nigeria with, do they source their crude oil from their countries?

They do. Niger has a large crude oil field. Ghana too does the same.

Kobonaire234:


Well how do we pay for the new refineries?

When nnpc is not making enough profit selling petrol it brings in at 510 naira as at November at lesa than 200 naira to depot?

Dangote refinery will collapse if the above happens too.

Ate you seriously asking how we pay for refineries. We already got 4. How has the govenment been paying for other projects. What happened to all the taxes of lagos state alone.

njelrapheal:


Ate you seriously asking how we pay for refineries. We already got 4. How has the govenment been paying for other projects. What happened to all the taxes of lagos state alone.

To build one of those type of refineries now would cost us one third of our foreign reserves.

Lagos tax revenue for 2021 was around 740 billion naira, which is about 1.7bn dollars. A new refinery of the kind we have wrecked would cost about 5-10 billion dollars.(Dangote's initial cost of his refinery was 9bn. dollars. He needed to borrow more money to get it up and running)

Plus tax revenue is used for other things. Lagosians won't like it if you spent their tax for a refinery.


Finally, it is not building a refinery, it is keeping it well working...and to pay for that, subsidy has to go so that fuel sells at a profit.

Kobonaire234:


To build one of those type of refineries now would cost us one third of our foreign reserves.

Lagos tax revenue for 2021 was around 740 billion naira, which is about 1.7bn dollars. A new refinery of the kind we have wrecked would cost about 5-10 billion dollars.(Dangote's initial cost of his refinery was 9bn. dollars. He needed to borrow more money to get it up and running)

Plus tax revenue is used for other things. Lagosians won't like it if you spent their tax for a refinery.


Finally, it is not building a refinery, it is keeping it well working...and to pay for that, subsidy has to go so that fuel sells at a profit.

Are you a staff of oil company?
What about individuals owing the oil wells of the nation?

So it is the DSS that has indirectly ended subsidy by their actions.... interesting.
Now will they be available to put down any blow-back by the public and unions in the new year when revolts begin to arise.

IbeOkehie:


This is the same argument that was used against the privatization & deregulation of telecoms. If you were an adult in say 2001, you will remember that NITEL was the sole and only telecoms company in Nigeria, just like NNPC today. Back then phone lines were subsidized and yet only the very rich had access to phones. And you had to pay big bribes to get a phone line. If you weren't an adult back then, PLEASE, PLEASE ask the older folks who were around at the time.

So when telecoms were finally liberalized, the opposite happened - prices decreased and most Nigerians, even the very poor, now have phones. It's a simple fact of economics, liberalization leads to competition and decreased prices and surplus supply. The same will happen in the petrol market.



But that's not the OFFICIAL price, it's actually ILLEGAL for petrol stations to sell at that price.

Also note, that price is still far below what is paid in neighboring countries, so smuggling will continue and thus there will be scarcity in Nigeria. Remember, it's ordinary Nigerians that do this smuggling, there's videos and pictures on the internet that prove that. Just search Google.



This is one of the mysteries of the whole thing. I'm fairly confident government started paying subsidy for fuel back in 1973, Nigeria had operational refineries back then. It seems...in fact the reason for introducing subsidies was simply to shield Nigerians from high prices which had risen due to the Yom Kippur War of that year.and it was meant to be a temporary program.

I was an adult then, I can still remember how MTN were riping off Nigerians with their per minute billing which was later conquered by Glo per second billing. I totally agreed with on this, privitisation and deregulation will solve this problem. Because some people are really benefiting from these subsidy, especially the marketers and NNPC, if not why is it taking ages to remove the subsidy

Unigrad:

Niger and Ghana you are comparing Nigeria with, do they source their crude oil from their countries?

Niger and Ghana have their own crude oil...as does Norway and the UK.

USA is one of the largest producers of crude oil in the world.

The people of these countries all pay FULL PRICE for their fuel, the UK only introduced some sort of home heating subsidy in the last 3 months, but you can bet it will be abolished as soon as the war in Ukraine ends. In fact they just approved the restarting of coal mines as another source of energy.

If Ghana and Niger Republic citizens can pay full price, Nigeria can also afford it.