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fuel prices have increased and likely to increase again in a few days.

God help Nigeria.

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spam ?

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Daily Trust (Abuja)

Nigeria: Subsidy Report Lacks Credibility - Jonathan's Aide
By Abdul-Rahman Abubakar and Turaki A. Hassan, 3 May 2012


An adviser of President Jonathan yesterday criticised the House of Representatives subsidy inquiry report, saying the probe lacked credibility because it targeted specific individuals and shielded certain former oil ministry officials.

Ahmed Gulak, a political adviser to the president, told journalists in Abuja that the probe was skewed against incumbent officials as lawmakers failed to investigate former petroleum minister Rilwanu Lukman and former NNPC chief Mohammed Barkindo.

The subsidy inquiry covered a period spanning 2009 to 2011, and Lukman and Barkindo were in office in 2009-2010.

"Why did they not invite Rilwanu Lukman? He was the minister of petroleum resources during the period of the probe," Gulak said at a news conference.

"Where is Mohammed Barkindo who was the Group Managing Director, Nigeria National Petroleum Corporation (NNPC) at the time? Where are the other key actors who were at the vanguard of the subsidy regime?

"The House of Representatives must probe these individuals before we can truly say they are doing the right thing otherwise the report will lack credibility. What is worth doing at all is worth doing well," he added.

The House last week approved the subsidy probe recommendations, which demanded trial of top government officials for mismanagement of over N1 trillion petrol subsidy funds.

Among those blamed for the subsidy scam are the management and board of the Nigerian National Petroleum Corporation, headed by Petroleum Minister Diezani Alison-Madueke, and the defunct board of the Petroleum Products Pricing and Regulatory Agency (PPPRA) headed by Ahmadu Ali.

"Yes, money has been stolen in NNPC and we have to get to the root but in doing that we must go back to when it all started," Gulak said, referring to the era of Lukman and Barkindo.

Last week, the House of Representatives said it was passing on the report to Jonathan for implementation.

But Gulak said yesterday the House was yet to send the document to the President and so there was no basis to the accusations that Jonathan was sitting on it.

"Mr. President is even the one that is saying no more stealing with the subsidy regime and that it must stop. How can he then turn around and sit on something that will help him sanitise the sector? People should not allow themselves be used to promote the political agenda of some selfish individuals," Gulak said.

"President Jonathan is one person that wants things done and done correctly. He is the only president in the history of this country that has embarked on the cleansing of the oil and gas sector."

But spokesman for the House of Representatives, Zakari Mohammed, yesterday said Gulak's comments were an attempt to rubbish the report because his friends and associates were indicted by the Faruk Lawan-led committee.

Mohammed, in a reaction, said invitation by the committee was very wide and even people volunteered on their own to appear before the panel during the public hearings.

"It's not true," Mohammed said, referring to Gulak's accusations.

"It is another way of rubbishing the report because a lot of their friends and associates were affected. If an adviser is saying this then it calls to question the quality of advice he offers Mr. President. We have no regrets at all because most Nigerians are behind us," he told Daily Trust.

^

God help Nigeria

God bless Buhari !!

GenBuhari: General Muhammadu Buhari (rtd) has said that all government needs to charge for fuel is made up from following charges:

cost of labour to pump out crude
cost of transportation to and from refineries
and cost of refining oil to produce fuel

Buhari implies that cost of producing the fuel is less than what we are already paying  for fuel.

Where is the subsidy?

subsidy removal is a scam to raise money for the corrupt elite to loot!

[flash]
https://www.youtube.com/watch?v=YmG_dYY7YRA?version=3&feature=player_detailpage[/flash]

God bless Nigeria!!

who do we blame for the state of the country?

We should blame ourselves. Nigerians have simply not had the backbone to call our leaders to order.

God help us Nigerians

One man thread,once again we can see how desperate Buhari and his blood sucking cohorts can get.

no longer a one man thread

ubandire: One man thread,once again we can see how desperate Buhari and his blood sucking cohorts can get.

https://www.youtube.com/watch?v=YmG_dYY7YRA?version=3&feature=player_detailpage

Nigeria , please stop using the term " subsidy"

Call it price hike or tax or whatever, but subsidy is not correct, show the govt that we have not been taken in by their lies

[size=20pt]Nigeria: Endless fuel price hikes [/size]

Written by Workers' Alternative Wednesday, 14 September 2005

www.nairaland.com/attachments/822018_Obasanjo_speaks_gif0fe9b8e8a7dc5a40552e62d9356a0fec

The history of fuel price increases in Nigeria tends to repeat itself, although not exactly in the same way, but seems to follow the same old script. It first starts with rumours of the impending increase. Then you hear the same old story about how the NNPC and the nation are about to die due to the subsidy on fuel, then we hear that everybody is against it. We hear that the highest decision-making bodies in the land, the Senate and House of Representatives are all against the increase. They even claim that there are motions against increment. We hear that our labour leaders are all against it. After all this, the prices jump up and hell breaks lose. The lives of the masses are further worsened and the pain is intensified.

The end of August increment is the tenth time fuel prices have been tampered with in six years of (Obasanjo's ) civilian rule and the ninth increment. However, it is clear that it is the same old script that had been in use since the first increment in the 1980s under IBB that is still in use till today. It is the same old argument.

According to Karl Marx, “history repeats itself, first as a tragedy, then as a farce”. However, after the 9th increment in fuel prices in Nigeria, the farce is now a tragedy.

Within the past six years (of Obasanjo's govt), we have had six general strikes and mass protests called specifically to challenge these increments. These strikes, which were due to pressure from workers on their leaders, did achieve some reductions no matter how small and did slow down the pace of the upward increment. However, it is clear that the regime grants concessions in the face of the movement only to come back another day to attack the masses. To some it seem like we are in a barber’s chair.

According to the statement adopted at the September 5, 2005 Labour and Civil Society Coalition, (LASCO), “LASCO noted that while the previous strikes and mass protests had substantially reduced the pace at which government would ordinarily like to increase the prices, these have not solved the problem.” It is now clear to all that the Nigerian working class and youth must end this sadistic and ferocious cycle.

Of all the increments, this is probably the most condemned, even from the various sections of the ruling elites. It confirms the hopelessness of the regime and the entire ruling elites. It exposes how they are hopelessly tied to the apron strings of the IMF and imperialism. However, in spite of the condemnation or criticisms of the ruling elites either in the senate, representative, MAN, their parties AD, ANPP, etc, and various ‘professional bodies’, they are all opposed to mass revolt. They want the masses to take no action; this is why they are promoting the “strikes don’t work” slogan.

However, we have reached another historical crossroads in Nigeria. It is either the working masses take over the running of the society or this hopeless system will definitely continue with more brutal consequences.

A regime in crisis

In spite of its crude arrogance, the Obasanjo regime is quite weak and very unstable. It can be said that it was the labour leaders that rescued him on numerous occasions. The leadership of the labour movement bailed out the regime on numerous occasions, by holding back the working class. The experience of the aborted November 2004 general strike readily comes to mind.

The weakness of this regime can be seen by the numerous desperate political somersaults it has had to carry out, since the November 2004 aborted strike and now, in order to desperately hang on to power.

For instance, it is a well-known fact that Obasanjo is one of the most dogged opponents of the demand for a “national conference”, but in an attempt to divert attention he organized one. The so-called anti-corruption crusade is geared towards giving the impression that there is an attempt to fight corruption. However, in reality nothing significant is happening. And recently we have had the cry over “debt relief” which in actual fact is a big lie.

The realities of ‘civil rule’ are becoming clearer to the masses by the day and they are looking for a way out, as nothing is forthcoming from the so-called “civilians” who are actually crooks and agents of imperialism.

www.nairaland.com/attachments/822018_Obasanjo_speaks_gif0fe9b8e8a7dc5a40552e62d9356a0fec

Continuation of IMF inspired attacks

It comes under the fancy term of ‘reforms programme’, but its real meaning is IMF inspired attack programme on the working masses. Since the 4-day general strike in October 2004, the regime retreated a bit on a substantial increment in fuel prices and focused on ruthless implementation of the other IMF programmes.

More fees were imposed on students, combined with cuts in funds for education. Pensions and salaries are constantly being withheld, privatisation/liquidation of public corporations and utilities intensified, drastic cuts in funds meant for social service, devaluation of the naira, etc. The regime has borrowed N70 billion toward the retrenchment of about 120,000 federal workers!

In spite of the obvious failure of all these programmes, the regime still continues with them. It has no other programme. Increment in fuel price is an integral part of this policy.

In order to continue with these attacks without opposition, the reactionary labour bill was sponsored by this regime, which outlaws trade unions from going on strike on matters such as fuel price increment.


[b] No subsidy on fuel
The regime’s arguments to justify the increment in fuel prices are just too out-of-date and defy logic. The ruling elites have overused the claim that there is a subsidy for decades since the first increment under Obasanjo in the 1970s.

On September 5 2005, IMF nominated finance minister, Ngozi Okonjo-Iweala, still declared that the government would be subsidizing fuel to the tune of N400 billion in 2006. This is in preparation for further increment.

The arguments remain worthless and the figures are usually a result of abracadabra and not real figures. First, who made sure that the refineries do not work? Who made sure that no new refineries were built? Venezuela, another oil-producing country like Nigeria, under Hugo Chavez has built three new refineries since 1998.

The costs of building refineries are usually inflated to the tunes of tens of billions of dollars in order to justify why they cannot build any. This (Obasanjo) regime has not built any industry since 1999 rather it had sold them off under the claim that the government has no business doing business.

As of now, Nigeria is producing about 2.7 million barrels of oil per day and an additional 300,000 barrels is meant for the local market. Due to the bad shape of the local four refineries part of this are also exported. The mass of fuel for local consumption is now imported.

www.nairaland.com/attachments/782431_Olusegun_Obasanjo_mismanaged___closed__Nigeria__Airways_jpgd57326e8fac1d711eb0d1d3245abec97

According to the NNPC, it had subsidized fuel from January 2005 to July 2005 with $900 million. The country makes more from crude oil sales now due to the increase in the crude oil price internationally, over $160 million every day from oil; the so-called subsidy is less than 7 days income!

In essence, it does not make sense to claim that there is a subsidy, when there is more than enough to pay for the imported fuel. In addition, there is nothing to stop the repair of the refineries and the building of new ones.

Again, it is important to emphasize that the cost of production of one barrel of crude oil is less than $2, just as the cost of producing cassava is low in Nigeria. It cannot be claimed that since the price of cassava is high internationally then cassava is being subsidized locally.

www.nairaland.com/attachments/861709_OBASANJO_AND_BUSH_0_jpg4a8e09ab91009c86ddd34d4b957763d2

They always want to give the impression, although with little success, that real money is being used to finance the so-called subsidy. This is too far from the truth. Rather the subsidy claim is actually a projection of how much they would make if fuel were sold at a higher price and nothing more. For instance, before the last increase, the NNPC claimed that it was subsidizing fuel to the tune of N450 million per day. It claimed, “The landing cost is N65.26 per litre”; fuel was increased to N65.00-N75.00 per litre.

To get the figure of subsidy, just subtract fuel at N50.00 per litre for 30 million litres from fuel at N65.00 per litre for 30 million litres, and, abracadabra, you would get their N450 million!

Subsidy in the Obasanjo-IMF dictionary is the difference between a projected higher price and the current price of a commodity. Thus for them there can never come a time where there will be no subsidy!
[/b]


Why endless increases

As long as neo-colonial capitalism remains in Nigeria, the current crisis would remain and things are bound to get worse, as the interests of the imperialist multinational corporations and their local elite collaborators comes before the lives of the masses.

The numerous ‘reforms’ are geared towards making more money for this parasitic class at the expense of the mass majority. Therefore, in the midst of plenty, poverty and pain still prevail.

The main principle behind the “reform programme” is to hold the wages of the workers down using the crudest means, cut down all aspects of social spending and if possible destroy it completely, cut wages and income of the masses via devaluation of the currency, sell off the public corporations, and increase the prices of goods and services. Prices they say are to be determined by “market forces”.

This accounts for why the fuel price can go up several times and there is no corresponding increment in the take home pay of workers. The prices of all goods and services have gone up a multiple fold within the past period. The huge profits made from this bloodsucking programme then go into the private pockets and are used to pay the fictitious foreign and local debts.

www.nairaland.com/attachments/822018_Obasanjo_speaks_gif0fe9b8e8a7dc5a40552e62d9356a0fec
The vicious cycle

However, in spite of all the claims of the ruling elites and their imperialist bosses, the crisis of the system continues and in fact deepens in the face of the numerous failures, which are never admitted.

All the indexes continue to point to a downturn in the economy after years of the imposition of these IMF/World Bank programmes. These have come under numerous guises in the past: “austerity programme”, “Structural adjustment programme, SAP”, and now “home grown reforms”. They never consider the fact that their policies have destroyed the lives of millions of people and are keeping the society backward. Oh no, this fact never bothers them.

www.nairaland.com/attachments/782431_Olusegun_Obasanjo_mismanaged___closed__Nigeria__Airways_jpgd57326e8fac1d711eb0d1d3245abec97

For every programme implemented a corresponding set of contradictions follows, which further worsen the situation in spite of the money they make. The current fuel price increment for example comes with its own bandwagon effects, which the operators of the system cannot do anything about.

In their minds, the increase means increased revenue for them. They presume that if they sell 30 million litres of fuel per day at N50.00 per litre, they would sell that same volume at the current price of N65.00. This never happens. There is always a qualitative drop in volume demanded due to the limited purchasing power of the people. The man buying N1,000.00 of fuel before increase would probable not have the ability to increase the amount spent on fuel.

This in the long run would lead to a cut in the mass of profits. This accounts for why quite a lot of small companies in the “downstream” sector run into crisis, as they are not in the position to cope with the qualitative drop in sales.

Secondly, the increment means that those sectors that can increase their charges would do so, and this pushes up the rate of inflation. Those that cannot cope are pushed out of business. For example, the week the price of black oil was increase by over twenty percent, that same week a textile company in Isolo, Lagos, closed shop and sacked all its workers.

The price of bitumen also went up by 600 percent from N32,000.00 per tonne in July to between N70,000.00 and N80,000.00 now. This combined with the fuel price increase means that the cost of road construction, etc, would go up. The ministry of work has already confirmed this situation. The permanent secretary of the ministry confirmed that the cost of road construction has gone up by more than 600 percent; this means that various contracts would have to be reviewed.

However, as the prices of goods and services go up, the masses, who are supposed to be the main consumers, do not have the purchasing power to buy due to the reforms. This is the typical crisis of capitalism, the crisis of overproduction and under consumption.

As prices continue to rise, pressure is put on the naira and it begins to slide. This would affect all the sectors. It is only a matter of time before we would start hearing the talk of subsidy on fuel again. This is the vicious cycle!


www.nairaland.com/attachments/861709_OBASANJO_AND_BUSH_0_jpg4a8e09ab91009c86ddd34d4b957763d2

Worse yet to come

Like Tsunami waves, the first set of waves are not necessarily the most devastating; there will be series of devastating waves, so also is the case with the crisis of neo-colonial capitalism. This system cannot be reformed nor will it change on its own accord. Crisis is an integral part of the system. Though the system goes in a vicious cycle, it has a downward spiral path. Things go from bad to worse, worse, and worse. That is the tragedy of the Nigerian situation.

Industries have collapsed and are still collapsing, millions are jobless, thousands are losing their jobs by the day, education is going out of the reach of the masses, pensions are going out the window, health care is only for the rich, etc. The future is quite bleak, as the only option before the ruling elites are those put forward by the foreign masters.

www.nairaland.com/attachments/782431_Olusegun_Obasanjo_mismanaged___closed__Nigeria__Airways_jpgd57326e8fac1d711eb0d1d3245abec97

The global situation too is getting worse by the day. This would definitely affect the conditions in Nigeria. This is always the case.

The huge income the country is making from increase in crude oil prices internationally are stolen, mismanaged and wasted on repaying phantom debts. The country is going to soon part with $12 billion toward repaying the fictitious debt. Due to the destruction of the local capacity, the country depends heavily on foreign imports, which accounts for the ugly import bills.

As inflation increases and the crisis of capitalism intensify globally, it would definitely affect Nigeria. To be more specific, it would make the lives of the masses more hellish!


Labour must give a clear lead

This system cannot be reformed, just as the lion is not going to change its diet from meat to grass. The only way forward is for the working masses and youth to overthrow it.

The Obasanjo regime lacks popular support and it is well hated. This applies to the entire ‘civilian’ government structure. What keeps the regime alive is lack of a clear lead on the part of the leadership of labour, some of whom still believe that the system and the regime can be reformed. Some are just sell-outs. This accounts for why they never want to make political demands, set up a serious political organization, and do real rank and file mobilization.

The shortcoming of this view is exposed on a daily basis, as the regime continues to carry out draconian policies. Many of the labour leaders also openly confirm this fact directly or indirectly.

The lack of a clear lead from labour lays the ground for confusion, despair and frustration due to hopeless results. For example, when the regime was busy preparing for the current increase the trade unions’ response was to call on the regime to release the Senator Mantu report. This was definitely no challenge to the regime.

The Mantu report in no way addressed the cause of the crisis nor offered any serious way out. Had it been that the trade union movement started the immediate mobilization of the workers in preparation for a show down before the prices were increased the effect could have been more on the regime. The experience of 2001 readyily comes to mind.

Secondly, after the increase, the trade unions had to wait for more than two weeks before they could have a meeting, thereby allowing the effects of the increase to sink in. This is an obvious mistake.

Even at the September 5, LASCO meeting, they refused to declare a general strike, adopt the clear political demand calling for an end to the regime and the system among others. Rather they chose to organize protest rallies in six centres nationally, after which they would consider more action. These protest rallies are supposed to go on for a month.

However, a lot of time had been lost and the new prices have really caused a lot of pain, but the situation is still redeemable if the labour leaders use the period of the mass rallies to truly mobilize workers, the rank and file soldiers and police, and other poor strata of the society. In addition, they should adopt a clear line of action and be sincerely ready to see it through, not blowing hot and cold at the same time.

This should include the setting up of action committees in all work places round the country, where all issues concerning the struggle can be discussed and decisions taken. And decisions taken locally and nationally are to be binding and cannot be reversed by an individual or a group except with permission from the majority.

www.nairaland.com/attachments/782431_Olusegun_Obasanjo_mismanaged___closed__Nigeria__Airways_jpgd57326e8fac1d711eb0d1d3245abec97

In view of the growing crisis, workers are going to continue to mount pressur on them. These pressures would continue to build up in the next coming period. In addition, this regime is not going to stop its bloodsucking policies.

The experience of the past six years also confirms the fact that the working class possesses enormous powers. Unfortunately, the inability of the labour leadership to give a clear lead is responsible for the suspicions workers have towards the strikes they call. This regime could not withstand the full mobilization of the Nigeria working masses and youth.

Mobilize All

This regime lacks a social base, it is well hated by all, from the unemployed to the pensioners (military and civilian), to the soldiers, to the policemen, to the doctors, etc. With a clear programme, labour can mobilize all within the society with one voice. This would be impossible for Obasanjo to resist.

The trade unions must mobilize the workers and all the other poor and oppressed strata in society. The coming together of the three trade union centres (NLC, TUC, and CFTU) under the Labour and Civil Society Coalition (LASCO), is a step forward but is can definitely not be a substitute to involving the mass of the workers in making decisions nor in mobilizing rank and file workers.
www.nairaland.com/attachments/861709_OBASANJO_AND_BUSH_0_jpg4a8e09ab91009c86ddd34d4b957763d2

Rank and file workers (from the factory floor to the offices and the fields) must take an active part in all debates and decision-making. This is the only way that the shortcoming of the union leaders can be checked.

The current collaboration of all the trade unions should be a step towards real unity and the setting up a major political party for the working masses with a socialist programme.

A better society is possible but cannot come from the class of people that live off the blood of the workers. Workers can take power and can manage the society; this is only possible under socialism!

www.nairaland.com/attachments/861709_OBASANJO_AND_BUSH_0_jpg4a8e09ab91009c86ddd34d4b957763d2

Demand for:

An end to the Obasanjo regime!

The mobilization for an active general strike and setting up of committees of action in all workplaces across the country!

An end to the IMF-inspired reforms and a reversal of the entire programme!

For a reversal of the current price increase!

The nationalization the entire up and downstream sectors of the oil industry and place them under the democratic control of workers.

---
http://www.marxist.com/nigeria-fuel-price-hikes140905.htm

[b] No subsidy on fuel
The Obasanjo regime’s arguments to justify the increment in fuel prices are just too out-of-date and defy logic. The ruling elites have overused the claim that there is a subsidy for decades since the first increment under Obasanjo in the 1970s.

On September 5 2005, IMF nominated finance minister, Ngozi Okonjo-Iweala, still declared that the government would be subsidizing fuel to the tune of N400 billion in 2006. This is in preparation for further increment.

The arguments remain worthless and the figures are usually a result of abracadabra and not real figures. First, who made sure that the refineries do not work? Who made sure that no new refineries were built? Venezuela, another oil-producing country like Nigeria, under Hugo Chavez has built three new refineries since 1998.

The costs of building refineries are usually inflated to the tunes of tens of billions of dollars in order to justify why they cannot build any. This (Obasanjo) regime has not built any industry since 1999 rather it had sold them off under the claim that the government has no business doing business.

As of now, Nigeria is producing about 2.7 million barrels of oil per day and an additional 300,000 barrels is meant for the local market. Due to the bad shape of the local four refineries part of this are also exported. The mass of fuel for local consumption is now imported.

www.nairaland.com/attachments/782431_Olusegun_Obasanjo_mismanaged___closed__Nigeria__Airways_jpgd57326e8fac1d711eb0d1d3245abec97

According to the NNPC, it had subsidized fuel from January 2005 to July 2005 with $900 million. The country makes more from crude oil sales now due to the increase in the crude oil price internationally, over $160 million every day from oil; the so-called subsidy is less than 7 days income!

In essence, it does not make sense to claim that there is a subsidy, when there is more than enough to pay for the imported fuel. In addition, there is nothing to stop the repair of the refineries and the building of new ones.

Again, it is important to emphasize that the cost of production of one barrel of crude oil is less than $2, just as the cost of producing cassava is low in Nigeria. It cannot be claimed that since the price of cassava is high internationally then cassava is being subsidized locally.

www.nairaland.com/attachments/861709_OBASANJO_AND_BUSH_0_jpg4a8e09ab91009c86ddd34d4b957763d2

They always want to give the impression, although with little success, that real money is being used to finance the so-called subsidy. This is too far from the truth. Rather the subsidy claim is actually a projection of how much they would make if fuel were sold at a higher price and nothing more. For instance, before the last increase, the NNPC claimed that it was subsidizing fuel to the tune of N450 million per day. It claimed, “The landing cost is N65.26 per litre”; fuel was increased to N65.00-N75.00 per litre.

To get the figure of subsidy, just subtract fuel at N50.00 per litre for 30 million litres from fuel at N65.00 per litre for 30 million litres, and, abracadabra, you would get their N450 million!

Subsidy in the Obasanjo-IMF dictionary is the difference between a projected higher price and the current price of a commodity. Thus for them there can never come a time where there will be no subsidy!
[/b]

The Real Cost Of Nigeria Petrol
By Dr. Izielen Agbon

On December 10, 2011, if you stopped at the Mobil filling station on Old Aba Road in Port Harcourt , you would be able to buy a litre of petrol for 65 naira or $1.66 per gallon at an exchange rate of $1/N157 and 4 litres per gallon. This is the official price. The government claims that this price would have been subsidized at N73/litre and that the true price of a litre of petrol in Port Harcourt is N138/litre or $3.52 per gallon.

They are therefore determined to remove their subsidy and sell the gallon at $3.52. But, On December 10, 2011, if you stopped at the Mobil Gas station on E83rd St and Flatlands Avenue in Brooklyn, New York, USA, you would be a able to buy a gallon of petrol for $3.52/gallon. Both gallons of petrol would have been refined from Nigerian crude oil. The only difference would be that the gallon in New York was refined in a US North East refinery from Nigerian crude exported from the Qua Iboe Crude Terminal in Nigeria while the Port Harcourt gallon was either refined in Port Harcourt or imported. The idea that a gallon of petrol from Nigerian crude oil cost the same in New York as in Port Harcourt runs against basic economic logic. Hence, Nigerians suspect that there is something irrational and fishy about such pricing. What they would like to know is the exact cost of 1 litre of petrol in Nigeria .

We will answer this question in the simplest economic terms despite the attempts of the Nigerian government to muddle up the issue. What is the true cost of a litre of petrol in Nigeria ? The Nigerian government has earmarked 445000 barrel per day throughput for meeting domestic refinery products demands. These volumes are not for export. They are public goods reserved for internal consumption. We will limit our analysis to this volume of crude oil. At the refinery gate in Port Harcourt, the cost of a barrel of Qua Iboe crude oil is made up of the finding /development cost ($3.5/bbl) and a production/storage /transportation cost of $1.50 per barrel.

Thus, at $5 per barrel, we can get Nigerian Qua Iboe crude to the refining gates at Port Harcourt and Warri. One barrel is 42 gallons or 168 litres. The price of 1 barrel of petrol at the Depot gate is the sum of the cost of crude oil, the refining cost and the pipeline transportation cost. Refining costs are at $12.6 per barrel and pipeline distribution cost are $1.50 per barrel. The Distribution Margins (Retailers, Transporters, Dealers, Bridging Funds, Administrative charges etc) are N15.49/litre or $16.58 per barrel. The true cost of 1 litre of petrol at the Mobil filling station in Port Harcourt or anywhere else in Nigeria is therefore ($5 +$12.6+$1.5+$16.6) or $35.7 per barrel . This is equal to N33.36 per litre compared to the official price of N65 per litre. Prof. Tam David West is right. There is no petrol subsidy in Nigeria . Rather the current official prices are too high. Let us continue with some basic energy economics.

The government claims we are currently operating our refineries at 38.2% efficiency. When we refine a barrel of crude oil, we get more than just petrol. If we refine 1 barrel (42 gallons) of crude oil, we will get 45 gallons of petroleum products. The 45 gallons of petroleum products consist of 4 gallons of LPG, 19.5 gallons of Gasoline, 10 gallons of Diesel, 4 gallons of Jet Fuel/Kerosene, 2.5 gallons of Fuel Oil and 5 gallons of Bottoms. Thus, at 38.2% of refining capacity, we have about 170000 bbls of throughput refined for about 13.26 million litres of petrol, 6.8 million litres of diesel and 2.72 million litres of kerosene/jet fuel.

This is not enough to meet internal national demand. So, we send the remaining of our non-export crude oil volume (275000 barrels per day) to be refined abroad and import the petroleum product back into the country. We will just pay for shipping and refining. The Nigerian government exchanges the 275000 barrels per day with commodity traders (90000 barrels per day to Duke Oil, 60000 barrels per day to Trafigura (Puma Energy), 60000 barrels per day to Societe Ivoirienne de Raffinage (SIR) in Abidjan, Ivory Coast and 65000 barrels per days to unknown sources) in a swap deal. The landing cost of a litre of petrol is N123.32 and the distribution margins are N15.49 according to the government. The cost of a litre is therefore (N123.32+N15.49) or N138.81 . This is equivalent to $3.54 per gallon or $148.54 per barrel. In technical terms, one barrel of Nigerian crude oil has a volume yield of 6.6% of AGO, 20.7% of Gasoline, 9.5% of Kerosene/Jet fuel, 30.6% of Diesel, 32.6% of Fuel oil / Bottoms when it is refined.

Using a netback calculation method, we can easily calculate the true cost of a litre of imported petrol from swapped oil. The gross product revenue of a refined barrel of crude oil is the sum of the volume of each refined product multiplied by its price. Domestic prices are $174.48/barrel for AGO, $69.55/barrel for Gasoline (PMS or petrol), $172.22/barrel for Diesel Oil, $53.5/barrel for Kerosene and $129.68/barrel for Fuel Oil. Let us substitute the government imported PMS price of $148.54 per barrel for the domestic price of petrol/gasoline. Our gross product revenue per swapped barrel would be (174.48*0.066 +148.54*0.207+172.22*0.306+ 53.5*0.095+129.68*0.326) or $142.32 per barrel. We have to remove the international cost of a barrel of Nigerian crude oil ($107 per barrel) from this to get the net cost of imported swapped petroleum products to Nigerian consumers. The net cost of swapped petroleum products would therefore be $142.32 -$107 or $35.32 per barrel of swapped crude oil. This comes out to be a net of $36.86 per barrel of petrol or N34.45 per litre.

This is the true cost of a litre of imported swapped petrol and not the landing cost of N138 per litre claimed by the government. The pro-subsidy Nigerian government pretends the price of swapped crude oil is $0 per barrel (N0 per litre) while the resulting petroleum products is $148.54 per barrel (N138 per litre). The government therefore argues that the “subsidy” is N138.81-N65 or N73.81 per litre. But, if landing cost of the petroleum products is at international price ($148.54 per barrel), then the take-off price of the swapped crude oil should be at international price ($107 per barrel). This is basic economic logic outside the ideological prisms of the World Bank. The traders/petroleum products importers and the Nigerian government are charging Nigerians for the crude oil while they are getting it free.

So let us conclude this basic economic exercise. If the true price of 38.2% of our petrol supply from our local refinery is N33.36/litre and the remaining 61.8% has a true price of N34.45 per litre, then the average true price is (0.382*33.36+0.618*34.45) or N34.03 per litre. The official price is N65 per litre and the true price with government figures is about N34 per litre (even with our moribund refineries).

There is therefore no petrol subsidy. Rather, there is a high sales tax of 91.2% at current prices of N65 per litre. The labor leaders meeting the President should go with their economists. They should send economists and political scientists as representatives to the Senate Committee investigating the petroleum subsidy issue. There are many expert economists and political scientists in ASUU who will gladly represent the view of the majority. The labor leaders should not let anyone get away with the economic fallacy that the swapped oil is free while its refined products must be sold at international prices in the Nigerian domestic market.

The government should explain at what price the swapped crude oil was sold and where the money accruing from these sales have been kept. We have done this simple economic analysis of the Nigerian petroleum products market to show that there is no petrol subsidy what so ever. In the end, this debate on petrol subsidy and the attempt of the government to transfer wealth from the Nigerian masses to a petrol cabal will be decided in the streets. Nigerian workers, farmers, students, market women, youths, unemployed, NGO and civil society as a whole should prepare for a long harmattan season of protracted struggle. They should not just embark on 3 days strike/protests after which the government reduces the hiked petroleum prices by a few Nairas. They must embark upon in a sustainable struggle that will lead to fundamental changes. Let us remove our entire political subsidy from the government and end this petroleum products subsidy debate once and for all. It is time to bring the Arab Spring south.

Izielen Agbon Izielen Agbon writes from Dallas, Texas. izielenagbon@yahoo.com

He is former HOD , Petroleum Eng Dept, former ASUU chairman University of Ibadan, trained many operators in nation's energy industry with pratical experience on our practices and policy focus in the last 20yrs

realistically, when have you ever known Nigerian PDP goverment in the last 14 years to compassionately subsidise anything or worry about hardship of the masses enough to apply subsidy on anything?


[size=18pt]Fuel is not subsidised[/size]


First do you agree or not that "removing (fake) subsidy" cannot realistically justify 1000% (one thousand percent) fuel price increase in PDP's 14 years reign?.

Has anybody in the history of Nigeria ever heard the goverment quantify the subsidy they are claiming to be removing?

Has anybody in history of Nigeria ever remember when government announce that they were going to start subsidising fuel and how much they were going to subsidise by?

I have been researching Nigerian history for over 12 months and have not come across these information.

The best experts in Nigeria's oil industry including Buhari have all said that Nigeria fuel price has never been subsidised and this is a man who ruled us when fuel cost about 20 kobo per litre.

Nigerians could pay less than 70 naira per litre of fuel if Buhari is elected in 2015. Jonathan is just an error.