Nigeria’s first refinery was built in the 1960s outskirt of Port Harcourt. By 1965, the refinery started functioning, producing 38,000 barrels of oil per day. In subsequent years, 3 other refineries were built to meet the domestic needs of Nigeria. [size=20pt]Just like the “Prophet of Doom”, Thomas Malthus said, the population of Nigeria was increasing geometrically and the oil sector became unable to meet our pressing petroleum needs. Then importation began.

Nigerian National Petroleum Corporation (NNPC) started to import fuel at a price most time higher than the Nigerian market price and sometime lower. In order not to operate a fluctuating economy, subsidy was applied to stabilize the economy. Sooner than later, NNPC could not keep up with the high price of petroleum product in the international market, then she began to borrow to pay subsidy. Before any one could say Babangida, Nigeria already found herself in massive debt.
[/size](You see where the problem is?..bd).

This went on to haunt our oil dependent economy from then till now and will keep haunting it if we fail to hunt it. Now it had become almost impossible to remove it as the Labour union will be quick to remind the government and those in support about how oil is our birthright and compare us to oil producing countries like Libya and Venezuela.

A military government in Nigeria rose to the challenge with a sword in her hand. This government, decided that petrol will be subsidized for commercial vehicles and be unsubsidized for private owned vehicle. This semi-subsidy idea also failed, in fact woefully.

Briefly, I would like to tell a non-fictional story of three countries enjoying fuel subsidy. The first country being Libya, In Libya, the pump price of petrol is about N16 per litre, with the global price being N156 per litre. This is an amazing N140 subsidy if the fuel was imported, yet Libya, under a Dictator was the country with the highest human development index in Africa, still Libya had no external debt. The second country is Egypt, a non-oil producing state. Pump price in Egypt is about N47 per litre, with great social economic packages. The most amazing of all of these countries is the third, which is Venezuela. Venezuela has the lowest pump price in the world; this is about N5 per litre (N151 variance from global price). Yet, she enjoys fantastic social economic programs which include; free education to university level, free medical services for all. Recently, 17 new Universities were established and absolutely free. In Venezuela, people rarely go to Hospitals; rather Doctors come to their houses to treat them absolutely free.(KEEP in mind that Venezuela and Libya have 37 MILLION people, and five million people respectively and are no 5 and no3 on the list of oil producers.).

If these countries claim to be enjoying fuel subsidy, can we claim likewise? In a country where price of petrol is N65, N18 more than a non-oil producing state like Egypt. In a country where Medical services and education are far from free. In a country where “epileptic”, is the watchword of electricity.

Since the presence of subsidy has done us little or no good, should we not consider its removal and enjoy the benefits thereof?

Have you ever wondered why Nigerian Moneybags like Aliko Dangote, Femi Oteddola and Jim Ovia have decided not to invest in the importation of black gold, despite its influence on our economy? The answer is simple; all of them are profit oriented businessmen. All they do is sell to the populace what the government (NNPC) imported.

Have you ever wondered why we have not had more than 4 refineries for donkey years, despite license to individuals? The answer is simple, no one wants to lose.

[size=20pt]The logic is simple, if any private company comes into this sector and produces at international market price of N156 and sells in an economy were government fuel is N65, the company will have infinitesimal or no buyer at all, no matter the quality of the fuel produced. Subsequent to all this, the only choice we are left with is the removal of oil subsidy. This removal will pave the way for the following good.

If oil subsidy is removed, Natural monopoly (by the NNPC) will automatically be destroyed, giving room for private companies and thus competition. Just as it was in the days of NITEL (Nigerian Telecommunications), before the telecommunication sector was deregulated and the door was opened to private investors and thus a revolutionary good to the Nigerian economy. Just as it was then, when new companies flood in there will be an increase in price, SIM cards then were as high as N50, 000. In the face of competition, this dropped as low as N100. Same will be the case for oil, when the subsidy is removed, petrol may sell as high as N160 per litre, but when competition comes in it will drop to the barest minimum, possibly lower than N65 per litre.[/size]

The amount the Government pay on subsidy can be channeled to meeting social needs like free and quality health care and education for all. This is therefore a right step in the right direction, and is capable of helping Nigeria achieve her vision 202020.

It’s no news that the Nigerian oil sector loses 40% of her oil produce annually to the mis-managing hands of flaring. Flaring causes pollution and subsequently the depletion of the ozone layer. If the sector is deregulated and subsidy is removed, flaring will drop drastically as no company will want to lose that much.
When the price of petroleum product sky rockets within the first 6-12months after the removal of subsidy, Nigerians will look elsewhere for generation of Fuel. This will lead to the development of alternate power supply. This can help the solar energy sector thrive better. Also, it can help the coal industry find her foot in the Nigerian Market.

Btruth:
...lol. You are right my brother, but do you believe some people will still continue shouting "Jonathan till 2029" because they are dump and stupid. Unfortunately, Nigeria is getting worse everyday. I traveled a lot within Nigeria because of the nature of my business, but Alas! there's no improvement whatsoever in most of the region and the masses continue to complain, even in the south-south where the President come from.

loswhite:
is it fuel subsidy dat is d problem or the corruption associated with anything in Nigeria ?

egift:
In 2011 alone (an election year), FG budgeted less than N500b, Jonathan ended up spending/looting N1.8trillion in the name of Fuel Subsidy.

Now for 2015 (another election year), Jonathan is projecting 1,000,000,000,000 naira. Who knows the actual sum that will be spent eventually.

Jonathan surely knows how loot with both eyes open.

Stop Corruption, Vote Out Jonathan.

Eddygourdo:
,clearly u and that other commenter should be rounded up and burned at stake for not having the wisdom to know that to whom much is given much is expected. Educate urself and them politicians on strategic planning and management and u will realise u shouldnt wipe ur ass before using the toilet. The discourse on whether subsidy should go can only take place after planning on how the removal wont make life difficult for the masses. U must be self sufficient by some degree which are local refineries which must be built and run. When this is done automatically the quantity imported will drop over a period as also the cost of subsidy payments. The period it takes for local production to meey demand is the time taken to remove the subsidy not with filmsy reasons but because its no longer required. The advantage is that the cost will be on a downward trend till its stoppage. Question one . Since halfing the subsidy payments what strides have been acheived towards local production. How come the demand hasnt changed by more than 10% but we still pay the same or even higher subsidy payments as thougj its a full subsidy plan. I suggest u all tell urselves the truth and stop being partisan. The political class are a bunch of clueless theives

Sirniyeh:
If truly the higher educated one is the more intelligent he becomes. Then Jonathan is a disgrace to his qualification. Education enhances reasoning but in case of GEJ, he is a disappointment.
What has happened to our refineries? Is he going to spend N1Trillion to repair them? What are they subsidizing? He should know that we are not all animals.

Vote PDP out! They are crooks

bushdoc9919:
I would like to thank everyone who responded to me, and who raised questions and comments that are really good.

I would like to reiterate that the main problem is that we spend a lot of money on subsidy and we import too much.

As this article, The Positives Of Oil Subsidy Removal puts it...



And to further sweeten the deal....



Una don hear?

bushdoc9919:


Before you send me to the stake consider this

1.Our refineries are not operating at full capacity

2.Even if they were operating at full capacity...we still have to import to make up the projected shortfall in domestic production (and recall that oil prices are very high....and are set to rise up).

3,And we are paying subsidy money, on top of the billions spent on importation(and some oil subsidies are being paid to importers)

4.And we are not producing enough fuel....we produce far less than the UAE and even Saudi.

That is the problem....ultimately the oil money is not enough and the subsidy money needs to be spent on industrial support infrastructure...so that we can get off oil.

Oil is a curse.

Anikulhapo:
Abi Thunder Wan Fire Dem? Upon The Increment In Fuel Price, Jonthan Till . . . .2015

bushdoc9919:
I would like to thank everyone who responded to me, and who raised questions and comments that are really good.

I would like to reiterate that the main problem is that we spend a lot of money on subsidy and we import too much.

As this article, The Positives Of Oil Subsidy Removal puts it...



And to further sweeten the deal....



Una don hear?

playboy19:


Dude... if you like quote the whole world, i still put it to you that you know nothing about this topic being discussed. There is nothing like a fixed global petroleum price. You only have global crude oil price. All countries set their petroleum prices accordingly. I will tell you this as i have stated it previously, 'There is nothing like subsidy in the first place. It is simply a scam'. I am in the industry and you can tell your finance minister or the petroleum minister to call me out on this. With or without government subsidy funds, you can import your petroleum products into this country and still turn profit.

At the moment, only 7 companies are granted allocations to import oil into the country on behalf of the FG and these are the ones who will share this N1 Trillion. Just 7 companies sharing N1 Trillion subsidy funds. All other companies are going to import and sell their own oil without receiving subsidy. Yet they're going to make massive profits. They were making massive profits before the increment from N65 - N95, so you can imagine the profit now, and this is them, without receiving subsidy funds. Call your connects in the oil industry (downstream) and verify this.

Moreover, all the oil imported into the country by these 7 oil companies are going to be bought from some 3 companies (Glencore, Trafigura and Vitol S.A) solely anointed by the FG. So stop feeding Nigerians with your simple and unintelligent logic or rather, some random facts from equally ill-informed journalists and get informed about what you pay for. Fuel subsidy has always been a scam, and a big scam it'll continue to be, until we all get informed and stand up to the government trying to lift it's 'fraudulent obligations' on the populace.

playboy19:


Dude... if you like quote the whole world, i still put it to you that you know nothing about this topic being discussed. There is nothing like a fixed global petroleum price. You only have global crude oil price. All countries set their petroleum prices accordingly. I will tell you this as i have stated it previously, 'There is nothing like subsidy in the first place. It is simply a scam'. I am in the industry and you can tell your finance minister or the petroleum minister to call me out on this. With or without government subsidy funds, you can import your petroleum products into this country and still turn profit.

At the moment, only 7 companies are granted allocations to import oil into the country on behalf of the FG and these are the ones who will share this N1 Trillion. Just 7 companies sharing N1 Trillion subsidy funds. All other companies are going to import and sell their own oil without receiving subsidy. Yet they're going to make massive profits. They were making massive profits before the increment from N65 - N95, so you can imagine the profit now, and this is them, without receiving subsidy funds. Call your connects in the oil industry (downstream) and verify this.

Moreover, all the oil imported into the country by these 7 oil companies are going to be bought from some 3 companies (Glencore, Trafigura and Vitol S.A) solely anointed by the FG. So stop feeding Nigerians with your simple and unintelligent logic or rather, some random facts from equally ill-informed journalists and get informed about what you pay for. Fuel subsidy has always been a scam, and a big scam it'll continue to be, until we all get informed and stand up to the government trying to lift it's 'fraudulent obligations' on the populace.

atlwireles:


I love this, Nigerians always living in a different universe. People like you should push for production cost, pricing, which stands at about $30 a barrel for Nigerian crude. Then you might have a N40 per liter price. Please enjoy your driving.

Even in 2014, some are still living in delusion.

playboy19:


Well, i wouldn't mind if you are I have a go at it using facts and figures. State what you know here and let's see how you weigh up.

bushdoc9919:


The reason why we are corrupt is because we are an oil dependent society. Oil societies transform the government into oil money sharers.

That is why I support the removal of fuel subsidy because if the money can be channeled into industries et al.....we would get off oil and become an industrial society....and in an industrial society it is in the interest of the govt to make everything work (Keeps tax revenues high).

atlwireles:


Anybody calling Nigerian Oil subsidies a scam, is not worth much weighted up or down. You called yourself an industry insider, so you know the cost of production for Nigerian crude is about $20-40 per barrel.

Please lead another demonstration, so government can sell you petrol at cost price. You wonder why you people are dying of poverty, because some of you are constantly trying to reinvent the wheel. Goodluck with your free/cheap oil.

hercules07:


Fuel subsidy is a big scam, 1 trillion Naira is about $6B, in the last 4 years we have spent almost $20B on subsidy, that is the cost of Total's largest refinery in Saudi Arabia (Second Largest in the world), it was completed in 4 years, joint venture between Total and Saudi Aramco, a stone throw from that refinery is a Petrochemical Plant by SADARA nearing completion, started about 1 year ago, sit down there and be defending the crooks milking Nigerians dry, the cost of oil in Saudi Arabia is dirt cheap because they refine their oil, are they not signed up to the same OPEC that we are?

atlwireles:


Why not ask the government to back off this scam and allow the companies mining this oil, sell their product. Why are you talking about Saudi Arabia? I don't understand the connection here. If Saudi oil is that cheap, get an import permit from PPRA and bring some here to sell. You have goldmine business in your hand, please use it.

hercules07:


Yeah right, as if your government wants to do what is right, the government profits from the scam, why can the government now work with the Totals of this world just like Saudi Arabia is doing, afterall, Aramco is a mostly owned by the Saudi government.

atlwireles:


Anybody calling Nigerian Oil subsidies a scam, is not worth much weighted up or down. You called yourself an industry insider, so you know the cost of production for Nigerian crude is about $20-40 per barrel.

Please lead another demonstration, so government can sell you petrol at cost price. You wonder why you people are dying of poverty, because some of you are constantly trying to reinvent the wheel. Goodluck with your free/cheap oil.

bushdoc9919:


You are asking the good questions....and to answer it all, I would say we need to produce more fuel for domestic consumption. That in my mind is where the problem lies.(Which is why Dangote better hurry up and build the refinery he promised....instead of spending so much time talking about it).It is because we are importing fuel at the high world prices...that is where much of the subsidy money is going to. (and if international oil prices go up...especially with the Iraq situation......oil subsidy money may have to go up too.)

(Of the countries you mentioned, Venezuela and Saudi also produce far more oil than Nigeria....and for lesser populations (Venezuela 37million, Saudi 11 million). Brazil has invested a lot in something called 'green fuel' which is made from sugar cane , and is mixed with the regular fuel (Of course Brazil also has a diversified industrial economy...meaning everything has to work for the industries to work well....including fuel supply)

To sum up....Nigeria needs to produce more oil. If we were producing all of the oil for domestic consumption here in Naija...then the current subsidy regime would have made sense...but this one where we are importing much of the oil we consume at home from abroad...and we expect to pay cheap prices ? Something's got to give.

playboy19:


Well, i was of the impression that you are someone with whom one could have an intellectual discuss, then again i suddenly realized that you're one of those GEJ apologist. I personally have nothing against GEJ or whatever, i just dont like the dummbb way you guys go about it.

And talking about 'we people' dying in poverty, that was a joke right? Cos you don't even know me personally. Being paid N100k monthly to be an internet troll doesn't amount to much you know.

Well, the fact is the fact. Subsidy is a fraud. It never existed. It's only part of the 'Nigerian compensation scheme' for the few. Get enlightened. Plus hey, you still did not answer how other Oil companies survive without receiving the subsidy funds?

atlwireles:


Total is a major player in Nigeria, ask yourself why they don't bring Saudi refined oil here.. Before, you move this conversation forward, please talk to any oil futures trader, what is the CIF(lagos apapa) price, for a liter of Middle east gasoline in the wholesale market.

hercules07:


They are a major player in extraction not refining, they dropped the cash for the refinery in the Saudi Arabia, why do I care about Middle east gasoline in the wholesale market, I am talking about refining our crude in Nigeria by entering into partnerships with the same set of people who have done it in other places, but, our government will not do that because the subsidy scam is good for their politics, it is good for their pockets as well, instead of fighting to remove subsidies for 16 years, why not use those same 16 years to build refineries by going into partnerships with people like Total, according to our government, subsidy is $6bn, then sales of the refined oil in Nigeria should be north of $12bn in Nigeria only and excess can be shipped abroad, that should be good enough for any oil company, afterall, they are in the business to make money whether from Nigerians or anywhere else.