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Nairaland Forum / Nairaland / General / Politics / Subsidy 101: Q &A On Subsidy. (31727 Views)
No Going Back On Subsidy Removal - FG / 2015 Budget: Reps Query Illegal N222b On Subsidy / Fuel Subsidy 101 (2) (3) (4)
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Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 9:22pm On May 27, 2015 |
I am surprised I just stumbled on this post. Let me give an insight to how petrol supply occurs in Enugu. Enugu deregulated a long time ago. Petrol price varies from one station to another. I am not talking about during scarcity. If you want to buy at 87. You simply queue at NNPC. This is because some years ago, marketers had a gentleman agreement with govt to stop harassing them because they lift petrol from Lagos, PH and Calabar. They have to cover their losses in case of accidents etc and also bear transportation costs 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by trillville(m): 9:23pm On May 27, 2015 |
gohome: From what I can gather from ur thread, you want the government to remove fuel subsidy as this will give the government more money to spend on infrastructure (basically bigger government) and take away money from the 110 million Nigerians that live on less than 2 dollars a day? My barber was a strong supporter of GEJ, but had to start trekking to and fro from work everyday after the price of fuel was increased. He voted APC in the last elections. Do you think fuel is a luxury for Nigerians or a means of livelihood? My barber couldn't increase the price of haircuts at his shop because he found out that when he increased his price, people who used to cut their hair every week started cutting their hair every two weeks. I used to give the yellow fever by my house 100 - 200 Naira every week before the increase in price. I had to completely stop this. We are a very poor nation. We are a growing nation. Our policies must have a human face. We must think of the poorest in the land as the most important to be cared for. We have difficult choices to make and as much understanding of how much is actually spent on fuel subsidy is necessary in evaluating our options. Again, this is a case of big government vs the people. You are clearly for big government. 4 Likes |
Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 9:25pm On May 27, 2015 |
The above post is an insight into how deregulation will be. In other countries there are different grades of PMS. You buy according to your pocket. This is what deregulation will bring. Let NNPC import and sell without profit. let other private investors have a level playing field. You cannot FIX the PRICE of a commodity except if you are in total control of its supply 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 9:28pm On May 27, 2015 |
gohome: you make me repeat myself, once you deregulate, you have lost the power to make anybody do anything. You said they won't hoard? oh! yea! where did all the AGO in the country disappear to last week? where did Jet A1 disappear to? or you think the planes use PMS too? wetin concern AGo with unpaid PMS subsidy? are you not seeing them again after the strike? you seem not to have any idea what is going on. Remove subsidy and witness the annihilation of the middle class. 3 Likes |
Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 9:28pm On May 27, 2015 |
Subsidy is a fraud. In the days of essential commodity, the same thing happened. Fix prices and you simply create artificial scarcity. It will be tough for Nigerians but NNPC should increase their importation capacity in the short term. Flood the market with products and watch prices come down 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 9:30pm On May 27, 2015 |
jpphilips: AGO prices are high because there is more to gain from importing PMS most marketers don't bother to import AGO because there is no free lunch there. |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 9:34pm On May 27, 2015 |
ohzee: If NNPC had the "importation capacity" let me borrow your phrase, why do we need the cabal? When the cabal is holding us to ransom, why does the NNPC not bail us out? well, you conveniently forgot that NNPC workers are union members too aka Cabals 3 Likes |
Re: Subsidy 101: Q &A On Subsidy. by frehage: 9:42pm On May 27, 2015 |
atlwireles: You've got valid points there. Our "volume of production to population ratio" is way out in left field. But the bottom line is that our output though not all sufficient, is adequate for us to buy fuel at a rate far below that of non producers. Non oil producing countries of necessity buy crude at international price, pay for it's transportation and refining, all from their pockets. But we don't need to dip our hands into our "pockets" for any of the above. Our crude have got/should get us covered. And we don't need to buy crude at international price. NNPC have got crude allocation for that. So there is really no need for us to buy fuel at $1.1 or whatever. 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by gohome: 9:42pm On May 27, 2015 |
jpphilips: you are also making me repeat myself. Pray tell me why AGO is not scarce in Togo, Chad, USA KENYA etc. You owed the markerters and they showed you pepper. Also pray tell while the annihilation of the middle class has not occured in 90% of the countries. They have devalued your Naira, what it means is that any money you have now (savings) has been reduced by 10 percent. Your expenditures have also been increased by 10%. It means you are actually buying your so called subsidized PMS for 10% extra. Annihilation of the middle class has not occured. Stop the delusion that government can not regulate a free market. Its a communist mentality. 2 Likes 1 Share |
Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 9:42pm On May 27, 2015 |
jpphilips: Actually they can import more. They currently rent tank farms to do so. The problem is that they are unbelievably corrupt. But then maybe the fear of GMB will help. The point is that there should be an alternative to private importers to force down their prices. 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by adanny01(m): 9:42pm On May 27, 2015 |
gohome: I bet you dont own a car or probably dont travel or too rich to travel by road so petrol is pretty useless to you that only a petrol power generating set is worth mentioning. Gen set is the only machine you agree that uses pms abi? We should convert our cars and all those interstate buses, taxis etc which are the main consumers of petrol to diesel abi. The petrol generating set which has a very expensive big brother in the diesel gen set will now be the main power source abi? Agriculture is the sure bet to put your subsidy money into. It is the real sector. You employ your people, you feed your people, you produce excess and reserve in time of war, you diversify your economy, you earn exchange rate and put less pressure on your naira and as such values your naira which will in turn reduce price of imported PMS.How can you get this done with corruption that is in the subsidy regime still existing in the government? Is it not when the subsidy fraudstars are jailed and those in government are locked up that any government plan will work? Removing subsidy wont reduce corruption but just make Nigerians poorer and some corrupt Ministers and Perm secs richer. The way to go is removing corruption bro. 2 Likes |
Re: Subsidy 101: Q &A On Subsidy. by trillville(m): 9:43pm On May 27, 2015 |
When the yaradua/gej administration came in, Naira to dollar was about 118. Today it is about 200. The price of a barrel of crude was between 60 - 70 USD as it is today. The op quotes a landing cost of about 1.1 USD. at 2007 the landing cost would have been about 130 Naira where as today it is about 220 naira. Why has our currency fallen so badly? Is it the Nigerian public's fault or the government? If it is the governments fault, should the Nigerian public suffer for the mismanagement of our economy by the government? Should the Nigerian public trust the government that has failed to maintain the value of their currency that they will judiciously use funds from subsidy removal appropriately? Granted, we have a new government, so we should be hopeful but shouldn't the individuals who's actions are causing us this pain be made to suffer too? Don't we deserve some justice? Should we just keep suffering and smiling waiting for God to give us good leadership or should we demand for accountability? 2 Likes 1 Share |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 9:56pm On May 27, 2015 |
ohzee: I would have answered you but i have a problem with people who stick their mouth in issues they have no idea of 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 9:58pm On May 27, 2015 |
ohzee: NNPC failed Nigerians since 1990, free your hope 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by ttmacoy: 10:02pm On May 27, 2015 |
Subsidy should be removed before refineries. Why? Firstly because the goverment cannot afford to continue paying subsidies and also invest the huge sums required to develop our refineries. This is evidenced by the fact the government is borrowing to pay salaries at the moment. Secondly the goverment shouldn't be the only one building all the refiberies we need. This should fall to private investors, but no investor is willing to invest billions of the government dictates how much to sell their product. Removing subsidy will free up the sector to market forces and in the short to medium term prices will go up ( they are already up anyway) but in the medium to long term with competition and supply it will come down and the money saved from su sides can be better used in more crucial areas. holuphisayor: |
Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 10:04pm On May 27, 2015 |
jpphilips: Nairaland is a forum where people air their views on issues after thinking them through with facts at their disposal. So I am not sticking my mouth anywhere. I believe I have a right to state my opinion freely. I have gone through your posts and they sound very angry. Let us learn from you. Even if I don't agree with you or you with me, we will all improve our knowledge. Thanks |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 10:06pm On May 27, 2015 |
gohome: The Nigerian problem requires a Nigerian solution I won't remind you again,, your devalued currency increased your landing cost and interest rates nothing more, I have told you why AGO is scarce instead of proving me wrong, you are telling me it is not scarce in Togo, what kinda reasoning is that? Prove to me that the cabals did not hoard AGO last week to send a strong message to the govt to pay for PMS subsidy outstanding? If the Marketers can show the government pepper, what do you think they will show you in a deregulated market, candy? 2 Likes |
Re: Subsidy 101: Q &A On Subsidy. by TheGoodJoe(m): 10:06pm On May 27, 2015 |
gohome: GEJ is gone but his tentacles is alive. Until we curb corruption, we can not increase the suffering of the masses. Develop refineries. We do not need total subsidy removal to do that. Reduce the wastage in government, probe corrupt officials and recover stolen funds. Build the damn refinery if it means taking a loan like GEJ's Boko loan. Then kill subsidy with a boost in local petroleum products production. 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 10:11pm On May 27, 2015 |
ohzee: That is not the right way to learn, you can not learn by first mis informing your audience, I take such matters very personal. The misinformation of 2012 is why most Nigerians can't even make sense to themselves rather recycling lies sold by the government. 1 Like |
Re: Subsidy 101: Q &A On Subsidy. by TheGoodJoe(m): 10:16pm On May 27, 2015 |
ttmacoy: GEJ spent billions on private jets and fueling exorbitant lifestyle of corrupt politicians. We are talking of Billions of US Dollars missing from NNPC. A quick probe and a corruption tribunals will help recover stolen funds. The government have money to get refineries functioning. That is the best way to curb the Subsidy. Look at the money spent on elections. That money is enough to get two refineries in the country. It is a lie when we are told the Subsidy is the only way to build refineries because the Partial removal proved it. Let Buhari curb corruption in the government then we can tackle and erase Subsidy by boosting our local production of petroleum products. 2 Likes |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 10:20pm On May 27, 2015 |
ohzee: Renting tank farms means they do not have enough storage capacity, who pays the rent for the farms It is still part of the over bloated subsidy, if the market is deregulated, will the rent disappear? NO, but the Nigerian people will have to pay for the inefficiency of NNPC. You just confirmed that NNPC lacks the capacity to import reason the cabal is doing that JOB. Storage goes with import, if you cannot store, you cannot import enough, so they refine a little, import a little and leave the rest for the cabal. 2 Likes |
Re: Subsidy 101: Q &A On Subsidy. by adanny01(m): 10:21pm On May 27, 2015 |
ttmacoy: Corruption should be removed, then subsidy can go, then refineries building. |
Re: Subsidy 101: Q &A On Subsidy. by 989900: 10:25pm On May 27, 2015 |
Hopefully this comes in handy: In a further breakdown the NNPC data revealed as follows: January, 652,000 MT crude received – processed 69,000 MT February, 903,000 MT – 497,000 MT. March, 492,000 MT – 279,000 MT April, 788,000 MT – 432,000 MT; May, 985,000 MT – 560,000 MT June, 672,000 MT – 221,000 MT July, 966,000 MT – 334,000 MT August, 542,540 MT – 296,140 MT September, 253,260 MT – 74,640 MT The data concluded by saying that in general, the three refineries in Kaduna, Port Harcourt, and Warri, recorded an average capacity utilisation for the nine months period of 16.7 per cent, 11.69 per cent and 25.52 per cent respectively. As with the HPP Report, the NNPC data also did not say what became of the rest of the crude for the period in review. Furthermore, another NNPC data for a 10-year domestic refining capacity utilsationfrom 2004 to 2013, showed as follows: Kaduna Refinery achieved 26 percent, 33.8 percent, 8.34 percent, 0 percent, 19.56 percent, 22.17 percent, 20.46 percent, 22.17 percent, 29.12 percent and 29.33 percent respectively. During the same period, Port Harcourt achieved 31.04 percent, 42.18 percent, 50.26 percent, 24.87 percent, 17.84 percent, 15.23 percent, 9.17 percent, 9.18 percent, 11.95 percent and 9.18 percent respectively. While Warri Refinery on the other hand achieved 9.10 percent, 54.85 percent, 3.85 percent, 0 percent, 38.52 percent, 41.34 percent, 43.36 percent, 27.99 percent, 27.88 percent and 35.99 percent respectively. Refineries’ managers speak The Group Executive Director, GED Refining and Petrochemicals, NNPC, Mr. Ian Udoh, had earlier expressed the hope that the nation’s refineries would operate optimally up to 90 per cent capacity by 2016. Udoh told Sweetcrudethat the Corporation commenced rehabilitation of refineries in October 2014, and that the operation was expected to last for 18 months. He explained that the three refineries would no longer be sold or privatised; rather, they would be fixed for maximum capacity utilisation. He said, “We are rehabilitating them, and we have started the programme of phase rehabilitation using local resources and in-house competencies spread over a period of 18 months which started in October last year. “By the end of this year (2015) or early next year, the refineries will be in a significant better position than they are right now,” he said. Udoh, however, corroborated claims of redundancy of the refineries, stating that the refineries cannot record significant production increase until the maintenance works on them are concluded. He said, “However, it is not going to be a sudden jump in production, it would be gradual. We have ordered a lot of materials; as the materials come we install them using our local resources. “It is an ongoing process that will allow the reliability of the refineries to continue improving across the period, because most of our problems have to do with reliability of the plant. We can start all of them now, but from time to time, one of the equipment will fail, or some other faults will occur, and we have to shut down to repair.” According to the 2012 Report of the Petroleum Refineries Special Task force headed by Dr. Kalu Idika Kalu, former Minister of Finance in the Ibrahim Babangida’s administration, during the early 1990’s, the refineries produced enough petroleum products to satisfy the national demand and exported the excess production. In fact the refineries were so successful that for two consecutive years, 1991 and 1992, Nigeria earned US$124million and US$156million respectively from the export of petroleum products. - See more at: http://www.vanguardngr.com/2015/03/nigerian-refineries-avalanche-of-controversies/#sthash.tehpELb2.dpuf |
Re: Subsidy 101: Q &A On Subsidy. by TheGoodJoe(m): 10:26pm On May 27, 2015 |
I guess you do not leave in Nigeria, if not you will never say this. Petrol price moving from N60 to N97 left people stranded in villages. The cost of transportation and living sky rocketed. Same thing with the IBB petrol increase. Major Al Mustapha explained it during Oputa Panel. He used a Bowl of garri price in market to prove it gohome: |
Re: Subsidy 101: Q &A On Subsidy. by ohzee(f): 10:29pm On May 27, 2015 |
jpphilips: OK noted. Let me believe that what I wrote was misinformation. However I am still curious. Can you explain why a marketer will import AGO that has much less demand and no subsidy payment instead of using his capital to import PMS? If the demand for AGO is high like PMS and you have a deregulated market open to all investors including refiners, do you think they can still gang up and form a cabal and fix the price? I believe some investors will rather take their chances and sell lower than the cabal to increase their turnover. Again I stand to be corrected. These are my thoughts. In Enugu where PMS price is not fixed, you choose where to buy petrol and at whatever price you can afford. The marketers have never been able to fix the price. Sometimes a few have been known to sell at 64.50; when the price was 65 to attract customers. JUHEL in New Haven had done that in the past. |
Re: Subsidy 101: Q &A On Subsidy. by jpphilips(m): 10:29pm On May 27, 2015 |
gohome: Is that how you think? how can you say you want to be at the mercy of the cabal to experiment capitalism? what I wrote there is pretty clear and any policy maker knows its a mine that MUST not be stepped on. How do you want to checkmate them when you have just removed the only element of control? Checkmate them how?? tell me the plans you have to checkmate them. Stealing hurts the Nigerian economy more than subsidy, deal with it. 2 Likes |
Re: Subsidy 101: Q &A On Subsidy. by Esdb3: 10:30pm On May 27, 2015 |
gohome: Don't you wonder why they are still in that state? Paying a lot when they don't have money. You want us to be like that? You seem heartless. |
Re: Subsidy 101: Q &A On Subsidy. by gohome: 10:30pm On May 27, 2015 |
jpphilips: 1. The Nigerian solution is to get rid of subsidies on PMS. 2. I have also told you why AGO was scarce. Can't you read? 3. They won't give you candies or pepper if your government learn how to regulate a free market |
Re: Subsidy 101: Q &A On Subsidy. by obi4eze(m): 10:33pm On May 27, 2015 |
989900: |
Re: Subsidy 101: Q &A On Subsidy. by gohome: 10:34pm On May 27, 2015 |
adanny01: Corruption doesn't go away by wishing it. It goes by creating policies which in turn creates a system where corruption would not thrive |
Re: Subsidy 101: Q &A On Subsidy. by obi4eze(m): 10:35pm On May 27, 2015 |
"If we refine 1 barrel (42 gallons) of crude oil, we will
get roughly 45 gallons of petroleum products. The 45
gallons of petroleum products consist of 4 gallons of
LPG, 19.5 gallons of Gasoline, 10 gallons of Diesel, 4
gallons of Jet Fuel/Kerosene, 2.5 gallons of Fuel Oil and
5 gallons of Bottoms." |
Re: Subsidy 101: Q &A On Subsidy. by 989900: 10:36pm On May 27, 2015 |
How do you reconcile that the Department of Petroleum Resources (DPR) few days to a new government taking over the administration of this country has suddenly remember that all we need to solve the lingering crisis in local production of petroleum products is the modular refinery concept? The DPR knew about proposed modular refineries for almost ten years or even more now but because of the fear of soon-to-come Buhari, the agency has suddenly woken up its ideas and it’s already on a globe-trotting road-show that is showing nothing other than a suspected conspiracy of handing licences to another batch of loyal oil traders. At least five of my colleagues in the Society of Petroleum Engineers (SPE) have been begging the DPR since 2010 for licences to set up modular refineries in the Niger Delta but could not get it for reasons best known to the folks at the DPR and the Office of the Petroleum Minister. So the idea of building modular plants across the country is not a new one and this rush by the DPR is uncalled for and outrightly suspicious. In 2002 under the Obasanjo administration, 18 licenses for the construction of private refineries were issued by this same DPR. What happened to the licenses and the refineries? It would be recalled that the NNPC Greenfield Refinery Projects Division (GRPD) came into existence late 2005 as a strategic response to a lack of visible progress on the 18 Licenses issued by the DPR for Private Refineries in 2002 and also, the negative consequences of massive importation of petroleum products against the backdrop of low capacity utilization in the existing three (3) refineries (445KBD capacity). On July 3 2010, the Minister of Trade and Investment, Mr. Olusegun Aganga, announced that the federal government had signed another MoU with two firms, United State-based Vulcan Petroleum Resources and Petroleum Refining and Strategic Reserve Ltd, a Nigerian company, for the construction of six modular refineries in the country at an estimated cost of $4.5 billion. Aganga, who signed on behalf of the federal government, stated that the refineries, with a combined capacity to refine 180,000 barrels of oil per day, would be located in areas where there are crude oil pipelines. He said, when completed, each of the modular plants will refine up to 30,000 barrels of crude oil per day and produce up to five million litres of petrol, diesel and kerosene. The minister emphatically stated that two of the refineries would be completed within 12 months, and even gave the assurance that the Ministry of Trade would work together with the Ministry of Petroleum Resources and the NNPC to ensure the actualisation of the projects. “We are working in collaboration with the Ministry of Petroleum Resources and NNPC. We are working together as a team to ensure that in 12 months’ time, we will witness the inauguration of the refineries. Vice-President/Director, Vulcan Petroleum Resources, Mr. Jim Mansfield, and Chairman, Petroleum Refining and Strategic Reserve, Mr. Edozie Njoku, reportedly signed on behalf of their respective companies. Njoku had also corroborated the minister’s statement that partners in the deal would work with the Ministry of Petroleum Resources and NNPC to actualise the project. Can the DPR first tell us why for almost five years after the signing of Memorandum of Understanding with companies/investors with licenses Nigeria is yet to see the result of the proposed six modular refineries slated to have been constructed within 30 months at a cost of $4.5 billion? Where are the refineries licensed because there is nothing on ground to indicate that the project has actually commenced almost five years after the MoU was sealed? So what is the gang at the DPR doing differently now that was not done when the first set of licenses were issued? The truth most Nigerians don’t know is that most of these licensees rather than use the permit to build modular refineries had in collaboration with DPR top officials criminally veered into using the same licenses for crude oil lifting under all sorts of guises. Is that how a country can make progress? http://saharareporters.com/2015/05/26/dprdiezani-madueke-deceiving-buhari-renewed-modular-refineries%E2%80%99-licensing-ifeanyi-izeze 2 Likes |
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