Just some analysis i saw on Facebook    https://www.facebook.com/notes/adebiyi-epistrophy-olusolape/a-fifty-fifth-facebook-note/10150323538046933
OIL SUBSIDY

Chioma earns N18, 000:00k in a month at the factory where she works.
They pay only N17,100:00k into her account after tax.
She spends N11, 000:00k every month buying Gari, Rice, Beans and other food stuff.
She buys a lot of Gari because she takes some to work to soak in the afternoons.
Getting to work and coming back home every day, in addition to going to church on Sunday (N1,800:00k tithe) costs her about N1, 440:00k i.e. N60:00k to and fro.
This leaves her N 2,860:00k which she uses to pay some of the money she borrowed from her sister to make the down payment of her 2-year rent. She also contributes N1000:00k to the staff cooperative.

On the last Saturday in January 2012 she spends N12, 600:00k on food and by the end of February she has had to spend N2,880:00k on transport. She is left with N1, 620:00k.
She opts out of the cooperative. She does not pay her tithe. She does not pick her sister's phone calls,

Crude Oil and Petrol are two different products. Prof. Aluko seems to conveniently overlook this fact.
Nigeria exports Crude Oil and imports Petrol.
Of course, some Crude Oil is refined in Nigeria to produce Petrol.
Therefore, we can say that the Petrol used by Nigerians comes from two sources:
Locally refined
Imports
An important question to ask is how much Petrol do Nigerians consume daily?
On the average 294,000 barrels.
The four local refineries are operating at, again on the average, 21% of their capacities
this means they provide, at most, only 93,450 barrels every day.
If they run at only 66% of full capacity, they would meet the need of all Nigerians and the pump price of fuel would be about N30:00  only.
What has the Government done to ensure that the four refineries run at full capacity?
What about the private operators who were given licenses to run refineries?
Anyway, since the locally refined Petrol does not meet the need of Nigerians, at least 200,550 barrels need to be imported.
What then is the cost of imported Petrol per litre?
It costs N115:74k to get to the Nigerian ports.
Because the Nigerian ports are not as efficient as the ports of, say, Ghana or even Togo an additional cost of N6:25k per litre is incurred at the Nigerian ports.
What has the Government done to increase the capacity of our ports and improve their efficiencies?
So, the cost of Petrol per litre increases to N121:99k
The Petrol is not transferred directly from the ships to trucks.
The Petrol is usually first stored in depots, which charge N3:00k
Then there is an Administrative cost of 15kobo
There is a Bridging Fund of N3.95k
Then the dealers add their margin of N1.75k
The transporters add their own margin of N2.75k
Finally, the Petrol stations generally add their margin of N4.60k
So, the cost of Petrol at the station ought to be N138:19k per litre, approximately N140:00k.
Why then is Petrol sold for N65:00k (when there’s no Fuel Scarcity, Black market)?
Because the Government pays the remaining N75:00k, more or less, on every litre that is bought.
This N75:00k is the subsidy which the government wishes to stop paying because:
They say they cannot continue to give Nigerians money forever; Government says it would become broke.
They say they need the money to build roads, fund health services and education etc.
Therefore, as from next year Nigerians would have to start paying about N140:00k per litre of Petrol.
What would be the effects of this?
N140:00k is about 215% of N65:00k therefore the cost of Petrol will more than double.
What does this mean?
Generally, Nigerians spend about 63.8% of their monthly income on food and about 4.2% of that income on transportation.
Therefore when all transport fares double, at the very least, and assuming a 10% increase in percentage of income spent on food due to increasing food prices, Nigerians would then spend 73.8% on food and about 8.4% of their incomes on transport.
This leaves only 17.8% of incomes to spend on Housing, Water, Electricity, School fees, and Hospital Bills.
But because the Landlords have to increase rents in order to be able to feed their families, and PHCN, Schools and Hospitals are going to have to increase their bills in order to be able to pay their staffs that also have families to feed, 17.8% won’t only be too small, it would be grossly inadequate:
more families will receive quit notices by the end of 2012
more people will die in the hospitals for lack of treatment in 2012
more children will have to stop going to school, 2012
People have to eat first and that would leave almost nothing left over.

The Government says it would offset some of this burden by increasing the minimum wage.
An increase in minimum wage is also an increase in the salaries of Senators, Special Advisers, Political Aides and so on.
The rise in prices is also called Inflation
One of the major aims of the Central Bank is to combat inflation, but all efforts to achieve that end would be undermined by the subsidy removal. The Central Bank is going to fail in one of its major functions.

Usually, a reduction in Inflation is opposed by an increase in Unemployment: if Inflation goes down Unemployment increases and if Inflation goes up Unemployment reduces. In many situations and in advanced economies, the people usually get compensated with the creation of new jobs for more people as a direct consequence of inflationary policies, but this does not apply to all inflationary policies.
The removal of the fuel subsidy in and of itself is not tied to job creation in any way therefore there would be no compensation for Nigerians in terms of Unemployment reduction.


Calculations based on numbers sourced from:
BudgIT; http://www.flickr.com/photos/68891946@N06/6263971530/sizes/l/in/photostream/
Petroleum Products Pricing Regulatory Agency (PPPRA); http://pppra-nigeria.org/pricingtemplate.asp
National Bureau of Statistics; http://www.nigerianstat.gov.ng[/size][/size][/size]

Is it true that if our refineries are working the pump price of a litre of petrol should be N30. If so why are the refineries not working. Please I need sound answers.

@jakigaga
You are wrong in your calculation according to Buhari, Nigeria has capacity to refine 600,000 barrels/day and due to inefficencies refines approx 50% of capacity, this means 300,000 barrels/day are refined in Nigeria.

Buhari says the oil Nigeria sends abroad to for refining, does not have to be costly to Nigeria, as the country refining for Nigeria could be paid by the excess crude  that Nigeria does not need.

Buhari is implying that the cost of producing fuel is well below the price that the government is currently charging for fuel, which means that government is making profit from selling fuel as it is at the moment.

He says it is corruption because it is a way of raising money that they do not want anybody to ask them to account for (money to be looted), this is why the government does not call it what it really is : a  Tax, instead decieving us by saying it is a subsidy.

Why is it that in all the years that corrupt governments like Abdulsalmi Abubakar , and Obasanjo have been removing the same subsidy, still havent finidhed removing it .
Why has none of the corrupt leaders e.g. OBJ never quantified how much this subsidy actually is?

[flash=600,600]
https://www.youtube.com/watch?v=YmG_dYY7YRA&hl=en_US&feature=player_embedded&version=3[/flash]

Buhari:
"It is Nigerian capital, Nigerian oil. What I understand Nigeria should charge Nigerians is the cost of getting oil from the well and then the cost of transportation to the refinery, cost of refining and its cost at the pump.
If anybody says he is subsidizing anything, he is a fraud. So when these people talk about subsidy… who is subsidizing who?
But there is so much fraud as I said before so I don’t talk about it. But the day I have to talk about it, I will ask the Petroleum Economists to come and tell me who is subsidizing Nigerians? Nigerian Oil? Whose oil is it?
We have four refineries with the capacity of four hundred and eighty thousand (480,000) barrels per day. That is if they are functioning at full capacity, because of corruption, they have virtually allowed those refineries to become so inefficient that I don’t think they produce up to half their capacity. Now instead of taking the balance of what we have outside to be refined outside as we used to ,when there was a Turn Around Maintenance (TAM) when I was in Petroleum, hardly Nigerians know. Because we negotiate with oil companies, we say ok Nigerians use two hundred thousand (200,000) barrels a day, take two hundred thousand (200,000) barrels a day, you refine it, you bring the refined product back to us, you sell the rest of the thing we don’t need. And then you call it subsidy. It is Nigerian crude. Who asked them to take commission for what they have refined?
Then our refineries, we built three (3) more refineries. It used to be one in Port Harcourt. We built another one in Port Harcourt, One Hundred and Fifty Thousand (150,000) capacity with the old one of Two Hundred and Fifty Thousand (250,000) capacity, Warri One Hundred Thousand (100,000) capacity, and Kaduna One Hundred Thousand (100,000) capacity. Is there supposed to be any cut? Now if you are taking Two Hundred and Fifty Thousand (250,000) barrels to be refined outside. All you have to do is to fill the fee for this refining and you bring your own oil inside it, and the people are saying that they are subsidizing. Who are they subsidizing? I don’t understand it and I need the Petroleum economist to explain to me this question of subsidy. It is sheer fraud and corruption!"

Even with all the problems outlined by the poster, Nigeria still manages to be among the countries with the cheapest price per liter petrol in the world.

http://en.m.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing

^ But most countries in the world do not produce oil.

Nigeria's fuel price among the 2 highest amongs oil producing nations

paniki:

Even with all the problems outlined by the poster, Nigeria still manages to be among the countries with the cheapest price per liter petrol in the world.

http://en.m.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing

this is unmitigated silliness. how can you compare Nigeria, with our vast oil resources, to other non-oil producing countries?

be rational, please.

GenBuhari:

^ But most countries in the world do not produce oil.

Nigeria's fuel price among the 2 highest amongs oil producing nations

thank you jare

Most countries have some form of oil reserves and production, so please chill with the sting comments.

http://en.m.wikipedia.org/wiki/List_of_countries_by_oil_production