5 Issues With The Vice President #FuelSubsidy Response

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#1 Are Our Refineries Working Or Twerking

VP: “What happened is as follows: our local consumption of fuel is almost entirely imported.”

So what happened to the 3 functioning refineries? Or was it a lie? Reminder:

January 2016: NNPC spokesman Ohi Alegbe said the Port Harcourt, Warri and Kaduna refineries were producing a total of 6.76 million litres of gasoline per day, adding that this was projected to rise to more than 10 million litres per day by the end of January. Source: Reuters Africa

NOTE: Nigeria consumes 35-50 liters per day on average. That means 20% to 33% will be carried by our local refineries per the above statement … so why the switch all of a sudden? Have we been lying about our refinery capacities to curry cheap approval points?

petronas-six-tips-to-save-fuel

#2 NNPC too Wan Join

VP: “NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers.”

If this is true, why then is NNPC also increasing their pump price? NNPC should not require FOREX for joint venture share exchange!

#3 ForexWahala

VP: “These marketers up until three months ago sourced their foreign exchange from the Central Bank of Nigeria at the official rate. However, since late last year, independent marketers have brought in little or no fuel because they have been unable to get foreign exchange from the CBN. The CBN simply did not have enough.”

This is not news, every sensible Economist (Naira: Sanusi backs devaluation) and even Engineer (even me sef write article here) since last year advised us to devalue the Naira.

But we did not listen, despite the fact that our foreign reserves were dwindling due to low Oil prices we still said we would stubbornly maintain an unsustainable N197 to $1 exchange rate.

This, despite the fact that the black market rate was running away we still held it at N197. What this does is deplete our foreign reserves much faster.

Now FOREX has almost finished, we are now shifting the cost of poor economic decisions by this administration to the poor Nigerian man.

killed me

#4 Typographical Exchange Rate Error?

VP: “We expect that foreign exchange will be sourced at an average of about N285 to the dollar, (current interbank rate).”

So wait here I am confused. The official inter-bank rate has always been N197. But all of a sudden in the VPs message to Nigerians it is now at N285. Did they just devalue the Naira or is this a typographical error?

Please epp me ask, so CBN can update their page here.

NOTE: I actually think the VP made a mistake and was referring to the N285 pounding sterling exchange rate and not the dollar exchange rate. In which case it is quite sad that no one could proof read and catch this factual error.

#5 Government Still Trying To Control Price

VP: “They would then be restricted to selling at a price between N135 and N145 per litre.”

We did a similar restriction of N86.00, it failed woefully. Why do we now think a N145.00 will work differently?

How will the man transporting fuel from Lagos to Kano still sell fuel at the same price as the man in Lagos not transporting anything? Its logically impossible. What they should do is have price restrictions per state or region … and not try and restrict a price across country. It just won’t work!

#6 Conclusion

At the end of the day, this is what happened …

The current Government despite sound advice from several Economists refused to devalue the Naira while running a propaganda campaign to make Nigerians believe that our refineries were working and everything was fine, gambling that the Oil will rebound and cover up the lies.

Sadly Oil never rebounded and this inevitably led to the fast depletion of our Foreign Reserves. To the extent that CBN could no longer keep up with the demand from Fuel importers.

And now the government is shifting the burden for their poor decisions to the Nigerian people. Now I am not saying our Vice President aka the ex-Pastor is telling Lies … but all I ask is that he …

tell truth

twitterWords by Okechukwu Ofili of ofilispeaks.com
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Author: Ofili

Words by Okechukwu Ofili of ofilispeaks.com
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13 comments on “5 Issues With The Vice President #FuelSubsidy Response

  1. Funso on said:

    I would just make 2 comments on points 1 and 4;

    Point 1: They have been struggling with the refineries and the recent attacks by the Avengers has made it worse.

    Point 4: I think you should ask your banker friends what InterBank rate means before jumping to conclusions.

    In conclusion while you have had some Economists advising for devaluation, we have had other advising against so it’s just a matter of the school of thought you lean towards there is no clear cut solution.

    • Ofili
      Ofili on said:

      Point 1: Noted. With or without the avengers, I still feel the 6.5 to 10 million barrels per day is largely exaggerated.

      Point 2: I don’t need to ask them. The rates are displayed in the CBN website, the same link I displayed in the article and that rate is N197.

      Conclusion: Majority of Economists have requested we devalue. Logic says we devalue, we don’t have enough FOREX to protect the Naira. What happens when our FOREX finishes in 2 months time, what do we do then? Borrow dollars?

      • Funso on said:

        On my point 2 I need to correct myself too as I was wrong, I always felt Interbank rates were the rates I was charged when I use my Naira MasterCard but I asked again and found out I was wrong.

        I still feel this govt is between a rock and a hard place but let’s give them time and see how they turn out.

        • Ofili
          Ofili on said:

          They have time, all I a doing is speaking up against errors in hopes they get better. Being silent does not help anyone.

  2. Louis on said:

    That N285 dollar rate seems to be the new interbank rate because that’s about the average rate every international payment I make with my naira debit card is converted. I don’t know much about the economics of devaluation and minimum wage but if it’s the only way out of this forex wahala it should be done asap. You are very correct on the fixed price announcement. It makes no sense because of various distances and it’s not a sign of a full deregulation. Two things that lack in Nigeria are common sense and truth. It’s so hard

    • Seyi on said:

      I believe the government will buy their dollars from CBN which is at 197. The one you are charged has excess charges exerted on you. It’s like retail charges plus service charge. As a retailer you don’t sell at cost price which is what they so then they add service charge for making it available to you. That is as far as I know

  3. Seyi on said:

    This was what I was thinking about just some days ago, the way our government quotes statistics without any check. They’ll claim to have increased so and so and we won’t be able to go back and check, we won’t even be able to check the present claim

    • Ofili
      Ofili on said:

      Too much too much talk. Refineries started working in June 2015, then they stopped, then they started again, then they stopped. Its up and down, left right and center. All over the place.

      • Seyi on said:

        And another thing is that our government always has someone to blame. If it’s not militants it’ll be oil marketers or so and so depending on the issue. I thought one of the things we were taught in social studies is that a good leader accepts mistakes and amends it, even if it was by your followers.

  4. Pingback: Wake Up: The Economy Does Not Lie | Ofilispeaks

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