Topic: DPR Interview; How did it go, guyz?

@debrown, I got ur PM and I have replied. Still waiting to hear from you. Tanx

@Sakabu hop u are fine ?

@chucky 77, I have responded. Pls check your inbox. Best Regards

@All, this is what we expect the govt of this country to do - a vivid explanation of the implication of oil subsidy removal so that an average Nigerian would understand what is actually going on before taking such a decision. Please read on.Central Bank of Nigeria Governor Sanusi Lamido Sanusi (SLS) responds to some Internet Inquiries on fuel subsidy and wrote: If you will patiently read this mail to the end you will understand my position. I won't be able to repeat everything I have said over the past few years on fuel subsidy, but in summary; Fraud like theft thrives not only because of the existence of greed and benefit but of opportunity. Place yourself in the shoes of the average Nigerian "businessman" or "entrepreneur"-polite euphemisms for rent seeking parasites.You establish an elcee for importing 20,000MT of PMS and the PPPRA says this is at a landed cost of N145 for example per liter. So u know that for every liter in that vessel you will get at least N85 as subsidy. Now you have a number of "possibilities":1. You can off load 5,000 MT and bribe customs and other officials to sign papers confirming u offloaded 20k MT. Then do the same across the chain with a paper trail showing you delivered 20k MT to a tank farm, and maybe even that u transported it to Maiduguri entitling you to a share of the price equalization fund. Maybe for N20-N30 per liter u bribe all those who sign the papers. The 15k MT you take to Benin or Ghana or Cameroon and sell at market price thus making an additional "profit" of N55/ltr on 15,000MT!2 you can just forge documents and have them stamped without bringing in anything and collect the subsidy -PPPRA pays based on DOCUMENTS.3 you can bring in the fuel, load on tankers, sell some at N65N some at 80 some at 100 some across the land borders.You can do all this and no one can catch it or prove it because somebody was paid to sign off on docs. And with a high enough margin there is too much temptation to be resisted and firepower for bribing officials.When I spoke to the house of reps I told them why I was suspecting fraud. It starts from PPPRA "allocations" based on "capacity". You will find a company like Mobil with capacity for say 60,000 MT and a relatively unknown name with a capacity of say 90k MT. Red alert number 1.Although PPPRA is supposed to give license only to marketers with a national distribution network you see names of companies where you have never seen a filling station in their name.I was a chief risk officer in UBA and in FBN for many years approving loans so I know the name of every big player in every industry that Nigerian banks lend to as these are among the biggest banks in the country. I see names on the list I don't recognize either from portfolios. I looked at or industry studies over the years. Red alert number 2.I studied the papers presented to PPPRA in a short period in 2010 (I won't tell you how I got them!). And I was surprised that on some days over 10 vessels are said to have discharged cargo in Lagos on the same day-clearly the same officers stamping and "verifying" that the vessels were SEEN. Is it really realistic that on the same day 13-15 vessels can discharge in Lagos? Red alert number 3.Why was I interested in fuel marketing. Because the two sectors that led to the near collapse of the banking industry were capital markets and oil marketing. I am not giving any confidential info out as AMCON MD has already disclosed publicly that two companies alone -Zenon and AP-owned by the same businessman owed the Nigerian banking industry N220b. And we all saw the amount of subsidy paid to those companies published by Business Day.So money had been taken, subsidy had been collected but loans were not repaid, and we couldn't see the money either as product in tank farms or in fuel stations or credit sales. So I became obsessed with trying to understand how that industry operated and the more I saw the more I hated it and I started the war against subsidies.It is actually better to do a direct cash payout or add a line item to salaries called petroleum support or transport allowance capped at say N300b p/a than to keep paying it. It goes to pay middle men, rent-seekers and corrupt officers and there is no amount of preaching that will stop this fraud so long as the policy is so badly defined.Every time oil price goes up and every time the Naira is devalued and every time the quantity of imports increases the "subsidy" and thus the "rent" increases and there is more gravy to go round. So every year we "import" more and more and deplete our reserves, and the government borrows more and more to pay for subsidy and the beneficiaries are a small group of marketers, govt officials and neighboring countries which get fuel without losing Forex! And while a person who applies intelligence can see what is happening you can't prove it in a court of law. If the man says he sighted the vessel and it was 20kMT you have to accept it. It was a year ago!So for two years I have been convinced that this thing is a scam and that it cannot be stopped because the entire controls have been compromised. NNPC sells domestic crude, Pays whatever subsidy PPPRA says and then gives the balance after JVC to the federation account. And while Fani Kayode is right to speak up, the truth is that it was Obasanjo who first subverted the process by allowing NNPC to make the deductions before paying into federation account. Because once money goes into that account it is to be shared among 3 tiers of government so strictly speaking the deductions have always been unconstitutional as the FG was paying subsidy on behalf of itself and state and LGs without their approval.So yes, I am willing to take all the criticism and labels and be unpopular but this has to stop and govt can find other ways of alleviating pain. Iran removed subsidies and started cash transfers directly to the poor. It is up to fiscal authorities to figure out safety nets but from where I sit and what I know this decision is not only correct but necessary and overdue. I also confirm that I have revealed nothing here I haven't spoken about before in public and it is just that Nigerians never listen!I am not complaining about insults I am used to that. I just believe that an insult is not an argument and when people resort to personal abuse they have run out of logic.But to then go beyond me and extend it to my dead grandfather and his "descendants" ie my late father his siblings etc I think goes beyond the pale. As a Nigerian-and as an economist- I can take a position on economic matters and this position is one I have had for years even before coming in to the central bank.I have also explained the position on several occasions and criticized government for not doing this before. In 2010 at a public hearing in the House of Reps on the 25% saga I alerted the nation of what I considered a potential big scam around subsidies and urged for its removal. No one paid attention. The economics is very clear to me. That it is unpopular is also understandable.The British public is unhappy with Tory budget cuts. The Greeks went on riot over austerity. Italian parliamentarians came to blows before Berlusconi was thrown out of office. The US congress is yet to approve Obama's tax increases.Economic decisions-by definition-ALWAYS must involve a cost or an opportunity cost since for them to qualify as economic they must involve a choice in resource allocation among competing uses. An enlightened debate is one that weighs the pros and cons of removing subsidy and continuing with it.Removing it has costs in terms of Nigerians paying more for PMS-which by the way is not the fuel for generators, power plants, production facilities, heavy duty goods transportation trucks and even luxury buses.It is fuel used by the middle class and car owners to drove around town and from city to city not to employ workers and produce goods and services. Diesel which is critical to manufacturing and employment creation is not subsidized as the subsidy was removed years ago by Obasanjo. Nigerians said nothing then because it was blue collar workers that got retrenched by factories.Those speaking now on the internet and Facebook and twitter and newspapers are not workers but middle class elite who use PMS in their smart cars so let's stop all the ideological pretense. This is not about elite and masses but an intra-elite discourse.I will summarize the issues and I write as a Nigerian economist and public intellectual not as a public servant:1. I am a strong advocate for subsidies if they are for production and not consumption, and if they benefit the poor and not middle men and rent seekers. The US government subsidizes cotton and wheat farmers and Nigeria spends its reserves importing wheat from America and keeping American farmers employed. The OECD countries pay subsidies to cattle farmers. Today Promasidor imports powdered milk from New Zealand and packages in Nigeria using our foreign exchange while we have cattle. WAMCO imports milk from the UK and adds water and tins it and calls it "production" of Peak milk. We use our Forex to import petroleum products and keep refineries and jobs open in Europe. Meanwhile precisely because of market distortions there can be no private sector investment in refineries since no one can make profit selling at the regulated price unless we are going to provide private refineries with crude for next to nothing. Certainly no one can purchase crude at market price, refine it and sell at N65 without huge losses so this explains why there are no private refineries.2. what I mention above is at the heart of the problem with government economic policy which needs to be changed. The economy since SAP is one that supports imported consumption and not local production, perpetuating dependency, non inclusive growth and insecurity. Why is it that the economy is growing at 7pct annually but the people are getting poorer. Because growth gains are not evenly distributed. Personal income is skewed towards people in the oil industry, telecoms, high finance, stock market, real estate and yes civil servants and politicians who feed on corruption. We produce crude oil but import petroleum products (today the UK's highest exports to Nigeria are petroleum products). We have a large cotton belt but import textiles from china (thus keeping their subsidized factories open and jobs in china). We are the world's number 1 producer of cassava but import cassava starch from Europe. We have a huge tomato belt in kadawa, jigawa and chad basin but are the world's largest importer of tomato -from China and Italy. We can produce rice but we import rice from Thailand and India-most of it from grain reserves that have been in stock for over 5 years.3. If above is clear then it is evident that this trajectory can only lead to disaster. We will continue to spend our resources promoting growth and employment in our trading partners. Terms of trade shift against us, we can only have foreign reserves because by the good grace of God we have Oil which will be exhausted soon and with new discoveries may become so cheap it loses value. We don't create any value added jobs as the only real production is peasant farming. Oil, telecoms, finance and real estate are not employment intensive. So everyone becomes a civil servant as the economy cannot create jobs. Result? In 2012 budget out of a total N1.8tr recurrent expenditure for the executive arm N1.6tr is on personnel costs not overheads. To reduce this you have to cut salaries or pensions or retrench civil servants. This is the classic trajectory of underdevelopment, De-development and De-industrialization.4. For the above reasons I am a strong proponent of structural reform and this begins from the fiscal framework. The limited resources of government should be allocated to supporting production-especially if we are running a budget deficit. We cannot keep borrowing to support conspicuous consumption. To support a job creating economy we need to fund power, transportation infrastructure, market infrastructure and access, technical and vocational education etc. We need to build rice processing plants, produce starch and cassava flour and ethanol, process our tomato and milk locally, regenerate our textiles firms (which used to employ 600,000 workers but now employ 30,000!), refine our own crude etc. We cannot even begin to do this if 30pct of govt expenditure is on fuel subsidy, if out of the balance 70pct is recurrent spending, 10pct is debt service, 10pct goes to the Niger delta and only 10pct is capital expenditure. So it is about a choice-what do we spend money on and how do we allocate resources?5. We often compare ourselves to other oil producing countries like Saudi Arabia. What are the facts? With a population of over 160m we produce 2mbpd ie 1 barrel for every 80+ citizens daily. Govt share of revenues if like 50pct of every barrel so it is effectively a barrel for 160 citizens. Saudi Arabia with a 24m population produces over 8mbpd or one barrel for every 3 citizens. In fact in 2010 the nearest OPEC country to Nigeria in production per capita was Algeria with a barrel for 30 and Algeria is more gas than oil.With one barrel for 3 citizens daily Saudi Arabia is able to provide infrastructure, education, healthcare and social safety nets and have huge savings. It can provide subsidized fuel at a total cost that is a fraction of its savings and even export refined products. It is paying for subsidies our od its fiscal savings and not borrowing to pay. We are like a poor man with a rich neighbor. The neighbor builds a good house, buys several cars, eat expensive food, travel abroad every year and still have huge balances in several current accounts. Then you choose to live that lifestyle and mortgage your house, take an overdraft from the bank to finance it. Next year it is time to repay the bank, u don't have the money so u go to another bank, borrow enough to pay the first bank principal plus interest and also fund the continuation of the lifestyle. It continues till u can't borrow anymore and the bank throws u and your family out of your house and you everything.A responsible father would have long since faced reality and told his family he doesn't earn as much as his neighbor and expectations need to be moderated if they to keep their roof. Of course the children won't be happy at not going to Hawaii for summer and having to take public transport rather than own cars like their neighbor's children. Maybe they will even abuse the father behind his back and call him a miser. That is the cost of leadership.Finally: removing subsidy is not a silver bullet that solves our economic problems. And there is a huge trust deficit that government has to address. Government needs to investigate subsidy payments and punish any violations of extant guidelines. It needs to cut on unnecessary and wasteful expenditure. It needs to fight corruption and show seriousness in that. It needs to deliver on capital projects, power and infrastructure including irrigation, farm-level storage and agri-processing. These are all valid issues that are to be taken IN ADDITION to and not in place of subsidy removal.Since someone has decided to make insinuations about my grandfather I owe it to him to defend his record. it was my grandfather as emir that repealed an obnoxious rule started from the days of Emir Usman that disenfranchised women from inheriting property. It was Sanusi that built the groundnut pyramids to the point where Kano NA was contributing 40pct of the revenues of the northern region. It was emir Sanusi who built the Bompai Industrial Estate, and turned Kano into the industrial nerve center of the north. He was acting governor of the northern region, minister for pilgrim affairs, chief Imam of Friday mosque, judge and leader of the Tijjaniya order. As for his "descendants" my father was one of the very first batch of 12 Nigerians recruited by the British to set up the foreign service in 1957 and he remained in public service and rose to be permanent secretary before retirement. He set up in the 60s the research dept of the ministry- the present NIA so he was the first external intelligence officer in Nigeria. As permanent secretary he was the architect of Murtala Mohammed's policy on decolonization of Africa and oversaw the independence of Mozambique and Angola and the final push to liberate Zimbabwe and South Africa.So yes Sanusi was not perfect. He was a feudal aristocrat. And my father was not perfect. He was also a prince and privileged to go to Oxford and LSE. But please if you want to abuse my grandfather and father kindly tell us what contributions your own grandfather and father made to the people.Sanusi Lamido Sanusi is the governor of Nigeria's Central Bank

Good day All. @ Gen Debrown like i said earlier removal of subsidy is not a bad idea since we know it will benefit the Masses in the long run. The Problem here is implementation and awareness of the benefits that will accrue to NIGERIANS when the subsidy is removed. As i earlier said there can be a gradual increase of the price while awareness and other policies such as transport and electricity issues are being implemented. The final thing is rushing the revamping of our existing refineries and fast track the building process of the proposed three refineries scheduled to be built in Lagos, Bayelsa and Kogi respectively. It is well, i believe the strike will end shortly and we will be called to serve our nation in one of the most prestigious departments in the country. @ All lets all continue to pray for God's divine guidance and wisdom from above which is ABOVE ALL. It is well. God is in control. Gentlemen start preparing the day is fast approaching when we shall be called by God's Grace. As Gen Sakabu will say "IRON YOUR SUITS". GOD IS IN CONTROL

@debrown, wonderful write up by u on fuel susidy.wish i could do same though i see it as a gift u hv.dear pls i sent u a pm.many tnx

@debrown. Tnx 4 ur reply.

fuel deregulation. Other petroleum products like ago has been long deregulated, for the past 7years or thereabout. Where the hell is this money! Wat I expect this gov to do is remove corruption. Wat jonathan is saying is that the government is tired of paying the cabal this money, that the ordinary naija man should do the payment. By paying #140 per litre for fuels, u are pay vat, fuel subsidy charge, but to mention a few. God save naija, God bless us all

Debrown,great write up. Did u get the msg I sent u? Am from Edo state and discipline is Business Admin. Pls bear with me I've to make it open cos am anxious. Tanx

Unconfirmed rumours. Make up ur own minds.

Rumour Has It: Petroleum Marketers Fights Back, Exposing Subsidy Deals - Nigeria DailyPost

Hmm! Quite Enlightening.
But d write-up still doesn't answer some of d masses questions.
1. AGO, jet oil, DPK have been deregulated since, where are d economic effects?
2. As a poor person, u shd not copy ur rich neighbor, but our leaders are not leading by example. Why do we have 11 aircrafts in d presidential fleet when leaders of rich nations hardly have 1? Why shd we pay abt 50m for VP newspapers and N12m for printing docs when we kno we're poor? N1b feeding, 75m fueling of generator by govt dt promises to turn around electricity? Looking at d spending on aso-rock and presidency in 2012, my question is, 'is Nigeria really poor as we're made to think?'
3. Clearly, d fuel subsidy is a good thing and it's not d problem but CORRUPTION is. And it appears d govt lacks d capacity to check d it. So, d best thing is to throw away d baby (subsidy) wt water (corrupt cabals)?
4. Governance is not a test of popularity but democracy is. Democracy requires dt d will of d ppl shd prevail. At this moment, what ppl want is return it, start d orientation, sensitization against it, put those 'hasty' palliative in place and in 2months or so, remove it.

The last thing is d issue of trust. There's a very WIDE GAP btw d governers and d governed. Even among d leaders, there's no trust. The reason cited by governors against SWF is they don't trust FG. The same govs carpeted removal of subsidy bks they didn't trust FG on its claim on amt paid on subsidy. If they can't trust themselves, how can we trust them.
Is it possible to trust a perpetual liar? FG told us implementation of subsidy removal will start in April. Are we in april?
In 2011, N50b was in d budget for employment creation. Where is dt now? Every yr, budget is given a sweet name, do we c any improvement at d end of d yr? TRUST?

Masses are stakeholders dt must av say in democracy. Masses say return fuel price NOW, you may increase it later.
Masses say our leaders must lead by example. Start d sacrifice from ur end. Office of d First Lady is unconstitutional. President and all govt officials shd patronize commercial facilities (govt hospital, schs, Nigeria Airways, etc) to really feel our pains.