I don’t understand this country at all
Oil price goes up is a problem and oil price goes down is a problem.
Why?

Bend the rules and allow them work side by side with the normal refineries. Why is it that we like suffering the masses?

Since the normal refineries have refused to work, gov should bend the rules to accommodate modular refineries to function in other meet our daily consumption needs.

All these grammar is nothing to the suffering masses.

Then why can't they allow modular refineries to produce and Nnpc buy from them and resell to us at subsidise prices ..... atleast they are paying foreign companies the market price and selling at subsidise rate ....

Doing this will improve Naira since they are paying for fuel within d same country

Big fat lies everywhere in Nigeria. They do not want modular refineries and other refineries to work all because of DANGOTE REFINERY.

BSsniffer:
story..... modular refineries can't refine crude oil because it would affect dangotes business.

How?

uccheks:
Am I missing something. You pay subsidy on imported products with landing cost inclusive. Yet you can't pay subsidy to encourage local modular refining pending when you are sensible enough to deregulate. It's either I'm too stupid to understand what's up or the MD is a Duns. Irredeemable Clowns

Basically, if you want that to happen, you still won't get cheap fuel.

The report is saying that you need a modular refinery to make a profit. You cannot pay subsides on non-existent modular refineries...they have to be producing first.

If truly they produce locally at higher costs, then why don't they have access to subsidies and still sell locally the way the Otedolas and others who import fuel at higher costs do? Or better still, they produce the petrol locally, export it to Europe and then Otedolas and co should go there and re-mport it for us. Because leaders have no soul

Npfn:
Why

don't fall for that lie. If it wasn't so, people won't be be using crude methods to do oil bunkering. These people are evil. Like fur king evil.

Same modular refinery that is found in many countries outside Nigeria?

kulrunsman79:
Bend the rules and allow them work side by side with the normal refineries. Why is it that we like suffering the masses?

Since the normal refineries have refused to work, gov should bend the rules to accommodate modular refineries to function in other meet our daily consumption needs.

All these grammar is nothing to the suffering masses.

Government is willing to allow modular refineries...

The point of the article is that the NNPC boss is saying that for the modular refinereis to work, they have to be allowed to operate at a profit...which means deregulation of the downstream.

backbencher:
What the NNPC boss is saying is simple.

Modular refineries can only work when government allows petrol to be sold at market price, otherwise they won't make enough of a profit to function well otherwise.

Finish ,this is what all the long grammar is. We should start a full summarizimg culture here on nairaland where every article is summarised.

seunny4lif:
I don’t understand this country at all
Oil price goes up is a problem and oil price goes down is a problem.
Why?

You don't even understand what the issue is.

The downstream sector is regulated, meaning the price at which the refined products can be sold are determined by government and not the market forces of demand and supply.

backbencher:


Because the neighboring African countries will buy the refined fuel from a hypothetical modular refinery at market price, not at N162 per liter.

Should they buy it at 162 Naira? Nigeria government is not paying for subsidy of African countries.

REDshouse:
Then why can't they allow modular refineries to produce and Nnpc buy from them and resell to us at subsidise prices ..... atleast they are paying foreign companies the market price and selling at subsidise rate ....

Doing this will improve Naira since they are paying for fuel within d same country

It still won't let the modular refineries operate at a profit, and it would increase our subsidy costs drastically.

If you want a working modular refinery, you have to let it sell at a profit. And subsidy costs rise with the rise in the cost of production, meaning you have the same problem we have with imported fuel subsidy.

backbencher:
What the NNPC boss is saying is simple.

Modular refineries can only work when government allows petrol to be sold at market price, otherwise they won't make enough of a profit to function well otherwise.

Does it also mean that the much anticipated Dangote Refinery will not produce PMS, after commissioning, because of this same full price regulation?

Golan007:


You don't even understand what the issue is.

The downstream sector is regulated, meaning the price at which the refined products can be sold are determined by government and not the market forces of demand and supply.

But that doesn’t change the fact that Nigeria always have fuel price problems
Every time

mrvitalis:
This is what I was saying for long people abused me

Not only that most can't even produce petrol

For what we sale fuel in Nigeria no refinery would break even in 100 years even

Fuel should sale for nothing less than 400 a litre
Not only should subsidy be removed ...#50 to #80 road tax should be imposed for fuel and #100 tax on diesel for road maintenance

Poor people don't benefit from subsidy it's the rich n middle class that do

you think other sectors benefitting poor people wouldn't be affected House rent, transportation, School fees, medical bills, etc will go up.

jmoore:

Should they buy it at 162 Naira? Nigeria government is not paying for subsidy of African countries.

No they should not.

But subsides on local refinery production has problem .....the cost of production is never static, but keeps on rising.

So, even if you can afford to subsidize petrol to sell at N162 here, the rising cost means you have to pay more to subsidise it to sell at that price, or remove it partially or completely

The point of the article is that modular refineries cannot operate well under a subsidy regimen. They need to be allowed to sell fuel at a profit, home and abroad.

bestdudes:
don't fall for that lie. If it wasn't so, people won't be be using crude methods to do oil bunkering. These people are evil. Like fur king evil.

Same modular refinery that is found in many countries outside Nigeria?

You want to compare a man who steals crude oil to refine with one who buys the crude, employs lots of staff, employs scientific methods to refine, and must produce to an agreed standard?

Starpro87:


Does it also mean that the much anticipated Dangote Refinery will not produce PMS, after commissioning, because of this same full price regulation?

They would, but for that refinery to work, they need to be allowed to sell PMS at market price, not at subsidy price of N162, because that refinery is not going to refine fuel at a cost less than N200/

seunny4lif:

But that doesn’t change the fact that Nigeria always have fuel price problems
Every time

And the solution is complete deregulation which the masses don't want, not realising they are punishing themselves.

backbencher:
What the NNPC boss is saying is simple.

Modular refineries can only work when government allows petrol to be sold at market price, otherwise they won't make enough of a profit to function well otherwise.

I respect your answer please but I actually think what he's saying does not make sense.
Today, we buy PMS back from imports through marketers because the Gov't is subsidizing the retail price and this subsidy is being paid with Forex.

Imagine if we are refining these products ourselves, then there are 3 major advantages (among many others) over the current process
1. Even though he's arguing that the Gov't is subsidizing the product, this subsidy will be paid internally, to market the product at the same retail price (not to some imaginary marketers but straight to the production firm).
2. We cut the middle man cost (this actually is the main problem and reason why the refineries cannot work), too many people are feeding fat as middlemen in importing PMS. Once refineries start working as they should these guys would lose that bumpy source of income.
3. If we are paying our subsidy internally, we can as well agree to pay with local currency since the main raw material in this case (crude oil) is obtained locally. Imagine what that would do to our foreign reserve and the strain on dollar.


Please also note that this does not stop us from still exporting crude oil to other countries so yes we will still be earning income from the product.

But alas, scratch my answer, this is Nigeria. We do not rule by logic, but it's being ruled in the interest of a few.

why can't government sell crude to them at a reduced rate?

Something is not adding up.

We were informed the reason pms sells at 162-165 currently is because crude oil is exported to countries (companies) outside Nigeria to refine and bring back as refined product into Nigeria, all transactions in $ and with the current exchange rates, importing will jack the price further up, understandably.

Now if crude oil extracted from our soil is given to modular refineries to refine, how does this affect their profit. Will a local company be transacting in $?? I suppose all the hassle involved in importing pms is eliminated thus the final price should be very minimal. Will local refineries be competing in prices with foreign coy, can someone explain this magic.

We clamour for local content to save the naira from suffering further, why can't this easily apply to refineries?

If the nnpc is optimal, shouldn't these modular refineries be producing for the Federal government at little cost such that it saves Nigeria the excess billions spent in subsidies .

Leaders of this country nor get joy and happiness at all

backbencher:


On the other hand, we can remove subsidy, and make it profitable for modular refineries to operate.

A modular refinery needs to make a profit to operate, and government setting the price and paying subsidies does not provide the enabling environment for it to operate at a profit.

question is, if government subsidizes imported fuel, why not also subsidize locally refined fuel, that way Nigeria gets to win in all ways: more employment, cheaper cost of subsidy etc.

BSsniffer:
story..... modular refineries can't refine crude oil because it would affect dangotes business.


We can divert those subsidies to modular refineries.

If you subsidies petrol from modular refineries, they would run at a loss.

Like now, assume it costs N362 to refine one liter of fuel in the modular refinery. Government comes in and tells that refinery to sell to the market at N152 per liter., pays a subsidy of N210 per liter to cover the loss.

Next year, costs go up to N462 at the refinery. Meanhwile, government revenue is not adequate enough because of our large populaiton. Would you support a rise in subsidy payments to keep the sale price at N152?

Or would you let the modular refinery make a profit by selling the fuel at N412 per liter to the market, and recoup its costs, and pay for expansion and upgrades?

backbencher:
What the NNPC boss is saying is simple.

Modular refineries can only work when government allows petrol to be sold at market price, otherwise they won't make enough of a profit to function well otherwise.

How does the boys in the creek produce and sell with profit?

mcdokwe:
question is, if government subsidizes imported fuel, why not also subsidize locally refined fuel, that way Nigeria gets to win in all ways: more employment, cheaper cost of subsidy etc.

Government used to subsidize locally refined fuel back in the day.

It's why we don't have 4 working NNPC refineries, because subsidies impact on the profit making ability of such refineries and thus their ability to operate and function well..

mrvitalis:
This is what I was saying for long people abused me

Not only that most can't even produce petrol

For what we sale fuel in Nigeria no refinery would break even in 100 years even

Fuel should sale for nothing less than 400 a litre
Not only should subsidy be removed ...#50 to #80 road tax should be imposed for fuel and #100 tax on diesel for road maintenance

Poor people don't benefit from subsidy it's the rich n middle class that do

The government has failed big time. If they remove subsidy, the protest that would follow would be too crazy.

What they should have done was to ensure our non-oil export earning increase over the years.
That would have helped the economy and the Naira.

Now, with massive inflation, if they ever try to remove the subsidy as it stands, there will be big problems for the government. They are in a box already!

Alexgeneration:
How does the boys in the creek produce and sell with profit?

Illicit methods, and even then, they don't sell fuel from those refineries at N162 per liter...they sell way above the price.

And yes, if government recognises them, they would have to upgrade the refineries, which costs more money, and which adds to their production cost,and sale price.

KazikageSama:


I respect your answer please but I actually think what he's saying does not make sense.
Today, we buy PMS back from imports through marketers because the Gov't is subsidizing the retail price and this subsidy is being paid with Forex.

Imagine if we are refining these products ourselves, then there are 3 major advantages (among many others) over the current process
1. Even though he's arguing that the Gov't is subsidizing the product, this subsidy will be paid internally, to market the product at the same retail price (not to some imaginary marketers but straight to the production firm).
2. We cut the middle man cost (this actually is the main problem and reason why the refineries cannot work), too many people are feeding fat as middlemen in importing PMS. Once refineries start working as they should these guys would lose that bumpy source of income.
3. If we are paying our subsidy internally, we can as well agree to pay with local currency since the main raw material in this case (crude oil) is obtained locally. Imagine what that would do to our foreign reserve and the strain on dollar.


Please also note that this does not stop us from still exporting crude oil to other countries so yes we will still be earning income from the product.

But alas, scratch my answer, this is Nigeria. We do not rule by logic, but it's being ruled in the interest of a few.

what seems so easy in your analysis and even the least analytical mind is, regrettably to complex for the Nigerian government... But alas, it can all be easily explained away by long grammar of module and non-modular jargon.

KazikageSama:


I respect your answer please but I actually think what he's saying does not make sense.
Today, we buy PMS back from imports through marketers because the Gov't is subsidizing the retail price and this subsidy is being paid with Forex.

Imagine if we are refining these products ourselves, then there are 3 major advantages (among many others) over the current process
1. Even though he's arguing that the Gov't is subsidizing the product, this subsidy will be paid internally, to market the product at the same retail price (not to some imaginary marketers but straight to the production firm).
2. We cut the middle man cost (this actually is the main problem and reason why the refineries cannot work), too many people are feeding fat as middlemen in importing PMS. Once refineries start working as they should these guys would lose that bumpy source of income.
3. If we are paying our subsidy internally, we can as well agree to pay with local currency since the main raw material in this case (crude oil) is obtained locally. Imagine what that would do to our foreign reserve and the strain on dollar.


Please also note that this does not stop us from still exporting crude oil to other countries so yes we will still be earning income from the product.

But alas, scratch my answer, this is Nigeria. We do not rule by logic, but it's being ruled in the interest of a few.

Subsidies means that the refineries would be forced to sell at a loss, and the subsidy would be paid to cover the loss.

The same subsidy would be inadequate to cover the loss, because cost of production rises every year.

We did the same with our 4 refineries, forced them to operate at a loss, and paid a subsidy that did not cover the loss.And they all broke down because they were not allowed to be profitable in the name of subsidy, with corruption and sabotage being the side effects.