Here are the 12 Things You Need to Know About The Increment In Fuel Price by Ikenda Elechi.
1. Nigeria does not refine, she exports & sells her Crude to those who can refine
2. After it’s refined, she now buys it as finished product & imports back into Nigeria as Petroleum Products
3. These & other transactions are done using the US dollar ($) because that’s the currency of Int’l trade
4. And because everyone who wants to trade requires the $, the $ becomes competitive to get. This means that the much $ you get from exports, the richer you become as a trader (whether country, individual or corporate body)
On the other hand, if you spend more $ than you earn, you’ll be poorer at the Int’l economic scene
5. Petrol being an Int’l commodity required by nearly all countries to power their energy & serve their strategic reserves and by companies to power their Machineries, it means that Petrol is also relatively scarce as much as it’s competitive. As we all know from basic Economics, when demand is higher, a commodity becomes more expensive
6. Due to the expensive nature of Petrol at the Int’l Market, countries import at the high costs and sells to their citizens at a discount. Eg, Nigeria buys at the equivalent of 200 naira per litre from the Int’l Market & sells at 150 per litre to her citizens, the difference of #50 is paid by the Govt.
It is that difference of #50 that is called SUBSIDY
7. And because millions of litres are involved, Subsidy runs into hundreds of billions and even trillions, meaning that monies that ought to be used to fix Infrastructures are used in paying subsidies. When you consider the corruption on the subsidy scheme, it becomes worse
8. Worst is that it is the ‘big men’ in Nigeria who have several Cars in their Convoys that ultimately benefit from this subsidy. How?
They have several Cars meaning they consume more Fuel which had been subsidized by the Govt. But the ordinary Nigerian at most, has one Car that he manages with his family. So, his benefit on the subsidy is just on one Car while the big man benefits on several Cars on subsidy paid from public purse jointly owned by all Nigerians. The best option therefore is for every Nigerian to fund themselves such that the big man fuels his Convoys at his own cost while public funds meant for public purposes are used to attend to other areas of National need
9. From the above, it is clear that no single Country, Govt or President fixed prices of Petroleum products, at best, they either pay subsidies or refine their Crude by themselves
10. However, the concern here is that Nigeria has about 4 or so Refineries which ought to be refining the Crude. Why successive Nigerian Govts, including the PMB administration has been unable to fix these Refineries is what amazes me till date
11. More saddening is that while Nigerians are made to bear high cost occasioned by subsidy removal, those in govt at all levels, especially at the State & Local spend monies recklessly & inefficiently. In Rivers which has Nigeria’s highest ratio for eg, just 23 Judges/Justices who are normally well-paid were offered 150m each amounting to 6B of Rivers money when Civil Servants & Pensioners have not been paid a dime in about 5years
12. Based on the above, Nigerians would not have a problem paying the high cost of petrol if the ruling class shows some creativity in managing public resources. It’s either all Nigerians, including the govt bears the high cost of things or govts spend public resources in a manner that deliberately uplifts the larger population who actually needs support.
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