jmaine:

Can i ask if the local refinering capacity is anyway near our daily consumption of ± 30 million liters . .If yes, then the OP concerns is valid . .but if no . .how do we reconcile the huge deficit that is likely to be imported as usual . . .

debosky:

It does not have to be anywhere near the imported quantity - the issue here is that if you are producing locally refined at 120 naira, sell it at 120 naira and not 141 naira.

If it means everyone rushes to NNPC to try to buy cheaper fuel, then so be it, but let there be transparency on how much locally refined petrol costs. If the NNPC price is a composite of locally refined price + imported price, this should also be made transparent.

debosky:

This is one question that the government has completely evaded in the subsidy discussions - how much does it cost to refine one litre of petrol in Nigeria? Is it equivalent to the price of imported fuel?

A couple of comparisons:

the price of petrol in the UK (removing VAT and Duty) is approximately 53p. Based on a conversion rate of 250 naira to 1 pound, locally refined petrol should cost 132.5 naira.

http://www.petrolprices.com/the-price-of-fuel.html

In the US, the current cost of petrol is roughly 88 cents/litre. Removing tax, (12%), we come up with 77.44 cents/litre. Based on 150 naira to 1 dollar, the price of locally refined petrol should be 116.16 naira.

nateevs:

Are those prices in pennies and cents the costs of 'locally-refined petrol' in the UK and US respectively or the cost of 'imported petrol'?

jmaine:

Bros, before we move further . .what is the refining capacity of our refinery at the moment . .you cant evade or dilute the important factor of availability . . .

if the NNPC quota is miniscule compared to their imported counterparts . . . selling at that prize may at best be very limited and less impactful . .the big importation players would still have the market prize game pad . .

Our refineries when we came into government 16 months ago were running at about 30 per cent or more capacity utilisation. We have worked very hard and aggressively to ensure that at this point, they are between 50 per cent and over 60 per cent capacity utilisation, producing almost 30 per cent of our locally needed refined products at this time.

debosky:

No one is evading anything - according to the minister for petroleum, local refining is sufficient to meet 30% of the petrol consumption. That is not miniscule in any sense.

karl max:

Omo_Tier1:
Seriously, this question does beg for serious answer folks. We all know our refineries are not all dead. At least they still refine some volumes of PMS. We also do know that the cost of refining locally is way way cheaper than the imported PMS, just as foreign rice is way more expensive than Abakiliki rice in Nigeria.

Then arise the question: Will NNPC mega station be selling fuel at far more cheaper rate of say N70 since the PMS refined in Nigeria are not subsidized? If yes, what will become of the oil marketers who the FG have said can go overseas and import and sell to the public. If the NNPC follow the PPPRA directive to sell @ N141 locally refined PMS, is that not an economic sabotage, selling almost 10 times the actual cost of production?

Fellow forumites, what is your take, any answers to the question above?


I thought people like Ʊ said our refineries are not working ?

debosky:

This is one question that the government has completely evaded in the subsidy discussions - how much does it cost to refine one litre of petrol in Nigeria? Is it equivalent to the price of imported fuel?

A couple of comparisons:

the price of petrol in the UK (removing VAT and Duty) is approximately 53p. Based on a conversion rate of 250 naira to 1 pound, locally refined petrol should cost 132.5 naira.

http://www.petrolprices.com/the-price-of-fuel.html

In the US, the current cost of petrol is roughly 88 cents/litre. Removing tax, (12%), we come up with 77.44 cents/litre. Based on 150 naira to 1 dollar, the price of locally refined petrol should be 116.16 naira.

I suspect the difference between US and UK prices is due to exchange rates as well as different crude prices as well (WTI Crude used in a lot of the US is slightly cheaper than the UK standard Brent Crude)

I do not think Nigerian refining costs from inefficient refineries are significantly lower than foreign refineries, and 77% of the cost of petrol is from the price of crude.

In my opinion, Nigerian refined petrol should be in the range of 120-130 naira per litre taking the average of the two above and considering our inefficient distribution network using road tankers.

jmaine:

Okay . . . 30% is quite a substantial volume to accommodate the OP question . . .

Omo_Tier1:

Let me begin by appreciating your price comparison using the UK and US examples. Correct me if I am wrong, I think the Federal Government template agreed with the Major International Oil companies actually put the cost of crude extraction and refining locally at N45, with a margin of profit between N15 to N25. I am trying to dig up that document and I will try and put it up when I do lay my hands on it.

However, I still think of the 450,000bpd local allocation, our refineries do refine about half of that quantity. If that be the case, will these locally refined crude be sold at N141? Should NNPC proceed to sell at N141, then there is no basis whatsoever for the FG to allocate crude to NNPC, rather NNPC should be made to 'buy' crude from the FG at International Markets prevailing prices, as those importing are also subject to the prevailing International Market prices, hence the reason PPPRA came up ith N141 minimum pump price. In fairness, and to allow for equal competition, NNPC  buying crude from the FG would put every player in that sector on equal footing. And idea I even find ridiculous  

By the way, the government claims we consume about 22million liters of PMS daily, but the CBN governor has continually challenged the DPR to provide the template that was used to arrive at that figure but none has been forth coming. Sanusi at the last Fuel subsidy removal debate even raised doubt as to the credibility of that figure and subsequently question whether the savings a thouted by the FG is equally as high as N1.36tn.

Omo_Tier1:

Seriously, this question does beg for serious answer folks. We all know our refinaries are not all dead. At least they still refine some volumes of PMS. We also do know that the cost of refining locally is way way cheaper than the imported PMS, just as foriegn rice is way more expensive than Abakiliki rice in Nigeria.

Then arise the question: Will NNPC mega station be selling fuel at far more cheaper rate of say N70 since the PMS refined in Nigeria are not subidized? If yes, what will become of the oil marketers who the FG have said can go overseas and import and sell to the public. If the NNPC follow the PPPRA directive to sell @ N141 locally refined PMS, is that not an economic sabotage, selling almost 10 times the actual cost of production?

Fellow forumites, what is your take, any answers to the question above?

debosky:

This is one question that the government has completely evaded in the subsidy discussions - how much does it cost to refine one litre of petrol in Nigeria? Is it equivalent to the price of imported fuel?

A couple of comparisons:

the price of petrol in the UK (removing VAT and Duty) is approximately 53p. Based on a conversion rate of 250 naira to 1 pound, locally refined petrol should cost 132.5 naira.

http://www.petrolprices.com/the-price-of-fuel.html

In the US, the current cost of petrol is roughly 88 cents/litre. Removing tax, (12%), we come up with 77.44 cents/litre. Based on 150 naira to 1 dollar, the price of locally refined petrol should be 116.16 naira.

I suspect the difference between US and UK prices is due to exchange rates as well as different crude prices as well (WTI Crude used in a lot of the US is slightly cheaper than the UK standard Brent Crude)

I do not think Nigerian refining costs from inefficient refineries are significantly lower than foreign refineries, and 77% of the cost of petrol is from the price of crude.

In my opinion, Nigerian refined petrol should be in the range of 120-130 naira per litre taking the average of the two above and considering our inefficient distribution network using road tankers.

oxford:

This guy, I can see that while u instigate others to take to the street, you are in the comfort of your home farting through your brain. Government said it is deregulating the down stream sector. Know what that means? Free market - where prices are regulated by forces of demand and supply. Grab the opportunity this present: Set up a refinery, produce at N20 and sell at N200. Boy! this will be more useful endeavor than sitting your fat behind all day long typing rubbish  

t does not have to be anywhere near the imported quantity - the issue here is that if you are producing locally refined at 120 naira, sell it at 120 naira and not 141 naira.

If it means everyone rushes to NNPC to try to buy cheaper fuel, then so be it, but let there be transparency on how much locally refined petrol costs. If the NNPC price is a composite of locally refined price + imported price, this should also be made transparent.

yd849ja:

Who ever says cost of running a refinery in Nigeria is equivalent to that of a developed nation must be on some cheap drugs even if crude oil is supplied at the international benchmark price. I see no reason why the cost of production of a litre of petrol in Nigeria should be the same or almost the same as the US/UK considering the fact that labor and other constituents involved in the production would be cheaper in Nigeria. So please stop your misinformation.