Saw this Online......Fuel marketers Milking us(Long Read)

Subsidies on Petroleum products have long been a Pandora’s Box in Nigeria. It is a wonderful source of corruption, Greed, Happiness and a reflection of the Inability of the Africa to Optimize Its God Given resources. The existence of Fuel subsidies is a source of reoccurring debates, while the removal or Nonpayment of same subsidies raises ,Flashpoints, Scarcity, Protests and increased hardships on the Populace, which is quite amazing for something which some say does not exist. Today we examine aspects of Fuel subsidy and try to develop new and easy means of understanding It.As you might Note we have implied that Subsidy exists and also is been exploited By the players in the downstream Petroleum sector to Garner Illicit gains and Impoverish the Rest of the Country.

Our First Point of contact is the Recent calculations by Former Minister of Petroleum professor David Tam west in which He implied that The subsidy on petrol is a Farce. Many believed him and share the same opinion, but we Critically examined the Figures he used and realized he used an unreal Crude production Cost of $5 per barrel and an exchange rate of 160 N/$ .We find such assumptions spurious and thus we consider the Rest of the Calculations a Flight from reality to The land of Fantasy.

Our Second Point is asking such Questions as, How much Does It cost to Produce a Liter of Petrol (Premium Motor Spirit)in Nigeria, This question should be directed of course to the usual suspect ,The NNPC, but of course we expect No answers from them, The Management of the Orient refinery and the Proposed Dangote Refinery would have Adequate data to provide an answer, but then again their response is not Forthcoming. We are left with Figures from OPEC Monthly oil reports, which would be supplemented with Figures from The Petroleum Products Price regulation Agency(PPPRA),Customs and Ministry Of Finance.

Time to get our Hands and Brains dirty,Subsidy is the amount paid by Government that enables Nigerians to But Petrol below the Open market Rate,Fuel subsidy payments in Nigeria is influenced by 3 major factors, Crude Oil prices, The Exchange rate and Consumption. Subsidy for most intents and Purposes is funded from the Federation Account through the NNPC domestic crude Allocation and thus talk of Federal Budgetary allocation is Slightly misplaced.

The PPPRA templates Gives us a List of Components of PMS cost, (Cost + Freight) being the largest. The Gasoline (Petrol) Price per Metric Ton being the most important, and is largely determined by Factors beyond our Control. The freight is the amount charged for Transporting a Metric ton of PMS from a refinery (Mostly Europe or Eastern US seaboard to Nigeria).We do not know the exact freight costs used by the PPPRA to Know if it is competitive and this Omission might lead to exploitation as every $10 per metric Ton in Freight Costs would lead to a 1.3 naira increase in PMS cost per Liter.

Another Component of the PPPRA template, the traders margin is also another point of worry as we do not know what exactly it is, is it the Profit of the Trader who sells the Gasoline to us or who brokers the Deal and why is it a set figure ($10), despite fluctuations in Crude oil prices.Do we have a trading desk in our National Oil Company, NNPC .Traders Margin yields 100 Million dollars per annul for the trader, chai,what a Lucky trader.The PPPRA say the Traders Margin is Factored Into Freight Costs yet It appears as a Separate Component from Cost and Freight, weird ehhh……,Lucky trader.

Lightering expenses
According to the PPPRA,Local Freight charge is the cost incurred on the trans-shipment of imported petroleum products from the mother vessel into daughter vessel to allow for the onward movement of the vessel into the Jetty. This charge includes receipt losses of 0.3% in the process of products movement from the high sea to the Jetty and then to the depot. The mother vessels expenses are based on the allowable 10 days demurrage exposure at the rate of $28,000 per. Day. But does Lightering costs have to be more than 3% of Petrol Prices ,is that what obtains in other countries and can the PPPRA and NNPC prove such.
Moving to Other Aspects like the Storage charge , Jetty Charge and financing, there is not much data on those and we cannot ascertain the accuracy or Otherwise of such Figures.

Now that the Petrol has landed, it cannot be sold to us without the Tanker drivers, distributors -Filling stations like Oando, Forte Oil,Total , Ugo and sonns, etc. The retailers Take about 3.5% percent profit , which we consider ok , as cost of business(No ,we don’t own any Petroleum Stocks).

The transport 3 naira per Liter, which is approximately 100,000 naira per 33,000 tanker of fuel, here our problems begin as there is another cost of bridging, we ask bridging what exactly?What is the cost of transporting a 33,000 liter tanker of Fuel from Lagos -Maiduguri, or Port Harcourt to Maiduguri, we could ask some tanker drivers or look into our Military accounts to See how much they spend in tackling the Boko haram Insurgency.

What is the Difference between Bridging and Transport Cost, and how much does it cost to Transport a Tanker of Deregulated Diesel from Lagos to Maiduguri and do Bridging Costs apply to diesel. 33,000 Liter Tanker of Diesel is approximately 25 Tons, a Truckload of Cement of 500 Bags has the same weight, yet Dangote, Lafarge and Other cement Manufacturers Charge between 100(minimum)-200(maximum) per bag of Cement for Delivery Nationwide, this translates to 50000 -100,000(maximum) per 25 Metric Tons or 1.50K to 3 naira per liter , which leaves the question where are we Bridging the Fuel to, Libya perhaps, and is the Transport Cost borne by Retailers and distributors Free money as we also pay them to “Bridge” Petrol. This is Very Important as we consume 13 Billion liters of petrol annually with a Bridging Cost of 5.80 per liter which yields 75 Billion in bridging expenses. The Free money part might be accurate as the Minister of Finance Ngozi iweala recently said that Fuel marketers are in a Risk free Business.

Also does it cost more than 3Naira per liter,(100,000/Tanker) to transport fuel from the Lagos Jetties/Depots to areas within Lagos or better still what is the maximum distance that (100,000/33,000 L tanker) can transport. We believe transporting fuel within Lagos is less than that and Lagos accounts for More than 30% of our National Petroleum consumption, why then are we paying extra 6 naira to transport and “Bridge” fuel within Lagos and other nearby states. So many questions for the PPPRA, NUPENG, NNPC, Marketers and the Rest of us.

Do we also pay the Traders Fee, Finance Costs, Freight Charges on Locally produced petrol from our Refineries which we have been told by NNPC are Working at 30% capacity, If so WHY?, if Not why is there No separate template for domestic Fuel Production?, or are Those claims misleading?.

This Complicated process and the accompanying questions are only those Associated with Petrol subsidy , The Kerosene subsidy is another Mind Boggling maze which we are handicapped to Investigate. The Kerosene subsidy maze can be likened to a Black Hole which does not exist yet does exist which creates unending happiness for its beneficiaries and Utmost confusion for the Rest of us. In the Second part of this article we examine the Economic Factors affecting Petrol subsidy and their effects on us.


http://nairametrics.com/how-to-calculate-fuel-subsidy/
http://skuulmi.com/2015/05/how-to-calculate-fuel-subsidy

Wait lemme finish reading it..fp tins

sagr:
Wait lemme finish reading it..fp tins

If it makes front page I wil buy fuel for all nairalanders

@Donguutti...
Plz bro i need ur help...
Im carrying out a project work on furl subsidy...
Plz help me with datas on Nigeria fuel subsidy.
08132341126
Thanks