26.05.12
Pact the subsidy challenge does not require the brains of a rocket scientist; it is unpretentious mathematics. The removal of subsidy means the removal of a financial buffer on provocation products that protects the consumers from bearing the
bulk of the costs incurred by the suppliers.
The simplification that this would not happen defies simple mathematical calculations; a simple relation of the costs of petrol and that of diesel gives a clear picture of what we may be faced with.
Since the moving of subsidies on diesel, we have seen a spiral in the cost of the product from a subsidy induced fetch, which made it cheaper than petrol, to an average 148 Naira per litre today, much higher than the get of petrol; this is because the removal means that suppliers must include the costs for transportation and duties, which would then have been borne by government.
The need for government cushion is based on the really that our average income is not commensurate with the cost implications imposed by these duties. Currently, the sell for of petrol in Nigeria is almost at par with that in the United States.
Source: Nigerian Observer