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Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 5:05am On May 12, 2011
By Sola Alabadan, Senior Correspondent

The International Monetary Fund (IMF) has pointed out that the call on Federal Government to ensure that all refineries in Nigeria work at full capacity might not address the issue of increment in the prices of oil products.
IMF’s Country Chief and Senior Resident Representative in Nigeria, Scot Rogers stated this in Lagos on Wednesday, at a training course being organised by Thomson Reuters Foundation in collaboration with (Norwegian Agency for Development Cooperation) NORAD for financial journalists.
He based his argument on the fact that Nigerians are presently paying N65 for a litre of petrol whereas the same product goes for about N130 at the world market.
According to him, if all refineries are made to work as people have been canvassing for, the onus will still be on the owners of these refineries to decide whether to sell at the local price or take it outside the country to make more money.
Rogers also called on the government to critically address the issue of power generation, noting that once this problem is solved, the nation’s economy will be better for it as virtually all businesses require electricity in their operations.
He stressed that if the government can ensure ready supply of electricity, as well as ensure that there are good road networks in the country, all the other things would fall into line.
Managing Director of the Nigerian Liquefied Natural Gas (NLNG), Chime Ibenechie, had at a recent conference of the Nigerian Association for Energy Economics, said that the Nigerian government was spending $350 million monthly on petroleum subsidy.
He regretted the huge sum of money being spent on fuel subsidy monthly saying the situation is unacceptable.
According to him, the amount currently spent on gas subsidy could be deployed to other areas of needs such as the provision of infrastructure and gas projects.
Ibenechie, however, expressed the need for economists to think about balancing the confusing paradox in the petroleum industry.

http://www.independentngonline.com/DailyIndependent/Article.aspx?id=33633
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 5:06am On May 12, 2011
Na wa for naija

subsidized electricity => shortage, power industry moribund
subsidized petrol => shortage, no refineries
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Kobojunkie: 5:20am On May 12, 2011
Nigerians are paying Naira 65 still for gas?? WHAT THE HECK? Wait . . . so na only Diesel and Kerosene go up??  shocked shocked shocked Or is someone trying to dupe me
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by violent(m): 5:39am On May 12, 2011
According to him, if all refineries are made to work as people have been canvassing for, the onus will still be on the owners of these refineries to decide whether to sell at the local price or take it outside the country to make more money.

Bullshyt!

I hate it when people attempt to blow hot air down my árse like i've never been through the walls of an higher institution.

If all refineries were made to work, all the government simply had to do is to reduce subsidies and increase taxes on refined crude exports, up to an extent where it becomes priced competitively in global markets and owners would be forced to see a more lucrative deal in selling at the local price where less taxes and higher subsidies abound.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Nobody: 11:17am On May 12, 2011
violent:

Bullshyt!

I hate it when people attempt to blow hot air down my árse like i've never been through the walls of an higher institution.

If all refineries were made to work, all the government simply had to do is to reduce subsidies and increase taxes on refined crude exports, up to an extent where it becomes priced competitively in global markets and owners would be forced to see a more lucrative deal in selling at the local price where less taxes and higher subsidies abound.

Makes sense
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by otokx(m): 11:23am On May 12, 2011
Government will have to subsidize petrol until such a time when we have more megawatts of power.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 11:23am On May 12, 2011
ekt_bear:

By Sola Alabadan, Senior Correspondent

The International Monetary Fund (IMF) has pointed out that the call on Federal Government to ensure that all refineries in Nigeria work at full capacity might not address the issue of increment in the prices of oil products.
IMF’s Country Chief and Senior Resident Representative in Nigeria, Scot Rogers stated this in Lagos on Wednesday, at a training course being organised by Thomson Reuters Foundation in collaboration with (Norwegian Agency for Development Cooperation) NORAD for financial journalists.
He based his argument on the fact that Nigerians are presently paying N65 for a litre of petrol whereas the same product goes for about N130 at the world market.
According to him, if all refineries are made to work as people have been canvassing for, the onus will still be on the owners of these refineries to decide whether to sell at the local price or take it outside the country to make more money.
Rogers also called on the government to critically address the issue of power generation, noting that once this problem is solved, the nation’s economy will be better for it as virtually all businesses require electricity in their operations.
He stressed that if the government can ensure ready supply of electricity, as well as ensure that there are good road networks in the country, all the other things would fall into line.
Managing Director of the Nigerian Liquefied Natural Gas (NLNG), Chime Ibenechie, had at a recent conference of the Nigerian Association for Energy Economics, said that the Nigerian government was spending $350 million monthly on petroleum subsidy.
He regretted the huge sum of money being spent on fuel subsidy monthly saying the situation is unacceptable.
According to him, the amount currently spent on gas subsidy could be deployed to other areas of needs such as the provision of infrastructure and gas projects.
Ibenechie, however, expressed the need for economists to think about balancing the confusing paradox in the petroleum industry.

http://www.independentngonline.com/DailyIndependent/Article.aspx?id=33633

This IMF again, abi.

They should first advise America to stop giving subsidy to her farmers.

Read between the lines, guys.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 11:25am On May 12, 2011
And they should stop giving out food stamps and putting people in projects.


Britain should also stop her benefit system.



Yeye IMF.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by redsun(m): 11:42am On May 12, 2011
Imf is part of d criminal gangs that are duping and exploiting nigerian public. That man should be stoned,he is talking rubbish. I bet he is d same man that said corruption is good for nigeria
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Nobody: 7:50pm On May 12, 2011
UN, IMF NATO, BEASTS OF NO NATION!!!

Why o why!!!! Why can't they shove their advises up their crap holes??


If every state can have a state owned refinery, supplying it's population, that will be the end of gas at 60 naira + it will be something like 20 naira or even ten naira, The only problem is if Niger Delta is not looked into, Nigeria's self sustaining gas dream remains gas and not solid,
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Sunofgod(m): 8:27pm On May 12, 2011
Of course the IMF would not really want Nigeria to be fully self sufficient.
That will not be beneficial to those currently exploiting the oil industry (mainly foreign companies)

The bottom line is if Nigeria were capable of refining 100% of the crude oil extracted, the country would not only be able to reduce the reliance on internal fuel subsidies but would also make enormous profits exporting the numerous refined products that can be marketed.

Even new industries such as in 'plastics' could be entered into.

I would even welcome a 'State Owned' oil company that would handle all extraction and refining of oil products. Now would be an ideal time as fuel prices are destined to only go up.

PS: If the current subsidies are reduced, inflation would rise, and civil unrest such as that seen in the Middle East would soon follow. The current  subsidies may even have to be increased to fight against food inflation that is affecting the whole world.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by Nobody: 11:44pm On May 12, 2011
Seriously mehn, this IMF needs to be scrapped.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 11:49pm On May 12, 2011
J12:

Seriously mehn, this IMF needs to be scrapped.


Nothing from the IMF is meant to help/develop Africa.

Nada!
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 11:51pm On May 12, 2011
The IMFs point is that whoever invests in refinery would much rather export the refined oil than sell it locally.

Who would want to sell for N65 if you can sell it abroad for N130?

And if the government forces you to sell locally, then you won't even bother investing in a refinery.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 11:55pm On May 12, 2011
ekt_bear:

The IMFs point is that whoever invests in refinery would much rather export the refined oil than sell it locally.

Who would want to sell for N65 if you can sell it abroad for N130?

And if the government forces you to sell locally, then you won't even bother investing in a refinery.

So, why is NOT easy for refineries in the EU to export petrol to the UK?

It is also more expensive there.

And, why are refineries in Saudi not doing that?
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 11:57pm On May 12, 2011
The reason why a key product like that gets subsidized is not just to help the poor.

The economy will pay a bigger price of uncontrollable inflation if left alone to market forces.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 11:58pm On May 12, 2011
ola olabiy:

So, why is NOT easy for refineries in the EU  to export petrol to the UK?

It is also more expensive there.

And, why are refineries in Saudi not doing that?



I don't know about the EU or Saudi; maybe the price differential isn't 2X. After all, it does cost money to export. . . if the difference were N5 per liter (rather than N65), it might not be profitable.

Share with us the #s per liter in UK vs Europe, and Saudi vs abroad and that might tell more.

Anyway, all I know is that as prices are currently, I don't see why anyone would want to build refinery for supplying the local market. I'd much rather export. Unless the government wants to give me some sort of subsidy.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 12:02am On May 13, 2011
ekt_bear:

I don't know about the EU or Saudi; maybe the price differential isn't 2X. After all, it does cost money to export. . . if the difference were N5 per liter (rather than N65), it might not be profitable.

Share with us the #s per liter in UK vs Europe, and Saudi vs abroad and that might tell more.

Anyway, all I know is that as prices are currently, I don't see why anyone would want to build refinery for supplying the local market. I'd much rather export. Unless the government wants to give me some sort of subsidy.

Exactly! It doesn't affect you one jot.

You still charge what is profitable for you while the government balances the receipt.

Most Brits don't know transportation is being subsidized for them.
Because their government simply pays the subsidy to train operators.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by agabaI23(m): 12:04am On May 13, 2011
The same strategy the EU is using to keep African countries from refining there products.

Let the refineries come up first and even if they decide to export the refined crude, there would have job creation at the minimum.

They should keep there advice to themselves
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 12:06am On May 13, 2011
agabaI23:

The same strategy the EU is using to keep African countries from refining there products.

Let the refineries come up first and even if they decide to export the refined crude, there would have job creation at the minimum.

They should keep there advice to themselves

Thank you.
Let's have these refineries first. Then, export them. No wahala.

These IMF guys know what is happening. They will never say it.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by jumbol1: 12:07am On May 13, 2011
pardon me! what subsidy.  Please get your facts right.  The gov does subsidse but these only goes to the fat cats.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 12:11am On May 13, 2011
ola olabiy:

Exactly! It doesn't affect you one jot.

You still charge what is profitable for you why the government balances the receipt.

Ah. In that case, then build as many refineries in Nigeria as possible.

I thought you were advocating people building refinery to sell at N65/liter, when the value is N130
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 12:13am On May 13, 2011
How can somebody argue that the reason for this is the subsidy?

Is it now cheaper for those importing the product?
If not, how do they get their subsidy?

If from government, why is it straightforward to do this with imports?

Or why can't the govt do the same with refineries operators since it's possible to subsidize importers?

Isn't this crystal clear?
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 12:14am On May 13, 2011
ekt_bear:

Ah. In that case, then build as many refineries in Nigeria as possible.

I thought you were advocating people building refinery to sell at N65/liter, when the value is N130

Nope!
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 12:18am On May 13, 2011
You sort of wonder whether spending $350 million a month (4.2 billion dollars) per year on petrol subsidies is the best course of action, though.

In the long run, once electricity is up and running, they should look to trim this amount by reducing the subsidy.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by agabaI23(m): 12:19am On May 13, 2011
Have you guys heard about the EU raw material initiative?
The objectives are to secure access to raw materials which come mostly from Africa. This came as a result of Chinese activity in the continent.

One of the ways they hope to achieve that is to force African countries to sign unfair trade agreements that will never allow them to increase export duties on raw materials. Again they will find ways to frustrate local processing of raw materials.
They also do not want development of human resources of the host countries so that the technology being with them, they will exploit the raw material the way they want which is why the PIB is being stalled by Shell and co.

So the IMF rubbish is line with the EU raw material initiative.

Nonsense!
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 12:23am On May 13, 2011
ekt_bear:

You sort of wonder whether spending $350 million a month (4.2 billion dollars) per year on petrol subsidies is the best course of action, though.

In the long run, once electricity is up and running, they should look to trim this amount by reducing the subsidy.

The funny thing is that if produced and refined locally, there is no need for subsidy. It is profitable even at 65 for govt-owned refineries.


But, the argument by the govt is that the product gets diverted that way. Ask them why it is easy to divert them to other countries.

Is it possible in a well-run country. And, to them, those who divert them are forever faceless.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 12:28am On May 13, 2011
ola olabiy:

The funny thing is that if produced and refined locally, there is no need for subsidy. It is profitable even at 65 for govt-owned refineries.
What do you mean by this? What price is the government owned refinery buying the barrel of crude at?

In any case, even if it were profitable to sell at N65, why would want to do that if it is worth N130?


But, the argument by the govt is that the product gets diverted that way. Ask them why is it easy to divert them to other countries.

Is it possible in a well-run country. And, to them, those who divert them are forever faceless.
Maybe, I dunno. In the US, we don't even have fuel subsidies. . . . we have taxes on petrol. In Europe, the taxes are even higher. I think they pay like $8+/gallon for oil there, something insane like that.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by agabaI23(m): 12:31am On May 13, 2011
^ There is nothing wrong in the government saying

Supply the local need after refining and then sell the excess internationally.

Countries make laws that are favourable to them
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by olaolabiy: 12:34am On May 13, 2011
ekt_bear:

What do you mean by this? What price is the government owned refinery buying the barrel of crude at?

In any case, even if it were profitable to sell at N65, why would want to do that if it is worth N130?

Not buying it at international markets. The govt owns the crude in its backyard. And, the govt belongs to the people.


And, do you know why our refineries were crippled.

And, why we had so many turnaround maintenance in the 90's. Especially when Abacha was at the helm?

ekt_bear:


Maybe, I dunno. In the US, we don't even have fuel subsidies. . . . we have taxes on petrol. In Europe, the taxes are even higher. I think they pay like $8+/gallon for oil there, something insane like that.

You are right. Taxes are higher in Europe.

Reason: revenue generation. Traffic control, etc.
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 12:36am On May 13, 2011
OK, so question for you all.

How should things work?

Pretend I want to open up a refinery in Nigeria.

1) Am I buying raw crude from Nigeria at market price, or at a subsidized price?
2) Am I selling locally at market price, or subsidized price?
Re: Refinery, Not Solution To Nigeria’s Oil Problem – Imf by ektbear: 12:43am On May 13, 2011
For me, the way things should work:

1) I buy crude from Nigeria at market price
2) I sell my refined crude to the Nigerian government at market price
3) Nigerian government then decides to do whatever it wants with the refined, selling it out at subsidized rates if it likes to Nigerians

Of course, there is then heavy temptation at stage #3 for connected people to divert the subsidized refined oil away to their own pocket. But that is just the nature of the world when you have things subsidized; corruption is natural when things are being given away for less than they are worth.

Only way to eliminate corruption at stage #3 is to eventually remove the gap between how much the petrol costs (N65) and how much it is really worth (N130)

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