for the past few trading days the international price of crude oil per barrel has been dropping continuously currently at $24/bl....

the price has solved perfectly the need for fuel subsidy which was required as a means to make it affordable to all.


I'm calling on government to abandon the idea of fuel subsidy system the market has corrected itself enough. pay subsidy #1.5trillion should be channel to better development projects.

government should put in place system that will make it difficult for any company to undermine it effort by all means necessary.

seun, lalasticlala, mynd44.

let's discuss, let bring this to the general awareness of the public. if government remove fuel subsidy the market price is enough to sustain itself at the old price of #145 even downward.

let make our government repurpose the subsidy fund.

You haven't explained why now is the time.

voltron14:
You haven't explained why now is the time.

government brings vin subsidy as a form of regulating price... subsidies are paid to companies or industries that government feel their services are essential but not affordable so government takes a significant part of the cost and sell less to her citizens.

in 2010 the subsidy payment was in the range of #350bn, in 2011 it balloon to #1trillion and now at #1.5tn. that is a significant dent on a country budget of less than #12trillion.

the market situation that created the scenario for subsidy was the high price of crude oil... which now is retailing at $24/bl.

it makes no economic sense to keep such system instead government should build a foolproof method of containment should any of the industry player try to create artificial crisis to bring us back to the subsidy regime

gnykelly:


government brings vin subsidy as a form of regulating price... subsidies are paid to companies or industries that government feel their services are essential but not affordable so government takes a significant part of the cost and sell less to her citizens.

in 2010 the subsidy payment was in the range of #350bn, in 2011 it balloon to #1trillion and now at #1.5tn. that is a significant dent on a country budget of less than #12trillion.

the market situation that created the scenario for subsidy was the high price of crude oil... which now is retailing at $24/bl.

it makes no economic sense to keep such system instead government should build a foolproof method of containment should any of the industry player try to create artificial crisis to bring us back to the subsidy regime

The purpose of subsidies is to mitigate the costly price the populace would pay on the product if this wasn't otherwise done.

The problem with your argument is that Nigeria depends on the export of the same oil for her forex.

With an impending Naira devaluation, without commensurate increase in wages, one would simply be chasing his own tail.

Already, you read importers claiming they cannot sell petrol at the reviewed rate by government, once again compelling government to implement subsidies.

One way about this is to remove subsidies when the Dangote refinery comes on stream.

Because the cost of shipping, landing, middlemen and more importantly, cost of dollar import is curtailed, you can remove subsidies knowing that importers can still compete but only by way of price reduction.

It would be premature in my estimation, for government to remove subsidies when a lack of alternatives and the prevailing situations do not allow for it.

[s]

voltron14:


The purpose of subsidies is to mitigate the costly price the populace would pay on the product if this wasn't otherwise done.

The problem with your argument is that Nigeria depends on the export of the same oil for her forex.

With an impending Naira devaluation, without commensurate increase in wages, one would simply be chasing his own tail.

Already, you read importers claiming they cannot sell petrol at the reviewed rate by government, once again compelling government to implement subsidies.

One way about this is to remove subsidies when the Dangote refinery comes on stream.

Because the cost of shipping, landing, middlemen and more importantly, cost of dollar import is curtailed, you can remove subsidies knowing that importers can still compete but only by way of price reduction.

It would be premature in my estimation, for government to remove subsidies when a lack of alternatives and the prevailing situations do not allow for it.

[/s]

[s]

voltron14:
You haven't explained why now is the time.

[/s]

Only if they have the political will

voltron14:


The purpose of subsidies is to mitigate the costly price the populace would pay on the product if this wasn't otherwise done.

The problem with your argument is that Nigeria depends on the export of the same oil for her forex.

With an impending Naira devaluation, without commensurate increase in wages, one would simply be chasing his own tail.

Already, you read importers claiming they cannot sell petrol at the reviewed rate by government, once again compelling government to implement subsidies.

One way about this is to remove subsidies when the Dangote refinery comes on stream.

Because the cost of shipping, landing, middlemen and more importantly, cost of dollar import is curtailed, you can remove subsidies knowing that importers can still compete but only by way of price reduction.

It would be premature in my estimation, for government to remove subsidies when a lack of alternatives and the prevailing situations do not allow for it.

in my estimation the price gap created by the downward trend of price per barrel can offset variables you've mentioned. at $24/bl the fixed cost of most producer is $19 with a profit of $5 in like when price was $50-70.

This government will not do that because it is very corrupt. EOD