quentin06:


and its the nigerian car owner who should pay it? nice hustle.

Dude, if you were a businessman selling shirts, and you bought shirts at N5000 per shirt, would you sell it at N3000 per shirt so that you can help poor Nigerians?? Meaning you won't earn enough profit to pay your loans you took for the business, your workers, you won't be able to buy new stock, and look after your family?

Business is not a charity. If we ran businesses as charites, there would be massive job losses...and massive finaincial loss.

Welcome to reality

zakim:

https://www.dailytrust.com.ng/oil-price-fg-revenue-shrinks-as-petrol-subsidy-rises.html

This report is doctored to create avenue for price increase,the government claimed that border closure has reduced drastically the amount of fuel consumption, before the border closure the nnpc claimed the daily consumption was about 60m litres per day which was very questionable,in the above report lot of fictitious monetary figures have been concocted n state without a mention of the present daily consumption rate,now does buhari know the meaning of subsidy?, this government n fraud is just 5&6,I seriously pray someone outside APC should succeed buhari.

Agboriotejoye:


Lol. Who in the world wants to buy anything at high price? Is the aim of free market not to increase production and reduce prices?

Well, that's the aim of subsidy removal. Prices go up, meaning more investment in refineries (since it is now profitable to build new refienreis) meaning increased prodicution and eventulaly fall in prices.

Where exactly are you getting this figures from?

I read widely enough.

I hope you realise that what drives the cost of fuel up is the landing cost not production cost per se

Which in the Nigerian setup does not matter because we import 80% of our needs. If not more.


.

I'll really like to see evidence that Nigeria pays subsidy on locally refined fuel in the 70s cause if that were to be true, then it reinforces my belief that subsidy is not the reason why refineries are not being built in Nigeria since your can build a refinery and still claim subsidy.

OK, let's explain how subsidy works.

1.I refine fuel at the hypothetical price of N150....and sell at N210 per liter, making a profit of N60 per liter.

2.The profit I make is to enable me pay decent salaires, invest in expansion of prooduction, and pay maintenance costs.

3.Under subsidy, Governoet makes me sell my fuel at N100 per liter...meaning I lose money and as a result....I am broke...I cannot pay maintenance costs, cannot expand production, and thus cannot build new refinereis, plus, jobs get cut, or salaries of my workers get cut...since I am now losing N110 naira per liter of fuel refined. But wait....Government pays me N50 per liter as subsidy...meaning my losses now go down to N60 per liter...and I am still NOT MAKING A PROFIT (Thank you government)....problems ensure.

US for example sells fuel at 30cents per litre which means the production cost will be somewhere between 20 to 25 cents. Bear in mind that US actually imports crude oil. For a country like Nigeria, we can actually sell at lower prices for our refineries like other oil producing countries do.

NEWSFLASH....

1The US now is 86-91% self sufficent in oil.

2.Also, fuel in the USA actually costs 77 cents per liter...that's N279 per liter.(as at 6//1//2020)

3.The US is the world's leading oil producer at 15.6m barrels per day.

Thus, if we are to be realistic and serious, we don't even need a dangote sized refinery since kerosine and diesel are already deregulated. What we actually need is modular refineries that will produce petrol to meet local demand. If we're serious as a govt, we can build five modular refineries in a year. Have you asked yourself why all the licences given for modular refineries never worked? Simple. The subsidy cabal sabotaged the effort just as they did the refineries. So what it takes is govt sincerity and political will to turn this around not necessarily subsidy removal

No, because no one is going to refine fuel at N150 or above..and sell it at a loss (See my explanation on how subsidy works.)...Because subsidy won't allow a refiner to make a profit. (Only folks like Dangote who have a alternate source of income..plus backing of government to get big fat loans can afford).

Plus, why haven't the cabals stopped Dangote eh??

P.S: Petrol sells for about 30cents per litre in the US which will equate to about 100naira here. So you can imagine why the landing cost is between 165-200naira per litre

No, petrol sells for 77 cents...which is N297 naira(Source:https://www.globalpetrolprices.com/gasoline_prices/)..in the USA.

The simplest solution to this recurring devil is getting a large refinery but the crooked leadership especially the past crooks had never deemed it fit because it will stop them creating more poverty the way they want.May God punish those who have consistently punished and " poverty capitalized" Nigeria and Nigerians.
Why can't they give licences to private individuals to build refineries.Dangote and petrolex refineries are not enough.

Gwilym:


Dude, if you were a businessman selling shirts, and you bought shirts at N5000 per shirt, would you sell it at N3000 per shirt so that you can help poor Nigerians?? Meaning you won't earn enough profit to pay your loans you took for the business, your workers, you won't be able to buy new stock, and look after your family?

Business is not a charity. If we ran businesses as charites, there would be massive job losses...and massive finaincial loss.

Welcome to reality

as if businesses like enron and worldcom were run like charities, there is a difference between sustainable profit and greed.

a real business provides services which people gladly pay for, not rip offs.

Mikelarteta:
I thought the Dullard said there is nothing like subsidy? God will surely punish all these APC members, they lied their way to power and still lying to remain in power. Imagine after increasing pump price from N87 per litre to N145 per litre these idiots are still talking about subsidy and some morons here on NL will still carry Buhari for head.

pls I don't support buhari I hate him pls count me out

At times like this I think of Fashola and his ignoble "cost of beans and akara" theory.

The government suppose to remove the subsidy.

Too much Politics in Oil Subsidy.

Hmmmm

Gwilym:


Well, that's the aim of subsidy removal. Prices go up, meaning more investment in refineries (since it is now profitable to build new refienreis) meaning increased prodicution and eventulaly fall in prices.



I read widely enough.



Which in the Nigerian setup does not matter because we import 80% of our needs. If not more.


.

OK, let's explain how subsidy works.

1.I refine fuel at the hypothetical price of N150....and sell at N210 per liter, making a profit of N60 per liter.

2.The profit I make is to enable me pay decent salaires, invest in expansion of prooduction, and pay maintenance costs.

3.Under subsidy, Governoet makes me sell my fuel at N100 per liter...meaning I lose money and as a result....I am broke...I cannot pay maintenance costs, cannot expand production, and thus cannot build new refinereis, plus, jobs get cut, or salaries of my workers get cut...since I am now losing N110 naira per liter of fuel refined. But wait....Government pays me N50 per liter as subsidy...meaning my losses now go down to N60 per liter...and I am still NOT MAKING A PROFIT (Thank you government)....problems ensure.


NEWSFLASH....

1The US now is 86-91% self sufficent in oil.

2.Also, fuel in the USA actually costs 77 cents per liter...that's N279 per liter.(as at 6//1//2020)

3.The US is the world's leading oil producer at 15.6m barrels per day.






No, because no one is going to refine fuel at N150 or above..and sell it at a loss (See my explanation on how subsidy works.)...Because subsidy won't allow a refiner to make a profit. (Only folks like Dangote who have a alternate source of income..plus backing of government to get big fat loans can afford).

Plus, why haven't the cabals stopped Dangote eh??




No, petrol sells for 77 cents...which is N297 naira(Source:https://www.globalpetrolprices.com/gasoline_prices/)..in the USA.

There's a vital point you keep muddling in point 3 which is that government fixing price means you sell below production price. Lemme give you an analogy. If an importer lands fuel at 200 per litre and govt says sell at 160 per litre cause i'm subsidizing, will he bring in again?

The theoretical purpose of subsidy is to keep fuel price at an affordable level for the people while the importers still make a decent profit. That's why subsidy fluctuates with crude price, while pump price is insulated as this OP has alluded. So, it's not possible for a govt to ask an importer to sell below import cost just cause they are subsidizing.

The difference when you refine locally instead of import is that since you own the input, you can reduce price from source and of course landing costs are also removed. But to say if you refine locally at a total cost of 200, govt will tell you to sell at 150 is simply untrue. Subsidy charges fluctuate with international crude price.

You need to stop looking at subsidy as if it's all evil. It's the corrupt management that abused it. It's not inherently evil neither is it a disincentive to building refinery as you assume

jamace:
A cabal is siphoning Nigeria money in the name of subsidy. Buhari needs to personally investigate this subsidy of a thing. I suspect a great fraud going on.

Guy you’re a hypocrite, cos it’s buhari now so you’re trying to absolve him, blaming people around him, but if this had happened during GEJ time you will blame GEJ.