Shiftmarket:
Subsidy 101: Q &A on Subsidy


Am not sure I understand you but fact is the whole subsidy issue is shrouded in mysteries. Once the real position of things is known, Nigerians can now decide if they want subsidy or not.

Kindly explain why radio, TV stations, banks and telecoms are shutting down because of diesel. Or is diesel subsidised?
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shiftmarket:
Subsidy 101: Q &A on Subsidy.


Good. Same thing can happen to petrol even if u remove subsidy or not. So in essence we can both agree that subsidy does not magically solve our problems as u wud have us believe. All the other quoted rhetorics are just that.

A proper investigation will show for example why a refinery is always on TAM as u claim they are. Just for ur info, are u aware that the Nigerian refineries do not get their share of crude to refine?[/i]

Sibrah:
Subsidy 101: Q &A on Subsidy.:
It all depends of the reputation of the government in charge. If issue of systemic corruption can be tackled by the sitting government then subsidy can go. That's to say If for example Buhari admin is ready to face the challenges of Diesel selling for same rate it sold for in 2012 Jan, when crude price was more than double it is now, then he can remove. If not removal of subsidy will only be a licence for the marketers to form a cabal and be the new government of fuel.[/i]

Wirinet :
Subsidy 101: Q &A on Subsidy.

[b]
wirinet(m): You are being myopic in this your analysis, you are not looking at the bigger picture. This petroleum subsidy issue is mired in so much mystery and confusion that nothing definite can be known unless there is a forensic audit of NNPC and the whole process.
We need to know exactly how much fuel is consumed, how much it cost to buy from foreign refineries, how much it costs to ship to Nigeria, how much it costs to distribute to various depots and how much it cost to dispense in your cars.What are the costs of corruption and innefficiencies in the system, then we will be in a better position to debate whether we should retain subsidy or not.

Having said that, i am not a fan of deregulation in a critical sector like the petroleum sector. There is never deregulation in the real sense of the word in any country in the world, government always regulate to some extent all industries in order to prevent abuse, monopoly and to protect public interest. It is the degree of regulation we should be debating about. "Deregulation" is good in situations with efficient market economy with strong institutions, but had been proven to be disasterous in countries with inefficient or underdeveloped markets with very weak institutions. All you will produce is monopoly or Oligarchy and the masses being at the mercy of a few powerful cabals.

This is what we have in almost all sectors of the Nigerian economy that had undergone deregulation. This is why deregulated Diesel and aviation fuel will never be cheap and available. This is why DSTV, MTN, Etisalat, etc can charge the masses very high tarrifs with very poor services. This is why deregulated NEPA is worse than regulated NEPA. I can go on and on. Before Thatcher deregulated or privatized the British economy, she made sure that the public run enterprises were running optimally and efficiently and very efficient regulatory bodies were in place

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shiftmarket:
Subsidy 101: Q &A on Subsidy.

If u have read all my dialogue with bara, I have always said corruption not subsidy removal is our (Nigerian) problem. Corruption shot up d value from 350billion in 1yr to 1.1T. It is those mysteries that must first be unravelled. Then we can decide and know the exact amount we are removing. [/i]

shiftmarket:
Subsidy 101: Q &A on Subsidy

I supported deregulation in 1999, which to my mind is another name for subsidy removal but btw then and now no gained in the whole process. Simply frees up more money for politicians to steal. That is the issue Oga.

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shiftmarket:
Subsidy 101: Q &A on Subsidy

If subsidy removal is the only solution to scarcity why is diesel scarce to the extent that businesses were shutting down? Diesel is not subsidised and I believe u know that.
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SubsidyRobust Wirinet Comments:
Subsidy 101: Q &A on


The analysis was done using wrong parameters and premises. Nigeria own the basic raw materials for making petrol and petroleum products - Crude oil. 450,000 BPD was set aside to take care of domestic requirements, which is not subject to international market price. Nigeria OPEC quota is about 2.2millionBPD, our current production is put at about 2millionBPD, so nothing stops us from removing the 450,000BPD for local consumption. The actual cost of the 450,000BPD will just be exploration, drilling and transportation cost, which should not be more that $20 per barrel. Since we are unable to refine, nothing stops the government from contracting the refining of the refineries abroad and transporting the crude to the refineries and transporting the refined products back into the country.


In the alternative, nothing stops the Federal Government from putting the refineries in order. It is we the masses that makes excuses for government that government cannot run refineries. If we come together and demand that the refineries must work, the refineries will work.





That is where i disagree with you, deregulation does not lead to efficiency in an inefficient market. Yes, refining margins are very small, that is why i insist that the refining of petroleum products should not be left at the hands of the private sector - whether refining or marketing. Availability of cheap fuel must be a fundermental government responsibility as it affects every facet of our lives. Shell, BP, Total, etc can and should never be interested in refining, their expertise and interests lies with exploration and exploitation of crude not just in Nigeria but the world over. They are satisfied with the huge margins they make in the 40% they make from all sales of Nigerian oil. If Dangote refinery is ready he can negotiate with NNPC on how much he will buy crude oil, but he must never be subjected to international price since the crude is obtained locally. Besides that should not affect the 450,000 BPD that is meant for the Nigerian people.

Fuel can be cheap, Fuel is very cheap in UAE and most of the Arab countries. Nigerians cannot afford to buy petrol at N220/litre. The cost of transportation of people and goods would sky rocket, most homes burn about 4 litres a day in their generators to get a few hours of electricity. Most businesses from telecommunications to manufacturing to banking depends on diesel. The inflation would be unbearable. The pressure on the Naira would be tremendrous. Devaluation of the Naira would make nonsense of the N220 in no time, as we buyimport our fuel in Dollars. All these while minimum wage will still remain at N18,000.

If you feel we should be paying N220/litre for petrol, how much do you think the minimum wage in Nigeria should be? And how much do you think the various governments can afford?



I do not know about NESCO, but Ikeja Distribution Company is horrible. The power situation is horrible and they still have horrible practices like the old NEPA, like high bills, non supply of meters, carrying of ladders up and down, etc.

Like i said earlier critical industries like power and education should not be left in the control of the private sector. It is even a threat to National Security.

okanfasi:
Do y
![/b]

Pavore9:
The subsidy is a fraud!