Screw y'all that think this is the best thing for us!!
I have always said that the mismanagement of those governing us is our problem.
They say without subsidy we cant make a strng economy aii??
Nw tell me y the president who peomised to cut down on expenses would take two private aircrafts filled with delegates for a mere 100yrs celebration of a political party.
He n his vice allocated 11billion for foreign travels.
As we all kme they also allocated 1billion for feeding(even if say na elephant)
The allocated about 11million for maintenance of the villas transformers  and also
Allocated abt 295m for refreshment excluding the 1billion for food.
Now all u pro-fuel subsidy personnels tell me hu is deceiving who??
If y'all did watch the interview you would have heard NOI saying they increased public office holders salary by 53%.
Did u also realise that when asked about the recurrent expenditure, she was like 88% was for salaries of public office holders and civil servants which doesnt amount to a reasonable percentage of the population.
I could keep going on and on but the truth is amidst anything the Nigeria govt wants to there is a benefit(not for the populace tho).
Removal of subsidy is constitutionally wrong. It also as we all know is catered for in the 2011 budget still bin used to run the country till 31st March. Then wat are we nt saying!!
I shall come back for more but nw, I Rest My Case!!!

Hehehe, Sanusi and Ngozi are fighting corruption?
Sanusi seats above all Nigerian banks where almost 2trillion Naira is laundered via banks abroad every year.
Okonjo-iweala has been Minister of Finance twice and even my little girl knows Customs Service which is under her purview is the highest point of corruption in Naija.

They are still drinking champagne, and advising us to be drinking Zobo

Yes o

Those saying since diesel subsidy was removed, how many refineries have been built? D answer is dis: u can't refine crude oil to get only diesel. In fractional distillation of crude oil, PMS, natural gas DPK and some other components(which are of more market value than diesel) comes first before diesel and co. So u can never build refineries to refine only diesel, u'll simply fall through. D Obj admin dat deregulated diesel, wia not bold enough to deregulate d entire downstream(which is d only way d impact of deregulation can be felt). Dia are so many reasons we have to support dis deregulation.it wil create employment in d oil sector heavily. It wil uproot oil corruption entirely. D OPEC member countries we are comparing ourselves wit, have way too much an advantage over us. Saudi Arabia produces 8million barrels of oil a day and are about 24million in population. Nigeria produces 2.4million barrels a day and are about 167million in population. Libya has just 6million people wit a higher amount of barrels of oil a day, so its unfair 2compare dem wit us. SLS and NOI have been tryin dia best to educate Nigerians wit reasons y dis policy will work 4our own betterment. Let me ask, how many privatized sectors have failed to deliver in Nigeria? Let our thoughts not be clouded wit hatred and sentiment, democratic govt is all about processes. Our main concern should be to pressure d govt to swear wit dia jobs dat dey 'll resign after a period of time if no changes are apparent. We should be occupying our state govt houses, local govt headquarters and NASS, because dey are d hub of corruption.

The issue is not abt comparism but abt inefficiency of those in govt. If we voted and pay them to be efficient and they are not, then there is no point staying there. Sls and noi are not privy to a lot of information, it is what those people tendered to them that they work on. They should use their link to contact the refineries to know the actual landing cost of pms and then know all the charges involved in this business.
The masses can no longer pay for inadequacies of those in govt. If u know they forge paper, why dont u use other electronic means to track all these problems or do they want to tell us that there is no technology to take care of it. The same way they hate electronic voting.
Let sls and noi go and get more facts before talking to us.
God bless NIGERIA.

In my opinion, there are three possible outcomes to this protest.

a) FSR is reversed and petrol goes back to N65 per litre.
This outcome is not impossible because that is the objective of the protest?
However it is unlikely because if the government backs down then it will have a major challenge with removing other subsidies on PHCN's electricity, Agriculture's fertilizer etc.

Anyway as was mentioned at the protest rally on Monday, the 3 tiers of government MIGHT have already shared the subsidy which makes a reversal tough as state governments will have to re-work their budgets.


b) FSR is retained and petrol sells at market determined prices depending on the fuel station, the location, exchange rates etc. This is the governments objective.

c) We grudgingly accept the deregulated petrol prices but we want government to tackle corruption by SHOWING that the subsidy gains will be well utilized. In that case the best approach is to ENSURE that the subsidy gains are enshrined in the BUDGETS of the various governments.

A little education here. Before last year, the budgets were really shrouded in secrecy.

But PRESIDENT JONATHAN signed the Freedom of Information Act last year and now you can demand, disclose, review and comment on GOVERNMENT RECORDS including BUDGETS. You could NOT do this before.

This is the CHANGE, the difference. The fight against corruption has shifted from the PERSONALITIES in the EFCC and the Judiciary to we the people.

Please review this links about the FOI ACT:

i) http://transparencyng.com/index.php?option=com_content&view=article&id=4993:foi-act-the-challenge-of-official-secret-act&catid=119:kayode-ajulo&Itemid=37

ii) http://expertscolumn.com/content/analysis-freedom-information-bill-nigeria

Following the FOI Act, the PROPOSED budget of the Federal Government is now available at this link:

http://www.budgetoffice.gov.ng/2012_budget_proposal.html

The government is already practicing disclosure. You can still influence the budget because it still a proposal.
It is available for individuals, clubs, organisations, universities to review, critique and influence. Both the NLC and NBA should review and make their comments known to the budget office or to the National Assembly. That is called lobbying.

Before you complain about the amount PROPOSED to furnish an executives office or for afternoon for EACH member of the House of Representatives, you should also review the Constitution of the Federal Republic of Nigeria whether its the responsibility of Government to furnish the executive's office or to provide tea or money in lieu to members of the House of reps.

The Constitution of the Federal Republic of Nigeria is here: http://www.nigeria-law.org/ConstitutionOfTheFederalRepublicOfNigeria.htm

Pre Nigerian banking crises era, I read in one of the national dailies, a full page, where a certain new generation bank (technically no longer exist) then selling at about 45 naira/unit share in the Nigerian stock market, claiming that a certain old/first generation bank then lead by the current CBN helmsman is warning customers that their bank is about going down, I think they were threatening l, aw suits or so. We did not only see the warnings as stranger than fiction, but also didn’t believe the warnings. Today Nigerians are still counting their losses because there were cabal/cartels in the banking industry manipulating figures, shady dealing and siphoning. Now the Nigerian apex bank through the CBN helmsman and some two or so top officials (spearheading this deregulation) who have risen to the top of their careers based on merits and became known and respected are saying again, Nigerians o, you are being shortchanged by some few(cabal/cartel). They deserve some benefit of doubt. May God not let us count bigger losses in the future?

Who said Sanusi sanitised the banking sector?Please wait till you have another CBN governor who will open his cans of worms. Please don't use the awards he gathered to rate him. I'm sure the people he criticised(Soludo, Akingbola and Ibru) all had awards while in office from same organisations.
For me, sanusi cried wolf where there was none and was highly selective in his banking reforms. Who said Elumelu/UBA, Ovia/zenith all had clean states? And how come he appointed managers for the rescued banks and his self-appointed managers were also living large and most had to be replaced and not punished for not meeting their expected targets?
Without digressing from the issue at hand, please there is no index to show that sanusi's performance is overwhelming good that anything he says will always be right. Please that is not a good pointer to why he should be given benefit of doubt on supporting removal of fuel subsidy. Under him, the amount laundered by politicians through the banks has increased. Under him, lending to real sector dried up. Under him, his mentor Olusola Saraki's huge bad loans were surreptitously written off. Under him, foreign reserves are getting depleted. It is one thing to be an Intelligent Orator, it is another to be above board and pursue policies not detrimental to the masses

Subject: FUEL SUBSIDY DEBATE




Central Bank of Nigeria Governor Sanusi Lamido Sanusi (SLS) responds to some Internet Inquiries on fuel subsidy and wrote: If you will patiently read this mail to the end you will understand my position. I won't be able to repeat everything I have said over the past few years on fuel subsidy, but in summary; Fraud like theft thrives not only because of the existence of greed and benefit but of opportunity. Place yourself in the shoes of the average nigerian "businessman" or "entrepreneur"-polite euphemisms for rent seeking parasites.




You establish an elcee for importing 20,000MT of PMS and the PPPRA says this is at a landed cost of N145 for example per litre. So u know that for every litre in that vessel you will get at least N85 as subsidy. Now you have a number of "possibilities":

1. You can off load 5,000 MT and bribe customs and other officials to sign papers confirming u offloaded 20k MT. Then do the same across the chain with a paper trail showing you delivered 20k MT to a tank farm, and maybe even that u transported it to Maiduguri entitling you to a share of the price equalization fund. Maybe for N20-N30 per litre u bribe all those who sign the papers. The 15k MT you take to Benin or Ghana or Cameroun and sell at market price thus making an additional
"profit" of N55/ltr on 15,000MT!

2 you can just forge documents and have them stamped without bringing in anything and collect the subsidy-PPPRA pays based on DOCUMENTS.

3 you can bring in the fuel, load on tankers, sell some at N65N some at 80 some at 100 some across the land borders.

You can do all this and no one can catch it or prove it because somebody was paid to sign off on docs. And with a high enough margin there is too much temptation to be resisted and firepower for bribing officials.

When I spoke to the house of reps I told them why I was suspecting fraud. It starts from PPPRA "allocations" based on "capacity". You will find a company like Mobil with capacity for say 60,000 MT and a relatively unknown name with a capacity of say 90k MT.

Red alert number 1.

Although PPPRA is supposed to give license only to marketers with a national distribution network you see names of companies where you have never seen a filling station in their name.

I was a chief risk officer in UBA and in FBN for many years approving loans so I know the name of every big player in every industry that nigerian banks lend to as these are among the biggest banks in the country. I see names on the list I don't recognise either from portfolios. I looked at or industry studies over the years.

Red alert number 2.

I studied the papers presented to PPPRA in a short period in 2010 (I won't tell you how I got them!). And I was surprised that on some days over 10 vessels are said to have discharged cargo in lagos on the same day-clearly the same officers stamping and "verifying" that the vessels were SEEN. Is it really realistic that on the same day 13-15 vessels can discharge in Lagos?

Red alert number 3.

Why was I interested in fuel marketing. Because the two sectors that led to the near collapse of the banking industry were capital markets and oil marketing. I am not giving any confidential info out as AMCON MD has already disclosed publicly that two companies alone-Zenon and AP-owned by the same businessman owed the Nigerian banking industry N220b. And we all saw the amount of subsidy paid to those companies published by BusinessDay.

So money had been taken, subsidy had been collected but loans were not repaid, and we couldn't see the money either as product in tank farms or in fuel stations or credit sales. So I became obsessed with trying to understand how that industry operated and the more I saw the more I hated it and I started the war against subsidies.

It is actually better to do a direct cash payout or add a line item to salaries called petroleum support or transport allowance capped at say N300b p/a than to keep paying it. It goes to pay middle men, rent-seekers and corrupt officers and there is no amount of preaching that will stop this fraud so long as the policy is so badly defined.


Everytime oil price goes up and everytime the naira is devalued and everytime the quantity of imports increases the "subsidy" and thus the "rent" increases and there is more gravy to go round. So every year we "import" more and more and deplete our reserves, and the government borrows more and more to pay for subsidy and the beneficiaries are a small group of marketers, govt officials and neighbouring countries which get fuel without losing forex! And while a person who applies intelligence can see what is happening you can't prove it in a court of law. If the man says he sighted the vessel and it was 20kMT you have to accept it. It was a year ago!


So for two years I have been convinced that this thing is a scam and that it cannot be stopped because the entire controls have been compromised. NNPC sells domestic crude, Pays whatever subsidy PPPRA says and then gives the balance after JVC to the federation account.
And while Fani Kayode is right to speak up, the truth is that it was Obasanjo who first subverted the process by allowing NNPC to make the deductions before paying into federation account. Because once money goes into that account it is to be shared among 3 tiers of government so strictly speaking the deductions have always been unconstitutional as the FG was paying subsidy on behalf of itself and state and LGs without their approval.


So yes, I am willing to take all the criticism and labels and be unpopular but this has to stop and govt can find other ways of alleviating pain. Iran removed subsidies and started cash transfers directly to the poor. It is up to fiscal authorities to figure out safety nets but from where I sit and what I know this decision is not only correct but necessary and overdue. I also confirm that I have revealed nothing here I haven't spoken about before in public and it is just that Nigerians never listen!


I am not complaining about insults I am used to that. I just believe that an insult is not an argument and when people resort to personal abuse they have run out of logic.


But to then go beyond me and extend it to my dead grandfather and his "descendants" i.e my late father his siblings etc I think goes beyond the pale. As a Nigerian-and as an economist- I can take a position on economic matters and this position is one I have had for years even before coming in to the central bank.


I have also explained the position on several occasions and criticized government for not doing this before. In 2010 at a public hearing in the House of Reps on the 25% saga I alerted the nation of what I considered a potential big scam around subsidies and urged for its removal. No one paid attention. The economics is very clear to me. That it is unpopular is also understandable. The British public is unhappy with Tory budget cuts. The Greeks went on riot over austerity. Italian parliamentarians came to blows before Berlusconi was thrown out of office. The US congress is yet to approve Obamas tax increases.


Economic decisions-by definition-ALWAYS must involve a cost or an opportunity cost since for them to qualify as economic they must involve a choice in resource allocation among competing uses. An enlightened debate is one that weighs the pros and cons of removing subsidy and continuing with it.

Removing it has costs in terms of Nigerians paying more for PMS-which by the way is not the fuel for generators, power plants, production facilities, heavy duty goods transportation trucks and even luxury buses. It is fuel used by the middle class and car owners to drive around town and from city to city not to employ workers and produce goods and services. Diesel which is critical to manufacturing and employment creation is now subsidized as the subsidy was removed years ago by Obasanjo. Nigerians said nothing then because it was blue collar workers that got retrenched by factories.


Those speaking now on the internet and facebook and twitter and newspapers are not workers but middle class elite who use PMS in their smart cars so let's stop all the ideological pretence. This is not about elite and masses but an intra-elite discourse.


I will summarise the issues and I write as a Nigerian economist and public intellectual not as a public servant:

1. I am a strong advocate for subsidies if they are for production and not consumption, and if they benefit the poor and not middle men and rent seekers. The US government subsidizes cotton and wheat farmers and nigeria spends its reserves importing wheat from america and keeping american farmers employed. The OECD countried pay subsidies to cattle farmers. Today Promasidor imports powdered milk from New Zealand and packages in nigeria using our foreign exchange while we have cattle. WAMCO imports milk from the UK and adds water and tins it and calls it "production" of Peak milk. We use our forex to import petroleum products and keep refineries and jobs open in europe. Meanwhile precisely because of market distortions there can be no private sector investment in refineries since no one can make profit seling at the regulated price unless we are going to provide private refineries with crude for next to nothing. Certainly no one can purchase crude at market price, refine it and sell at N65 without huge losses so this explains why there are no private refineries.

2. what I mention above is at the heart of the problem with government economic policy which needs to be changed. The economy since SAP is one that supports imported consumption and not local production, perpetuating dependency, non inclusive growth and insecurity. Why is it that the economy is growing at 7pct annually but the people are getting poorer. Because growth gains are not evenly distributed.


Personal income is skewed towards people in the oil industry, telecomms, high finance, stock market, real estate and yes civil servants and politicians who feed on corruption. We produce crude oil but import petroleum products (today the UKs highest exports to Nigeria are petroleum products). We have a large cotton belt but import textiles from china (thus keeping their subsidized factories open and jobs in china). We are the world's number 1 producer of cassava but import cassava starch from europe. We have a huge tomato belt in kadawa, jigawa and chad basin but are the world's largest importer of tomato paste-from China and Italy. We can produce rice but we import rice from Thailand and India-most of it from grain reserves that have been in stock for over 5


3. If above is clear then it is evident that this trajectory can only lead to disaster. We will continue to spend our resources promoting growth and employment in our trading partners. Terms of trade shift against us, we can only have foreign reserves because by the good grace of God we have Oil which will be exhausted soon and with new discoveries may become so cheap it loses value. We don't create any value added jobs as the only real production is peasant farming. Oil, telecomms, finance and real estate are not employment intensive. So everyone becomes a civil servant as the economy cannot create jobs.



Result? In 2012 budget out of a total N1.8tr recurrent expenditure for the executive arm N1.6tr is on personnel costs not overheads. To reduce this you have to cut salaries or pensions or retrench civil servants. This is the classic trajectory of underdevelopment, de-development and de-industrialisation.


4. For the above reasons I am a strong proponent of structural reform and this begins from the fiscal framework. The limited resources of government should be allocated to supporting production-especially if we are running a budget deficit. We cannot keep borrowing to support conspicuous consumption. To support a job creating economy we need to fund power, transportation infrastructure, market infrastructure and access, technical and vocational education etc. We need to build rice processing plants, produce starch and cassava flour and ethanol, process our tomato and milk locally, regenerate our textiles firms (which used to employ 600,000 workers but now employ 30,000!), refine our own crude etc. We cannot even begin to do this if 30pct of govt expenditure is on fuel subsidy, if out of the balance 70pct is recurrent spending, 10pct is debt service, 10pct goes to the niger delta and only 10pct is capital expenditure. So it is about a choice-what do we spend money on and how do we allocate resources?


5. We often compare ourselves to other oil producing countries like saudi arabia. What are the facts? With a population of over 160m we produce 2mbpd ie 1 barrel for every 80+ citizens daily. Govt share of revenues if like 50pct of every barrel so it is effectively a barrel for 160 citizens. Saudi Arabia with a 24m population produces over 8mbpd or one barrel for every 3 citizens. In fact in 2010 the nearest OPEC country to nigeria in production per capita was Algeria with a barrel for 30 and algeria is more gas than oil.


With one barrel for 3 citizens dailt saudi arabia is able to provide infrastructure, education, healthcare and social safety nets and have huge savings. It can provide subsidised fuel at a total cost that is a fraction of its savings and even export refined products. It is paying for subsidies ouy od its fiscal savings and not borrowing to pay. We are like a poor man with a rich neighbour. The neighbour buids a good house, buys several cars, eat expensive food, travel abroad every year and still have huge balances in sevral current accounts. Then you choose to live that lifestyle and mortgage your house, take an overdraft from the bank to finance it. Next year it is time to repay the bank, u don't have the money so u go to another bank, borrow enough to pay the first bank principal plus interest and also fund the continuation of the lifestyle. It continues till u can't borrow anymore and the bank throws u and your family out of your house and you everything.


A responsible father would have long since faced reality and told his family he doesn't earn as much as his neighbour and expectations need to be moderated if they to keep their roof. Of course the children won't be happy at not going to Hawaii for summer and having to take public transport rather than own cars like their neighbour's children. Maybe they will even abuse the father behind his back and call him a miser. That is the cost of leadership.


Finally: removing subsidy is not a silver bullet that solves our economic problems. And there is a huge trust deficit that government has to address. Government needs to investigate subsidy payments and punish any violations of extant guidelines. It needs to cut on unnecessary and waste ful expenditure. It needs to fight corruption and show seriousness in that. It needs to deliver on capital projects, power and infrastructure including irrigation, farm-level storage and agri-processing. These are all valid issues that are to be taken IN ADDITION to and not in place of subsidy removal.


Since someone has decided to make insinuations about my grandfather I owe it to him to defend his record. it was my grandfather as emir that repealed an obnoxious rule started from the days of Emir Usman that disenfranchised women from inheriting property. It was sanusi that built the groundnut pyramids to the point where Kano NA was contributing 40pct of the revenues of the northern region. It was emir sanusi who built the Bompai Industrial Estate, and turned kano into the industrial nerve centre of the north. He was acting governor of the northern region, minister for pilgrim affairs, chief Imam of Friday mosque, judge and leader of the Tijjaniya order. As for his "descendants" my father was one of the very first batch of 12 Nigerians recruited by the British to set up the foreign service in 1957 and he remained in public service and rose to be permanent secretary before retirement. He set up in the 60s the research dept of the ministry- the present NIA so he was the first external intelligence officer in Nigeria. As permanent secretary he was the architect of Murtala Mohammed's policy on decolonisation of Africa and oversaw the independence of Mozambique and Angola and the final push to liberate Zimbabwe and South Africa.


So yes Sanusi was not perfect. He was a feudal aristocrat. And my father was not perfect. He was also a prince and priviledged to go to Oxford and LSE. But please if you want to abuse my grandfather and father kindly tell us what contributions your own grandfather and father made to the people.

Sanusi Lamido Sanusi is the governor of Nigeria's Central Bank

# # The British prime Minister has only 2 official cars, our president has* The US, almost the size of Africa with about 500million people have 24
ministers, & 32 govt parastatals & commissions, Nigeria has 42cabinet ministers, & over 50
govt parastatals!

M16



Re: Ngozi Okonjo-Iweala And Sanusi On AIT Matters Arising
« #155 on: Yesterday at 02:13:25 PM »
Never knew Wale Tinubu, the highest subsidy benefactor was also a PDP financier Huh-jmaine


Well if you don't know ask. who is the chairman of Oando. General Magoro(former member of board of trustee and fomer gubernatorial candidate PDP Kebbi state) and currently PDP Senator from Kebbi state

Please be careful about raising unfounded stories. Magoro WAS the chairman of Oando, yes. But he resigned in July 2011. http://www.oandoplc.com/wp-content/uploads/Announcement-for-Resignation-of-Chairman-and-Company-Secretary.pdf

That he could have interests in said company is not in doubt. But he is NOT the current head of the board. Please avoid spreading falsehood!

I saw this peice and it seem to make alot of sense, decided to share it with fellow nairalanders to see another angle to fuel subsidy removal debate. Comments are welcomed.



Finally The Hidden Truth About Fuel Subsidy Comes Out


No doubt, many Nigerians have not seen the facts about fuel subsidy this clearer before: 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 (Nigerians) 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 445,000 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 170,000 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 (275,000 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 275,000 barrels per day with commodity traders (90,000 barrels per day to Duke Oil, 60,000 barrels per day to Trafigura (Puma Energy), 60,000 barrels per day to Societe Ivoirienne de Raffinage (SIR) in Abidjan, Ivory Coast and 65,000 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.

This piece was written by Izielen Agbon Izielen Agbon
He writes from Dallas, Texas. izielenagbon@yahoo.com
He is former HOD, Petroleum Engineering Dept, former ASUU chairman, University of Ibadan,
trained many operators in nation’s energy industry with practical experience on
our practices and policy focus in the last 20yrs.

SANUSI erred when he said PMS is not used in generators. Either he is not in touch with reality or he is a liar.

otokx:

SANUSI erred when he said PMS is not used in generators. Either he is not in touch with reality or he is a liar.

Is that only what you read from that sanusi's informative article?
nawaa for you.

This stupid Okonjo or whatever she calls herself doesn't know that she is just a notorious figure in Nigeria. Let her come out in 2015 and test her popularity. A very useless, wicked, irresponsible and tujedic political appointee.

please enlightened fellas, how much exactly does it cost to build a refinery? I'm continually surprised to hear the government officials saying nigerians should contribute money for building refinery, hospital and good road. pls how much is this genie of a refinery?

It will cost about 3.5 Billion Dollers to build a 100,000 Tons/day Refinery. The government is not saying it cant afford to build a refinery. What the government is saying is that it cannot manage or sustain the refinery when built just as it cannot manage the existing refinery, with billions of dollers down the drain during turn around maintenance due to corruption. Therefore they believe deregulation/privitisation or privitisation is better because then the government have no business owning a refinery. Hence the need to remove subsidy to enable private investor take up and build new refinaries and compete within the fundamentals of a free market.
This in summary is their argument which i do not subscribe to even though i support privitisation, NO AMOUNT OF SUBSIDY REMOVAL WILL TRANSLATE TO DEVELOPEMENT IN NIGERIA IF CORRUPTION IS NOT TACKLED FIRST.

It'll cost just $2b to build a 150,000 barrels/per day refinery, That's how much Uganda paid for their on-going refinery project.

Seun:

Oando sounds like a good company. Don't tarnish their image based on the cabal propaganda nonsense.

Seconded.

Let's stop mentioning the names of the companies of the cabals alone and start mentioning their real names. With these, we will be conscious of the thorns amongst us and work towards uprooting them. The cabals are Wale Tinubu fonting for Bola Ahmed Tinubu, Mike Adenuga fonting for Ibrahim Badamosi Babangida (IBB), Sayyu Dantata (Aliko Dangote's brother), Emmanuel Iheanacho, Oba Otudeko, Ifeanyi Uba.

Let the list continue ,

U will be wasting your time listing govt announced list of CABAL members. Most of those are legit business owners. Oando is owned by young entrepreneurs that were mates in UNIBEN and bulk of their start-up capital is from Oceanic bank courtesy of their friend Oboden Ibru whose initial shareholding was 40%. Don't you observe most Oando petrol stations nationwide always have fuel? You will see real CABAL members that when you even hear their names you will wonder where they are. Most of them were even forced to add their prices by 24naira per litre to raise revenue for PDP Presidential campaigns. Msheew, CABAL my foot when they wine and dine till date with GEJ

Sanusi is not a saint but a PROFESSIONAL FRAUD TOOL in the hand of GEJ. The two big banks oceanic and intercontinental were technically taken over by the CABALS,GODFATHERS AND GEJ.The whole process of banking reform is a BIG FRAUD, including AMCON. You the onlookers won't know what is happening underground because they have packaged you to think in a certain way or direction.All those noise you are hearing over the TV, Dailies and Radio by Sanusi are all propaganda to package all Nigerians.

No body will ever know that OBJ took over the 2nd largest bank in Nigeria when he was in power. What you are seeing today is the strategy to seal all their underground deals or buy over of those banks, buy more oil well, buy up PHCN etc. You never ask yourself why is repairing and building more refineries not a priority to the government.GEJ objective is to loot using professionals just like OBJ and the then CBN governor among others.

They will package their evil game plan as a benefit to the public in other to steal. What GEJ is telling us about fuel subsidy removal today, Babangida, OBJ told us the same. But today where is the money and where is the magin, where are the roads and infrastructures and other things they promised.

The game plan is simply to use the money for the public for 1-2 yr, then they go away with the subsequent money and deletion of the source of funds from paper and all they will tell you is that the funds are being used for so and so.

Must everyone that rule Nigeria loot?

I AM CERTAIN IN MY HEART THAT ANY MAN THAT LOOT THIS NATION WILL EXPERIENCE THE WRATH OF GOD AND THEIR CHILDREN UNBORN WILL NOT ESCAPE GOD'S WRATH.

If 6% depositors own 88% of bank deposit in Nigeria, then we all have to sit down and think.

PLEASE PRAY EARNESTLY FOR THIS NATION THAT GOD SHOULD HAVE MERCY ON US AND EXTINCT THE EVIL MEN AND TAKE OVER THIS NATION.

My problem about Nigeria is that every body is a professionals on many things. As long as is not in their favour you are doing nothing. God Help Nigeria. But my question is if we continue to distrust every one how do we move forward.

The problem with all of this is that SLS and NOI have found someone who cannot match them. They have intimidated and frightened him into a corner and effectively paralysed him. GEJ doesn't have the educatiom, international exposure or even breeding to cope with the information/advice he has received hence the appearance of a disjointed Government. Fuel subsidy may stay or go and that is not the real issue. The survival of Nigeria and Nigerians is not dependent on Fuel!Our survival is fully within our hands. Today we are all protesting in the streets about subsidy removal injustice but what about all the previous injustice(s)? The mass slaughter of innocents for religious,economic or cultural reasons? The non-completion of public projects already paid for? The overbloated allowances of our elected members? The direlect hospitals publicly funded? The disgrace of our electricity infrastructure. The shambolic police and emergency forces. I could go on. My point is this until we get upset about every single injustice and DEMAND for it to be addressed we will not take a single step forward as a Nation.

daregold:

Sanusi is not a saint but a PROFESSIONAL FRAUD TOOL in the hand of GEJ. The two big banks oceanic and intercontinental were technically taken over by the CABALS,GODFATHERS AND GEJ.The whole process of banking reform is a BIG FRAUD, including AMCON. You the onlookers won't know what is happening underground because they have packaged you to think in a certain way or direction.All those noise you are hearing over the TV, Dailies and Radio by Sanusi are all propaganda to package all Nigerians.

No body will ever know that OBJ took over the 2nd largest bank in Nigeria when he was in power. What you are seeing today is the strategy to seal all their underground deals or buy over of those banks, buy more oil well, buy up PHCN etc. You never ask yourself why is repairing and building more refineries not a priority to the government.GEJ objective is to loot using professionals just like OBJ and the then CBN governor among others.

They will package their evil game plan as a benefit to the public in other to steal. What GEJ is telling us about fuel subsidy removal today, Babangida, OBJ told us the same. But today where is the money and where is the magin, where are the roads and infrastructures and other things they promised.

The game plan is simply to use the money for the public for 1-2 yr, then they go away with the subsequent money and deletion of the source of funds from paper and all they will tell you is that the funds are being used for so and so.

Must everyone that rule Nigeria loot?

I AM CERTAIN IN MY HEART THAT ANY MAN THAT LOOT THIS NATION WILL EXPERIENCE THE WRATH OF GOD AND THEIR CHILDREN UNBORN WILL NOT ESCAPE GOD'S WRATH.

If 6% depositors own 88% of bank deposit in Nigeria, then we all have to sit down and think.

PLEASE PRAY EARNESTLY FOR THIS NATION THAT GOD SHOULD HAVE MERCY ON US AND EXTINCT THE EVIL MEN AND TAKE OVER THIS NATION.

The rate at which supposedly educated folks display wanton ignorance and pettiness alarm me.

So there is someone that still believes Intercontinental and Oceanic Banks were not in serious trouble before Sanusi came on board?
Maybe you need to read Segun Adeniyi's book to know that even before Sanusi came on board there had been widespread suspicion that something grave was happening in the banking sector and Soludo was either unaware of it or looking the other way.

Sanusi's banking reforms predated GEJ presidency, how you said he was working for GEJ in his banking reforms is beyond me!

Na wa for this level of thinking o

Jarus, you know they will never show you what is in the bowl, they will only show you the outer part of the shinning bowl. 4yrs down the line you will understand better.