By Henry Boyo
Media reports, lately, suggested that the approval for the 2015
Appropriation Bill, which was seemingly rushed through the National
Assembly, in the last week of April, did not contain any provision for
the payment of the usual subsidy on petrol and kerosene.

Nonetheless, the anxiety of labour and the other advocates and
beneficiaries of the subsidy scheme may have been doused by the
Senate Committee Chairman on Finance, Senator Ahmed Makarfi’s
subsequent statement that, contrary to such reports, the National
Assembly had infact approved the sum of N100bn as subsidy for
Premium Motor Spirit (petrol) while N43bn was approved for
kerosene for the 2015 fiscal year.
Nonetheless, the federal government, had in contrast, budgeted
about N970bn for fuel subsidy in 2013, while only N515 was
released to oil marketers according to a report titled “Senate
approved N143bn for fuel subsidy” in the Punch edition of
1/5/2015. Furthermore, according to the same report, “the same
amount was also budgeted for the 2014 fiscal year, with only
N414bn so far paid.
Thus, with the above historical data on subsidy provision and
payments, critics may see the approved meager sum of N143bn as
a booby trap for the incoming administration, since there is nothing
to suggest that the price of crude will further plummet below $50/
barrel or that demand would fall below the projected daily average of
40m litres.
In addition, available Petroleum Product Pricing and Regulatory
Agency, (PPPRA ) data, indicate that subsidy on petrol has soared
to N43.25/litre, up from N2.84 as at January 2015. Thus, an
estimated daily subsidy of N1.7bn with current crude price and
Naira exchange of N197/$1, will amount to over N620bn this year. It
is not clear if this figure also includes projected subsidy payments
for kerosene. So, why then did the National Assembly approve
barely 25% of the historical annual average subsidy payments.
However, Senator Markarfi assured Nigerians that the ‘paltry’
subsidy provision should not stop the initiation of a supplementary
Appropriation Bill by Buhari’s incoming administration to cover any
difference above the N143bn already approved by the National
Assembly. Indeed, if crude prices stabilise around the current $60-
$65/barrel, the subsidy shortfall could be well over N500bn, and the
projected deficit of almost N1Tn in the 2015 budget may rise beyond
N1.5Tn or constitute almost 33% of total budgeted expenditure of
N4.49Tn!
Instructively, with interest charges presently between 10-16% for
government loans, it may cost well over N200bn just to service
those debts, which were primarily induced by expenditures on fuel
subsidy, consequently such additional expenditure will compound
the almost N1Tn debt service charge initially embedded in the 2015
budget.
However, these service charges must be distinguished from the
N600bn interest payment that CBN would similarly incur in the
process of mopping up unceasing surplus liquidity from the money
market. Ultimately, consolidated domestic debt service charges
alone, sadly, may well exceed 30% of the paltry 2015 budget.
Regrettably, delayed payments of verified subsidy claims, may
inadvertently also further bloat the already oppressive service
charges on loans obtained to finance the 2015 budget deficit and
other earlier government debts. Curiously, the imminent federal and
state elections, may have forced government to accede to pressure
from marketers to pay the demanded balance of N256.2bn, which
they claimed included core subsidy as well as interest on delayed
payments and exchange rate differentials.
Incidentally, the marketers, have since confirmed that N40bn was
the actual core subsidy value outstanding for part of 2014 and
deliveries under Batch A & B in 2015; nonetheless, according to the
marketers, the balance on the related foreign exchange differentials
and the accrued interest on the outstanding invoices would come to
N215bn after the maturity of government’s N100bn sovereign debt
note by the 30th of April.
Thus, if Nigerians were already apprehensive about the huge and
clearly unsustainable incidence of subsidy values, then they must be
surely perplexed that payments, which were delayed because of lack
of funds, are now compounded by an additional sum of N215bn for
interest on delayed payments and exchange rate differentials.
Surely, if this is not a scam, it is certainly a reckless fiscal strategy
which is totally in denial of an imminent national debt trap.
In her response, the finance Minister, Dr. Okonjo-Iweala, confirmed
last week that the sum of N56bn will additionally be paid to offset
interest differentials; according to Dr. Okonjo-Iweala, “after these
payments, a subsidy balance of N98bn already certified by PPPRA
would be left as the amount owed to the marketers”.
Clearly, if the subsidy regime subsists with the present culture of
delays in settlement, the still outstanding sum of N98bn will
invariably also attract additional interest charges for delayed
payments as well as exchange rate differentials; consequently,
consolidated subsidy payments will exceed expectations and budget
provisions, particularly if the Naira exchange rate also continues its
current slide.
Furthermore, if in addition to Naira depreciation, crude prices
unexpectedly climb above the current $60-65/barrel range, the
amount of fuel subsidy payable for the rest of 2015 will similarly
increase; worse still, the attendant unbudgeted penalty for delayed
payments and exchange rate differentials will also increase.
Ultimately, if good sense, fails to prevail, close to 40% of total
budgeted expenditure in 2015 may become dedicated to fuel subsidy
payments! Incidentally, if government appears incapable of also
reducing its bloated recurrent expenditure budgets, the paltry barely
N400bn allocation for capital and human capacity expenditure in
2015 may become further deflated below 5% of the total expenditure
of N4.49bn.
It is therefore clear that in order to eliminate subsidy payments
without stress, we may need to ironically pray that crude oil prices
(our main source of revenue) will fall well below $50/barrel, while
the Naira exchange rate will not suffer further depreciation which
instigates rising fuel prices, to make subsidy removal a major
challenge.
Clearly, organized labour has already taken a firm position to reject
any attempt to remove subsidy and they have instead called on the
government to revamp existing refineries and build new ones, so
that fuel will be readily available at lower prices. It is curious that the
same people, who clearly recognize the huge waste and corruption
associated with public utilities, would still demand for the
entrenchment of such government parastatals.
Nonetheless, the abolition of price imposition would clearly attract a
host of investors into private domestic refining, but this would not
necessarily reduce prices to ultimately eliminate subsidy.
Instructively, however, fuel prices will conversely steadily fall if the
Naira appreciates, as a stronger Naira will translate down the line to
progressively induce cheaper fuel prices domestically and ultimately
eliminate subsidy.
SAVE THE NAIRA, SAVE NIGERIA!!





www.vanguardngr.com/2015/05/is-the-abolition-of-fuel-subsidy-imminent/

Buhari shld not try nonsense ooooo
D subsidy shld remain
Else he's doomed
I hate change

y is buhari and APC so intrested in petroleum products,


when will d subsidy for cow meat, onions, and kuli kuli b removed

nonsense ppl, wish there can be a resource control in naija..

Here's what I told some guy in another thread where NOI alleged the marketers are holding the State to ransom :

He wrote:

SirRoberto:
it nt easy to deal wit those cabals... The best way to hav dealt with d cabals was to stop subsidy payment and u and i are witness to wat happend wen govt tried it during GEJ tenure.... D masses ignorantly followed d cabals in ensuring their biz continued. I hop d incoming administration wil hav d hart to successfully stop this subsidy payment once and for all

And my reply was:

You guys are missing the whole point. The masses didn't ignorantly follow anybody, they took a stand that was best for them which is the retention of the payment of subsidies.

Subsidy payment isn't a bad idea, the problem rather lies with the government and her agencies that have become iredeemably corrupted resulting in the payment of claims for nonexistent imports. Was it not revealed during the hearings of the HoR that tens of billions of naira were paid to people as subsidy claims when they didn't even import a single drop of fuel?? Didn't we hear about ships that brought in products while at the same time the wreckage of those ships have been lying at the bottom of the ocean for decades, forming nice little coral sights for marine life? What about round tripping? Do you think this would have been possible without the active connivance of government agents

What the government needs to do is not getting rid of the policy, but enhancing monitoring and overall efficiency of the system. This way, payments would be made to only genuine claims and we wouldn't end up having an over bloated expenditure on subsidy. I'm pretty much sure if that is done we'd see a reduction in this expenditure of not less 50%.

You can't cut off the head just to spite the body.

I think this suffices for this thread.

According to APC fuel subsidy is a scam so what exactly is being removed

I will go with the ex CBN governor, SLS, on this subsidy of the a thing, the system is excessively corrupt that eliminating corruption & fraud in the downstream sector of our petroleum industry is a practical IMPOSSIBILITY, same with ending oil bunkering.
Govt is only subsidising corruption & not petrol or kerosene and the ONLY way out of it is by totally removing the subsidy & i agree with him now.

I owe GEJ an apology for actively participating & mobilising to do so in the Jan. 2012 subsidy protests, because from every indication now, we encouraged & supported the cabal called 'oil marketers' (both major & independent) to hold this nation at ransome that they are doing today.
SUBSIDY SHOULD GO !!

Abolish fuel subsidy, free up the market, and you will not have fuel scarcity again. You will also remove the corruption in the subsidy system. This is one proposal of Jonathan I fully supported and wish he had stayed on with. The main problem was the trust deficit Nigerians have with government and Jonathan only went on to prove that they were right. Where was all the stuff the money saved from a reduction in subsidy the government promised.

If we have a man who can inspire trust and is able to articulate the need for this removal then we might have a different result. We have oil cartels, we have generator cartels . . . . we need to start breaking up these special interest groups holding the country backwards. The government needs the support of the people on this.

The issue of PMS subsidy is a double-edged sword. Nigeria lacks basic infrastructure that will reduce challenges faced by the masses in the event of subsidy removal. Secondly, removing subsidy means freeing more money to another set of people (political elite) to loot and share among themselves while the real masses get to pay for the attendant high cost of living. On the other hand, leaving the subsidy regime means enriching and expanding the war chest of cartels, businessmen and politicians.

So What Should Be Done?
The government is left with the choice of "enduring" the subsidy but fixing relevant infrastructure like power, road, mass transit buses and increasing the working capacity of the 4 refineries. When these are achieved, the subsidy can go without much resistance. Anything short or this will always be resisted.

Subsidy must stay until Nigeria's capacity to refine petroleum products for her internal consumption are met. Buhari recognizes this fact

Balyz:
Subsidy must stay until Nigeria's capacity to refine petroleum products for her internal consumption are met. Buhari recognizes this fact

And how do you intend to meet that consumption demand?.
Build refinenaries!
Who can do that? - private sector!
How can they come & do so? - When the price is right based on the forces of demand & supply!
What is stopping them? - Govt subsidies that is making lazy fuel importers stupendeously rich!

Way out? -- KILL SUBSIDY & FREE THE MARKET.
We cannot let the fear of blood & pains of a surgical knife allow cancer to kill.

As long as fuel prices do not go up. It is welcomed.

There is nothing wrong with payment of subsidies because that is one of the few benefits Nigerians enjoy from the government. If our refineries were functioning at maximum capacity this topic won't be coming up. GMB promised to get the refineries working but you need money to settle these needs and Nigeria doesn't have that in excess. If GMB can dedicate a year of his admin to opening up channels that will generate revenue for the country and ensure that revenue generated is used in putting the required infrastructure in place then we may not be having this issue of subsidies. A sincere and purposeful government can achieve this. Nigerians can only hope GMB's team is equal to the task ahead

[size=18pt]lalastiiclala[/size]


which type of fake moniker be this ?

The ORIGINAL IS lalasticlala

They told us there were no subsidies, others opined that there's a subsidy but govt shud fight corruption embedded in the system. Now there's confusion everywhere and i dont believe an abrupt end to subsidy is the right move @ this point whereby, our refining capacity is yet to make up for local consumption. let the incoming govt fight corruption inherent in the system shekina! Subsidy must stay.

luvinhubby:

And how do you intend to meet that consumption demand?.
Build refinenaries!
Who can do that? - private sector!
How can they come & do so? - When the price is right based on the forces of demand & supply!
What is stopping them? - Govt subsidies that is making lazy fuel importers stupendeously rich!

Way out? -- KILL SUBSIDY & FREE THE MARKET.
We cannot let the fear of blood & pains of a surgical knife allow cancer to kill.

the subsidy is here to stay until we achieve self sufficiency in refining crude products for our local consumption. Any attempt to remove it will make the events of january 2012 look like child's play. Your views are those of the minority. You cannot impose them on we the majority

Balyz:
Subsidy must stay until Nigeria's capacity to refine petroleum products for her internal consumption are met. Buhari recognizes this fact

I agree with this to a degree. Government should kickstart refineries yes, but I don't think it should be a matter of waiting till Nigeria is completely self sufficient before subsidy is removed. Nigeria might never be free from the need to import petrol, but let the internal option be there at least then market forces can drive down price. Sounds logical.

Balyz:
the subsidy is here to stay until we achieve self sufficiency in refining crude products for our local consumption. Any attempt to remove it will make the events of january 2012 look like child's play. Your views are those of the minority. You cannot impose them on we the majority

They are my views & very proud of it and am not forcing it down anyone's throat.
Has it not occurred to you that the same subsidy cabal are still the ones with the capacity to meet local refining consumption demands & have refused to do so, even frustrating moves to do so all because of the lazy profits
of subsidy on refined imported fuel.

Lalasticlala,could you ban the Op,for cloning your moniker?
Jeez! So many ediots on NL.

It is practically impossible for government to regulate a highly profitable sector like petroleum industry and still maintain a high degree of transparency and sanity. There's so much intrest vested in that sector owing to it's marketability and profitability as world number one commodity product.
The Cabals or Cartels in that sector literaly set prices against market forces, making billions in profits against the government and people of Nigeria. In a nutshell, continued fuel subsidy is basically subsidy for the rich Cartels. This is totally unacceptible. Nigerians must not allowed these ripoffs go on any longer. Unless we support the government to openned up the sector (government attempted removing subsidy in 2012 but were rebuked due to ignorance) and allow public participation in production, movement and sale of hydro carbons through market force determine prices, the circle of inefficiency, invisibility and inpunity will continue unabated.
The best way to deal with oil Cabals is by Total Deregulation of the petroleum sector.

Fuel subsidy has always been a big fraud to enrich the cabals.

It has to go and should be used in getting our refineries work again.

Firefire:
[size=18pt]lalastiiclala[/size]


which type of fake moniker be this ?

The ORIGINAL IS lalasticlala

Lmao. I just noticed it!

I almost typed "Lalastic, this your post is somewhat illegible" before I saw your comment.

This is not when to apportion blame, but to pray.

It is a terrible situation.

But we must know what to pray for:
Are we playing for increase or decrease in the international price of our type of oil per litter? Or what is the miracle that must happen?
We can't afford to keep squandering billions of our money on subsidy to the detriment of the country's growth and development.

Dangote's refinery may help in 2018. Till then, Buhari should ensure that subsidy payments are prompt and steady.

Hypocrisy is when people occupy Ojota and Abuja for fuel subsidy removal under GEJ and same people calling for subsidy removal under GMB!!!

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