In a faraway kingdom lived a wealthy king who was called the emperor, the conqueror, the champion, and the lion.
This king cared for his people like a young man would care for his PS 5.
All was going well in that kingdom until one fateful day
This king cared for his people like a young man would care for his PS 5.
All was going well in that kingdom until one fateful day
when the price of firewood suddenly increased and the people couldn't afford it.
Everybody needed to cook else they would die of hunger.
And no king wants his people to die of starvation.
The king was rich so he went to all the firewood suppliers in his kingdom and said:
Everybody needed to cook else they would die of hunger.
And no king wants his people to die of starvation.
The king was rich so he went to all the firewood suppliers in his kingdom and said:
āI know that a bundle of fire firewood cost five cowries. But whenever the people come to buy firewood from you, sell it to them for three cowries."
"I, the king, the emperor, the champion, and the lion will pay the remaining balance for every bundle you sell to my people."
"I, the king, the emperor, the champion, and the lion will pay the remaining balance for every bundle you sell to my people."
The people were happy with this single act it was giving rich and caring king vibes.
So whenever the people went to buy firewood, they paid 3 cowries for each bundle they bought and their king would pay the balance of 2 cowries on their behalf.
So whenever the people went to buy firewood, they paid 3 cowries for each bundle they bought and their king would pay the balance of 2 cowries on their behalf.
The price was 5 cowries but the people paid 3 cowries.
Price of firewood - 5 cowries
People paid - 3 cowries
King paid - 2 cowries
Price was 5 cowries but the king kept sponsoring a 2 cowries "discount" for every firewood purchase.
Price of firewood - 5 cowries
People paid - 3 cowries
King paid - 2 cowries
Price was 5 cowries but the king kept sponsoring a 2 cowries "discount" for every firewood purchase.
That part that the king was paying on behalf of his people is called a SUBSIDY.
So if the emperor pays 2 cowries to balance the firewood purchase of 100 people in his kingdom one day. It means he spent 200 cowries on subsidy (2 cowries * 100 people) that day.
So if the emperor pays 2 cowries to balance the firewood purchase of 100 people in his kingdom one day. It means he spent 200 cowries on subsidy (2 cowries * 100 people) that day.
If you love definitions, @Investopedia puts it in a simple way. See attached image.
Now that you know what subsidy means. Shall we attempt to answer your question?
Fuel subsidy existing in Nigeria means that fuel costs more than what Nigerians are currently paying.
Now that you know what subsidy means. Shall we attempt to answer your question?
Fuel subsidy existing in Nigeria means that fuel costs more than what Nigerians are currently paying.
But the government sets a huge amount aside to pay the balance for Nigerians just like the king was doing.
Removing the subsidy means that nobody is paying the balance for Nigerians. And Nigerians will buy fuel at the normal price.
In simple terms, fuel becomes more expensive.
Removing the subsidy means that nobody is paying the balance for Nigerians. And Nigerians will buy fuel at the normal price.
In simple terms, fuel becomes more expensive.
So, how much is petrol going to cost without a subsidy?
Iām feeling generous so I attached some screenshots for your perusal.
You're welcome.
See screenshots from @PremiumTime, @MobilePunch and @THISDAYLIVE's publications made this year:
Iām feeling generous so I attached some screenshots for your perusal.
You're welcome.
See screenshots from @PremiumTime, @MobilePunch and @THISDAYLIVE's publications made this year:
I hope this clarifies it for you.
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If this was helpful, gift me a retweet and a follow.
You can follow this account if you are interested in reading about business and finance.
DISCLAIMER: The Emperor and the Firewood story above is purely fictional and does NOT in any way describe the situation of any group of people whether past or present. The story is there to make the concept more understandable. That's all.
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