theenchanter:
pls, how much do u want him to sell it? Free of charge?

You seem not to understand this simple truth. You are being fleeced. Not free but cheaper since its here. Prices of items are always cheaper wherever they are manufactured.

mamaafrik:
now that is not cool,thanks for the insight.
Do any one know if INNOSON or PROFORCE is given any sort of assistance Like free gas,power tax rebate ,tax holiday,import waiver etc
I know we are well represented anyone with the idea.

This two business did not key into government programmes... They import CKD for assemblage in Nigeria and get lower import duties

simonlee:
the Nigerian factor has started taking effect gradually!
i wouldn't be surprised if this postponement was deliberate just to allow the "lords of subsidy" loot more before handing it over to Dangote

so stupid of you.

AZeD1:

The profit margins of refineries are not that large.

Wow , I never new that.

Akanbiedu:
Dangote's prices should be lower for two major reasons.

(i) The refinery is closer to source of raw material. Dangote by refining in Nigeria has eliminated the cost of shipping and other logistics to and fro somewhere in Europe or Asia.

(ii) Labour cost in Nigeria should be comparatively lower than those places.

So it is commonsense that prices should be lower.

you are on point but my question is will he procure the crude oil at a price lower than the international market price?

QuotaSystem:


How did you conclude on the currency to be used for payment?

Besides what price do you think his major competitors are selling their refined oil?

Don't forget that for him to survive and excel as a global player in the industry, he must remain competitive.

Modified:



Let us break this down:

Dangote will not sell to Nigeria in Dollars unlike if we were importing refined fuel. That is KEY. Why?

It is because Nigeria will benefit greatly from eliminating a huge daily demand for USD to import fuel. This fall in demand has a direct effect on the exchange rate which will fall as a result of a fall in demand for $. Additionally Dangote will be forced to repatriate some of his USD income from exports, which will also boost our foreign reserves. More USD in the reserves means more USD available to satisfy our daily forex bill and avoid price spikes because the CBN will be better positioned to intervene accordingly.

Now why can't Dangote just sell to us at a reduced price? It is also simple.

For Dangote to survive in the global oil industry, it means he must then be able to compete favorably with other international refineries. That would be impossible if he is subsidizing prices for specific countries, because the costs of input (crude) and processing (refining) are the same or similar to his other competitors across the world. He must therefore sell at global prices, Nigeria not excluded (do not forget he is exporting the excess refined fuel to other countries) so as to remain profitable to his investors and keep him from shutting down after a few months of operation.

Yes we are an oil producing nation, but we are not 'dashing' the crude to Dangote to process for us. He is buying it from us at global prices too, and adding value (refining) at a cost he must recover and make some profit on.

This is rather simplified but hopefully it puts things in clearer perspective.

You are wrong sir. First, there is no global price for petroleum products. Market forces determine the price of products in different countries. That's why there is differential between the price petrol is sold in Germany & U.K., btw Nigeria & S.A. by the time you adjust for Forex. Don't get me wrong, there is global price for crude but not derivates.
Second, I believe Deva was misquoted, because you can't be a Nigerian refiner, based in Nigeria but still sell products at import price (i.e. you would be charging your customers for export of crude & import of products; the task that you did not do), so I agree with the guy you referenced. According to him, landing cost of PMS is #133 which has cost of shipment factored-in, and sold at 145 so profit can accrued for importer. But Dangote isn't importing therefore can't have cost of production up to #133, except global price of crude shoot up to over $100/barrel or he wants to be too greedy. I said too greedy because petrol does not obey demand/supply law, so if he decides to sell at 200 naira/liter people would still but cus they won't have choice as he has the strength (size & volume of his refinery/products) to chase away importer/competitors.
However, I agree with you that the price of his products won't be cheap (though would not be as high as those of importers), because we are not giving him crude for free, and he is buying in dollars (though in Naira equivalent) at global price. So all those would go into his own pricing too. Another point of yours that am agreeing with is the reparation of dollars made by selling it's products internationally. That would be so good for the country Forex reserve, as we would cut off demand for dollar for petroleum products importation. That together with the self sufficiency in rice production and some other products means dollars will come down a bit and Nigerian will be relieved.

Credit on the points above goes to Ope, a research/business analyst with S.T. BROOK LTD.

Agboriotejoye:
I keep saying it. Dangote is the front for the cabal milking Nigeria dry.
Just imagine buying crude at export price and selling at import price to a local market. What then is the point of the dollar breaks CBN have been giving the guy.
In other words, dangote refinery is another euphemism for removal of subsidy



The landing cost of fuel is N133. If he is selling at that amount or close to, then what difference does it make to the Nigerian market. Nigeria is an oil producing nation, so selling for local demand at international price should not arise except there's a plan to exploit the masses.
Quotasystem, read this so as to know that charging international price for locally refined crude is international 419. Also read porka's analyses, he's on point.

If dangote has been getting import waivers, forex concessions and other freebies from govt in the name of building a never ending refinery, then i think getting crude cheaper should be mincemeat for him except he's just up to a greedy game. We all know why our refineries have stopped producing totally is because of dangote's incoming refinery. Do you mean if tables were turned and the refineries start producing, they would sell to the Nigerian market at international prices? even Saudi oil company doesn't sell fuel at international prices in its local market. Be careful what you're defending cause you will also be a part of the receiver.
@grandstar, I daresay dangote has made a profit off Nigeria building the refineries already. Homemade products should be cheaper than imported ones, that's primary school knowledge. Dangote in cohorts with govt is planning a robbery of Nigerians like he did with cement during OBJ's time.


What difference does it make it babangida has a refinery outside and sells at international prices while dangote has his here and sells at the same international price? Dangote may even end up being the better for it since he does not have to worry abt logistics on the high seas. You and quotasystem keep making allusion to money being saved by exporting to African countries but don't realise even Benin does not buy dangote cement and dangote will compete internationally not like the monopoly he's abt to enjoy on the local front.

Dangote has become the John D. Rockefeller of our time and there's nothing any of us can do abt it, especially not by running analysis on SM

[quote author=Yorubasareslave post=83644413][/quote]

It is not a given that locally made products will be cheaper than imported ones. If it was true, countries won't be importing. You may lack comparative advantage in some things you produce locally.

Europe will be thier CUSTOMER and at the same time Europe will be thier COMPETITOR! Hahaha Edwin is so confused. You are even having eyes on Africa market when Buhari have closed the border. They cant sell to you but you can sell to them abi? Dangote, pls sack Edwin.

QuotaSystem:


How did you conclude on the currency to be used for payment?

Besides what price do you think his major competitors are selling their refined oil?

Don't forget that for him to survive and excel as a global player in the industry, he must remain competitive.

Modified:



Let us break this down:

Dangote will not sell to Nigeria in Dollars unlike if we were importing refined fuel. That is KEY. Why?

It is because Nigeria will benefit greatly from eliminating a huge daily demand for USD to import fuel. This fall in demand has a direct effect on the exchange rate which will fall as a result of a fall in demand for $. Additionally Dangote will be forced to repatriate some of his USD income from exports, which will also boost our foreign reserves. More USD in the reserves means more USD available to satisfy our daily forex bill and avoid price spikes because the CBN will be better positioned to intervene accordingly.

Now why can't Dangote just sell to us at a reduced price? It is also simple.

For Dangote to survive in the global oil industry, it means he must then be able to compete favorably with other international refineries. That would be impossible if he is subsidizing prices for specific countries, because the costs of input (crude) and processing (refining) are the same or similar to his other competitors across the world. He must therefore sell at global prices, Nigeria not excluded (do not forget he is exporting the excess refined fuel to other countries) so as to remain profitable to his investors and keep him from shutting down after a few months of operation.

Yes we are an oil producing nation, but we are not 'dashing' the crude to Dangote to process for us. He is buying it from us at global prices too, and adding value (refining) at a cost he must recover and make some profit on.

This is rather simplified but hopefully it puts things in clearer perspective.

Great analysis. It is Dangote refinery, not NNPC refinery. Besides, he's not being gifted the crude oil and he still needs to grapple with existing infrastructural decay .

Agboriotejoye:
I keep saying it. Dangote is the front for the cabal milking Nigeria dry.
Just imagine buying crude at export price and selling at import price to a local market. What then is the point of the dollar breaks CBN have been giving the guy.
In other words, dangote refinery is another euphemism for removal of subsidy

Dangote Refinery is BUYING foreign currency from the CBN at the OFFICIAL rate...
It is being dashed/gifted the foreign currency and it is a rate available to OTHER Nigerian businesses (esp manufacturers).

Nonetheless, the BENEFIT (or "point" to mirror your words) to Nigeria is that (just like Dangote, BUA and others did for Nigeria in respect of cement) Nigeria will transit from one of the world's leading importers of petroleum products to self-sufficiency and even a net exporter, in the process saving Nigeria BILLIONS of US dollars in foreign exchange (to invest elsewhere rather than continuing to import fuel) and earning Nigeria ADDITIONAL foreign currency from exports. In addition, the Dangote Refinery will create HUNDREDS OF NIGERIAN JOBS IN NIGERIA (from engineers all the way down the value chain), instead of continuing to subsidize and support foreign jobs in foreign refineries with no residual value to Nigeria (such as the development, transfer and retention of specialized skill sets domestically). The usefulness of our foreign currency reserves is NOT to put it in the bank and admire/count it, but rather to put it into good use for the overall economic development of Nigeria (and in the process Nigerians).

Agboriotejoye:
You wish. He ain't no Rockefeller. Rockefeller was not depending on govt patronage for business. He might have been a ruthless businessman and a cutthroat. But he was not a govt crony

Please which of Dangote's businesses "depend on government patronage for business"? His cement factories scattered throughout Africa? Dangote Sugar (which supplies the biggest confectioneries and beverage manufacturers in Nigeria)? His salt business? The flour mills (which is reportedly being sold to Olams)? The real estate business? Or perhaps the agricultural business (the tomato and the rice mills)? Please let's stick to FACTS!
>

Story story. Everything na hard thing for this people. In the abroad, projects are completed on time and even ahead of time without noise. Projects worth millions and billions of dollars. Factors are already factored in during project completion time analysis. Why over two years postponement?