Someone posted this yesterday:

"Due to weak regulatory regimes, the downstream sector became an all comers affair. Every Tom, Dick and Harry entered the business. Companies with no verifiable addresses, no tank farms, no vessels, no financial structures, no bank guarantees all became fuel importers. It was a bazaar.

It is only in Nigeria that such bizzare things can happen. Emergency millionaires were made in days. Time and space won't allow me to give you details of the unbelievable things that happened. Every top official of the federal government became an emergency fuel importer or middle man. Importation licenses were hawked openly. All you needed was for the PPPRA to give you a license to import. You could sell it for millions just outside the door.

Now there is a complex web that links the Petroleum Ministry, the DPR, thE Navy, the NPA, NIMASA,PPPRA, DMO, CBN and Commercial Banks in this fraud. Documents like the sovereign debt statements and the sovereign debt notes flew about and our money kept disappearing. From about 30 companies in the scheme, the number shot up to 300. Monthly, billions of Naira were paid out to people who have never had any contact with a Jerry can of fuel in their lives. No verification, no authentication, nothing. Money was being paid with reckless abandon. Dr Okonjo Iweala and Mrs Alison Madueke were all there watching!

It got so bad that some people will arrange with ship owners......take a two day hire of an empty ship, move it to Lagos Port, berth it there. Officials of the PPPRA, Petroleum Ministry, DPR will come there to inspect an empty vessel and certify that the empty vessel carried 10,000 metric tons of petrol, collect their money and walk away. The vessel simply sails away and three weeks later, close to 6 billion Naira will be paid as subsidy when not even a single drop of petrol was brought in."

Sunnycliff:
Nice informative piece! But as a proudly Economist there is more to Subsidy than the Average man could no!

Did you learn economics in your native langauge?
Enlglish seems hard for you, Mr. Economist.

gohome:
Question



Answer

[b]Nigeria can no longer afford to pay subsidy on petroleum products full stop. Corruption or no corruption we do not have the money to pay. You have to let it sink in your head. We have an infrastructural decay that will take 200 billion dollars to fix, you have annual 'deficit' budget of less than 20 billion dollars of which 40 percent is used to fund lazy states and you want to continue to spend 25% of your the remaining budget to subsidize PMS?

Hope the anology below helps

You are the head of your house, and you have an annual budget of 100 naira. Rent in a dilapidated house is 20 Naira. School fees is 20 Naira. Transportation to work and school is 30 Naira. Fueling your generator is 30 Naira. Let say you want to start up a new business to increase your income and as such you need to save 20 Naira. You also need to move from your present apartment because the ceiling leaks water any time it rains, which will require you save an extra 10 Naira. You took a loan from the bank, and the monthly deduction is 10 Naira. You have relations that cannot run their family and they have come asking for money because the landlord is about to evict them from the house. In the middle of all these, Something happened and your annual budget is reduced to 50 Naira. Will you keep paying for fuel to light up your house while you cannot pay rent and your kids can not go to school?

Before you critic always put yourself in a leadership position and provide practical solution
[/b]

Oga, what do you think is the average volume of petrol consumed by Nigerians daily?

We have a 445,000 barrels/day refineries, if the refineries have a 40% performance, that is like 175,000barrels /day.

What volume of Petrol , diesel, kerosene/jet fuel , will a 175,000 barrels/day produce daily?


I have other questions ? if you answer these ones, maybe i can proceed.

Anyone who can help to provide answers is appreciated.

During the Farouk Lawan probe, there was this banker turned 'cabal', who had received about N1.3b in subsidy funds, but does not have one single petrol station, and in total, has only about 12 staff (according to him).

The same guy when asked what the 'offshore Cotonu' scene looked like, was all erm, erm, erm . . . #briefcasecompany

I love this thread.

@poster, you see in Nigeria, we are simply in denial. We are a very POOR country with a budget less than that of countries of 7 million people. This wrong notion that we are rich must STOP. Our wealth is human capital if properly trained. My support for subsidy removal years back was frowned upon here on NL. No explanation made sense to them.

omenka:
Interesting!

I have just a few questions.


1). How much were previous administrations paying for subsidy??


2). How much did Jonathan pay on assumption of duty as the president and in subsequent years as president??


3). What necessitated the geometric increase in the expenditure on subsidy soon after Jonathan took over?? It was about 300billion on the budget but burgeoned to nearly 2trillion at the end of the fiscal year. Was there a corresponding increase in the demand of products to have warranted such increase in "supply"?? Did Nigeria get thirstier for petroleum products??


4). Was there any supplementary budget passed by the NASS to accommodate the increase as stated in #3??


5). There were about 40 importers of products prior to Jonathan's regime. After he took over, the list went over the roof to about 150!! What was the reason behind this??


#waiting.

Cc: gohome.

1. In 2009, the Yar'Adua/Goodluck administration spent 1 trillion naira on fuel subsidies.

The amounts expended were less in previous years due to various factors which I don't have the time to explain.
http://www.bloomberg.com/news/articles/2010-09-03/nigeria-aims-to-end-oil-subsidies-within-6-months-finance-minister-says

2. This question is not clear. The federal government budgeted the sum of 580 billion for petrol subsidies in 2010. There are are bound to variances between the budgeted amount and expended amount due various reasons.

3. In his bid to ensure a steady supply of petroleum to Nigerians and end persistent scarcity, GEJ decided to increase the number of petrol importers and suppliers. This (coupled with an increase in USD/NIR exchange rate) resulted in a sharp increase in subsidy spending by almost 100 percent from 1 trillion to almost 2 trillion. Nigerians were enjoying a steady supply of petrol but with huge costs to the government.

4. None

5. To ensure a steady supply of petrol, which Nigerians can attest to that they enjoyed during past four years.

omenka:
Interesting!

I have just a few questions.


1). How much were previous administrations paying for subsidy??


2). How much did Jonathan pay on assumption of duty as the president and in subsequent years as president??


3). What necessitated the geometric increase in the expenditure on subsidy soon after Jonathan took over?? It was about 300billion on the budget but burgeoned to nearly 2trillion at the end of the fiscal year. Was there a corresponding increase in the demand of products to have warranted such increase in "supply"?? Did Nigeria get thirstier for petroleum products??


4). Was there any supplementary budget passed by the NASS to accommodate the increase as stated in #3??


5). There were about 40 importers of products prior to Jonathan's regime. After he took over, the list went over the roof to about 150!! What was the reason behind this??


#waiting.

Cc: gohome.

Let me hazard a response to your questions on behalf of gohome

Imanuelle:


Subsidy is just another national cake for those who are opportuned to have a bite from it.

The masses have been bearing the cost right from time immemorial.

Even if they choose to remove the scam, PMS should not be more than #100

50 Litres of petrol for you. Your head is very correct. I insist subsidy is a BIG scam!!!

mbulela:

Did you learn economics in your native langauge? Enlglish seems hard for you, Mr. Economist.

Mr Linguistic, It's spelt English and not Enlglish

9jatatafo:


I know 3 marketers but there are more. The ones I know are Oanda owned by Wale Tunubu, Capital Oil owned by Ifeanyi Ubah and Con Oil by Femi Otedola

tenry:

Oga Con oil is owned by Jimoh Ibrahim. Forte belongs to Otedola

Sorry Sirs, actually, CONOIL is owned by Mike Adenuga

989900:




The petroleum ministry paid N10b for flights, trillions on exportation/importation of fuel it produces while all it needs is N99b for all it's refineries to be functioning at 90%+ = 25 million litres of PMS/day

So in essence, The Previous Administration of GEJ is a failed one

[quote author=anulaxad post=34139759]

You accuse people of ignorance, but are you really reading what you are saying.

How can you write and claim so much illegitimate information, can you imagine, How is India, UK and Brazil producing more oil than Nigeria.

I will not waste your time, take a look:http://en.wikipedia.org/wiki/List_of_countries_by_oil_production


But if that wasn't bad enough, you are telling people that they will have to pay higher once they remove subsidy ( how many average Nigerians can even afford oil at 87 Naira talkless of 200 ), what will they be paying for as the refineries do not work, so this leaves the question what oil will Nigerians be using .

In simple words,no refinery as of right now is working, Buhari has to fix these refineries and if he can get them working at maximum capacity Nigerians

1. Well subsidy is already partially removed since 2012.

2. As we speak, with the current price of crude, and not knowing for sure how much we consume daily (when we remove those ones they ship/truck to Niger, Cameroun, Benin Republic, Togo and who knows where), plus the fact that our refineries do produce (at what percentage--no data), we can't be sure how much the price of fuel will come to without 'virtual subsidy' -- definitely cheaper than the N147/litre figure they work around, maybe less than the N87/litre we currently pay!

3. Our refineries are working (at what capacity? We don't know.), and TAM according to the ministry, has already commenced since last October.

Subsidy is not the problem with Nigeria, our problem is corruption. In a country that produces Oil, why should the citizens not enjoy the proceeds? We keep mentioning N200 per litre, how can the masses afford to pay this ridiculous amount? UK pays £1.24 per litre of petrol an the minimum wage is £6.19/hour can Nigerians afford this wit a minimum wage of£66/month? We should compare prices with our sister countries producing crude oil. The price of PMS in Venezuela is 8p (N24) so why should Nigeria pay N200? Until Nigeria can meet its local needs, subsidy has to stay, but it needs proper implementation.

The subsidy corruption goes thus: A marketer imports 1M Litres of petrol, because of corruption in our petroleum ministries, he is able to falsify records with the officials that he imported 3M litres. Hence he gets subsidy on 3M instead of 1M. Once corruption is tackled Nigeria will survive. As long as the common man needs petrol for his 'I pass my neighbour generator' then fuel subsidy can't be removed.

kinibigdeal:




Your comment are too loopsided. The fact that you said you were against it in 2012 due to your unfounded fact speaks alot about your personality and you supporting it now enapse my conclusion. The protest against subsidy in 2012 was highly political and not for the interest of the nation, the calculation was to render this present administration ungovernable in lieu of their interest in 2015 which really work for them perfectly. Majority of the policy GEJ administration had then was strongly opposed through press and whatever platform because of their political calculation of 2015. The effect was, the more you oppose a beneficial policy, the more the aesthetic decay compiled and remain unsolved. Now the consequence of their unfounded critics is what they want to carry now which is almost impossible to solve in 8years. The problem we have as a nation is that our critics are never issue based but political gain

My brother u are wrong on this, in Nigeria we have always protest any increase in PMS price..To say the opposition was behind it is just Fallacy...previous PMS increase protest has always been done by NLC but #occupyNigeria was larger because people are more enlightened and the time of the removal also added to the wide outrage and protest...You need to drop this everyone is after GEJ mentality because it is not the opposition alone who will bear the brunch of the increase in PMS

Sunnycliff:


Mr Linguistic, It's spelt English and not Enlglish

So you know the correct spelling of the word but can't write a coherrent sentence the language?
Congrats!!

Its funny how you made a mistake while trying to correct

Conoil~ Wale Adenuga
Global fleet ~Jimoh ibrahim
Forte (formerly AP)~ Femi otedola

tenry:

Oga Con oil is owned by Jimoh Ibrahim. Forte belongs to Otedola

mbulela:

So you know the correct spelling of the word but can't write a coherrent sentence the language?
Congrats!!

Coherent not coherrent!
A coherent sentence in the language!

munex007:
Its funny how you made a mistake while trying to correct

Conoil~ Wale Adenuga
Global fleet ~Jimoh ibrahim
Forte (formerly AP)~ Femi otedola

wale adenuga? I don't think so, when did he enter into oil biz?

I think you intend writing Mike Adenuga

[quote author=emiye post=34139973]

Oga, what do you think is the average volume of petrol consumed by Nigerians daily?

We have a 445,000 barrels/day refineries, if the refineries have a 40% performance, that is like 175,000barrels /day.

What volume of Petrol , diesel, kerosene/jet fuel , will a 175,000 barrels/day produce daily?


I have other questions ? if you answer these ones, maybe i can proceed.

Anyone who can help to provide answers is appreciated.

445,000 barrels of crude= between 22 million -33 million litres of PMS. (Refining can be fluid, such as, you can optimize or tweak a little for what you most desire)

"If we refine 1 barrel (42 gallons) of crude oil, we will get roughly 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."

175,000 barrels will give roughly about 14.5 million litres of petrol, 7 million litres of diesel, and 3 million litres of kerosene/jet fuel."

No one knows how much PMS/day we consume . . . just random figures flying around to justify the fraud -- probably a third, or a half of the 40 million litres touted!

1. It will be difficult to tell you exactly how much past governments paid but I'm sure the records are available and with some massive research work it can be established. But the point really is that every Head of State since IBB has DIRECTLY paid subsidy. Buhari never paid subsidy DIRECTLY (this explains why he always feigns ignorance about DIRECT subsidy payments because when he was in charge it wasn't the practice. But he's only being smart by half because he was well aware of how the mechanism worked as head of PTF). Buhari didn't pay subsidy DIRECTLY because at the time he was head of state our refineries were still functioning (to an extent) and we had enough to satisfy our needs. But the economic mismanagement of previous years before his administration was already laying the foundation for crisis in our refining capacity even while he was still in charge, just that he didn't know it at the time. Apparently we were having problems sourcing forex to carry out Turn Around Maintenance at the refineries during his time but the problem of the refineries became really apparent during IBB's time when we simply could not produce enough for local consumption. Subsequently IBB started importing petrol. However he was importing petrol at the international price which Nigerians were not used to paying and knowing how completely bunkers Nigerians could get if one tampered with the price of fuel he started paying subsidy to smoothen the price. So IBB was the Head of state who officially started paying subsidy by making up the differential between international price and locally acceptable price. But it doesn't mean we were not enjoying a different kind of subsidy before then. The nature of the subsidy we enjoyed then is the origin of this famous 445,000 barrels per day that was set aside by NNPC for local refinery. Instead of selling this oil to its refineries at international market prices, NNPC sold the crude at cost of production to itself, thus forfeiting the profit that would have gone into government coffers. So in a sense we were already indirectly enjoying subsidy even during Buhari's time without being aware of it.

What the government s doing is price fixing,nothing like subsidy

Copied from another poster:

UNDER PRESIDENT OBASANJO

The subsidy scheme became an issue under President Obansanjo. It was under him that the concept of petroleum importation became full blown. For reasons best known to the wily Owu Chief, our four refineries were left to rot while our country relied on fuel importation. That policy remained the biggest disservice former President Obasanjo did to this country.
However, as bad as that policy was under OBJ, there was still some level of sanity and control. At no time under OBJ did subsidy payments exceed 190 billion Naira annually. There were stringent measures that controlled the participation of companies under the subsidy scheme.
Just before OBJ left office, he sold two of our refineries to Dangote and Otedola, a measure that would have worked if fully implemented. It is beyond doubt that the private sector remains the best economic and commercial managers. Government is a cesspool of waste and corruption.

UNDER PRESIDENT YARADUA

When late President Yar'adua took over, he rode on a staccato of uninformed voices to reverse the sale of the refineries. He reversed the sale but did nothing to bring the refineries back to work. He continued to run the subsidy scheme and kept the restive sanity in the system. As at the time Yar'adua died, Nigeria's subsidy burden was about 230 billion Naira per annum.
Now for the uninformed, the petroleum subsidy scheme is a system where the federal government, on a bid to reduce the cost of fuel paid by Nigerians chooses to pay the difference between the landing cost of petrol imports, the prevailing price of the commodity at the international market and what is actually sold in Nigeria.
For instance, if the landing cost of petrol in Nigeria is, say, N 115, and after adding lightering charges and other logistics costs, the price of petrol should be N147, the federal government asks the marketers to sell at N97 and decides to pay the marketers the difference per litre.

1- What is subsidy in the first place?
2- I think we shouldn't even be talking about subsidy in this country! We have crude oil, we exporting and we importing! Why can't we be using our crude oil to trade for the refined one? Why are we paying for importing and why is it that the importing price is higher than the exporting price, please elaborate?

3- No crude oil in South Africa and yet they paying less than Nigeria that have crude oil. A litre of PMS in South Africa is 90cent which is N14.80 in Nigeria currency... Are they not paying for subsidy in South Africa? What is called subsidy please?

#I believe subsidy is a scam.

#To the PDP fans; the likes of Barcanista, Temitemi, Mogidi and the likes, people that are replying those guyz don't have time too. If at all you guyz have something to do, you wouldn't be on Nairaland every minutes and seconds all day. I think Barcanista and the likes are just extraordinary fool because, they reasons upside down and they only want bad for this country. Since they don't have anything to do, they tends to sit with their phones and be posting rubbish all day. #IdleHand

[quote author=989900 post=34140991][/quote]

I just saw where NNPC reported , Nigerians consume average of 30 million litres of petrol /day , 12 mil. litres of diesel /day, 8mill, litres of Kerosene/day, 2 million litres of jet fuel/day. So, what i can infer is that to stop importation, we will need to guarantee local production of roughly 45 million litres of petrol daily.... , but the current production at 40% of the total capacity of refineries (445k barrels) will give 14.5 million litres.

gohome:
Question



Answer

[b]Nigeria can no longer afford to pay subsidy on petroleum products full stop. Corruption or no corruption we do not have the money to pay. You have to let it sink in your head. We have an infrastructural decay that will take 200 billion dollars to fix, you have annual 'deficit' budget of less than 20 billion dollars of which 40 percent is used to fund lazy states and you want to continue to spend 25% of your the remaining budget to subsidize PMS?

Hope the anology below helps

You are the head of your house, and you have an annual budget of 100 naira. Rent in a dilapidated house is 20 Naira. School fees is 20 Naira. Transportation to work and school is 30 Naira. Fueling your generator is 30 Naira. Let say you want to start up a new business to increase your income and as such you need to save 20 Naira. You also need to move from your present apartment because the ceiling leaks water any time it rains, which will require you save an extra 10 Naira. You took a loan from the bank, and the monthly deduction is 10 Naira. You have relations that cannot run their family and they have come asking for money because the landlord is about to evict them from the house. In the middle of all these, Something happened and your annual budget is reduced to 50 Naira. Will you keep paying for fuel to light up your house while you cannot pay rent and your kids can not go to school?

Before you critic always put yourself in a leadership position and provide practical solution
[/b]

But Gej brought same solutions and u and ur likes through it away and went 4 full strike. Hypocrite. We knw dat the removal of the subsidy is the best 4 Nig but u people foolishly go on a shameful protest. Hypocrite

2. Again the figures of what Jonathan paid I'm sure can be established with some research. What I like to say about what GEJ paid is that he was carrying his bills plus Yar Adua's bills at the time he made those humongous payments in 2011, the same way Buhari will carry his (GEJ's) when he takes over on 29 May. The interesting thing to note is that Yar Adua didn't inherit any bill from OBJ, or if he did at all, it would be very insignificant. And the reason OBJ left such a small inconsequential bill is because he maintained a balancing act were he gradually increased the price of fuel, without totally removing it entirely, on a regular basis, so as to keep his payment to the marketers manageable. That is really the genesis of this present crisis, that Yar Adua's government did a very poor job of handling fuel subsidy during his time. Not only did he reverse the last increase OBJ did before he handed over, he subsequently did not make any increases of his own during his entire 3 years. Worst still, he wasn't paying the bill presented to him by the marketers, because every time he saw it he would start to shiver. So he let them pile up in his in tray while he attended to his health. The implication was that a massive interest charge was accruing on the outstanding payments over time. It is this bill plus the interest that faced GEJ when he took over. Of course due to political reasons he didn't immediately increase fuel prices to lessen his own bills and in fact made matters worse when his people rushed in to add to the number of oil marketers gorging at the the trough that was the oil subsidy racket. He waited till after the elections and after he had subsequently paid out trillions of naira to cover for Yar Adua's bill plus interest and his (GEJ's) bill before he finally decided to do way with the sham in one fell swoop. The rest as they say, is history.

isaajibola:
1- What is subsidy in the first place?
2- I think we shouldn't even be talking about subsidy in this country! We have crude oil, we exporting and we importing! Why can't we be using our crude oil to trade for the refined one? Why are we paying for importing and why is it that the importing price is higher than the exporting price, please elaborate?

3- No crude oil in South Africa and yet they paying less than Nigeria that have crude oil. A litre of PMS in South Africa is 90cent which is N14.80 in Nigeria currency... Are they not paying for subsidy in South Africa? What is called subsidy please?

#I believe subsidy is a scam.

#To the PDP fans; the likes of Barcanista, Temitemi, Mogidi and the likes, people that are replying those guyz don't have time too. If at all you guyz have something to do, you wouldn't be on Nairaland every minutes and seconds all day. I think Barcanista and the likes are just extraordinary fool because, they reasons upside down and they only want bad for this country. Since they don't have anything to do, they tends to sit with their phones and be posting rubbish all day. #IdleHand

90cents is not N14.80 oooo

90 cents in nigerian currency is like N170.

kinibigdeal:




Your comment are too loopsided. The fact that you said you were against it in 2012 due to your unfounded fact speaks alot about your personality and you supporting it now enapse my conclusion. The protest against subsidy in 2012 was highly political and not for the interest of the nation, the calculation was to render this present administration ungovernable in lieu of their interest in 2015 which really work for them perfectly. Majority of the policy GEJ administration had then was strongly opposed through press and whatever platform because of their political calculation of 2015. The effect was, the more you oppose a beneficial policy, the more the aesthetic decay compiled and remain unsolved. Now the consequence of their unfounded critics is what they want to carry now which is almost impossible to solve in 8years. The problem we have as a nation is that our critics are never issue based but political gain

Your own thinking seems loopsided itself. You thought I fell for the media propaganda, which is not correct. In 2011,(a time when the media "favoured" Jonathan) I voted Buhari, having foresaw that Jonathan will not be who he portrayed himself to be. It was too evident as I checked about him from his days as Deputy Governor and Governor of Bayelsa State, down to when the election was approaching then. I was not really surprised when he began to show Nigeria the real stuff he was made of.
Let me ask you again, if they had removed the subsidy, what do you think will happen to the money saved from it? Use the case of the SURE-P fund and the unremitted funds from NNPC, as a guide.
Edit:
Gov Babangida Aliyu just said there was nothing like SURE-P, so when the government "partly removed the subsidy", the money it said is set aside was all facade! Please justify this and use it to answer my question again, of what would still happen to total removal of subsidy.

Sunnycliff:


Coherent not coherrent!
A coherent sentence in the language!

Your craze no dey here.
Enough of the trolling. Let me go and read your economic summations as it concerns the topic.
So where do you stand with the removal of subsidy?

tenry:
Oga Con oil is owned by Jimoh Ibrahim. Forte belongs to Otedola

Thank you and thank you very much

3. I think my no. 2 answers explains no. 3