Hi guys, I've been seeing this question asked in many quarters and i just thought i shed some light on how subsidy is calculated and how the 2011 subsidy amount was arrived at, its just a simple calculation of volume and price

Products subsidized in Nigeria - PMS and Kerosene
Demand
PMS - 35 million litres /day
Kero - 8 million litres/day

Prices
PMS Open market Price (OPM) - N145/L ( this number varied from N125 - 165 in 2011 because of crude oil price in 2011)
Kerosene Open Market price  - N150/L (this also varies)

Subsidy Per Liter
PMS Subsidy per liter = 145-65 = N80/L
Kerosene subsidy per liter = 160-50 = N110/L

Subsidy Per day
PMS = N80/L* 35,000,000 L = 2,800,000,000/day  = 2,800,00,000*365days = 1,022,000,000,000 = N1.022 Trillion/year
Kero= N110/L * 8,000,000 L = 880,000,000/day = 880,000,000*365days = 321,200,000,000 = N321 Billion/Year

Total Subsidy
PMS subsidy + Kerosene Subsidy =N 1,022 billion + N321 Billion = N1.342 Trillion

This is a very good estimate on how 2011 was arrived at.

Why the change of subsidy value from previous years, the average crude price for last year was largely above $100/bl, coupled with exchange rate differentials and  increase in energy demand  due to population growth, GDP growth & increase in smuggled products across Nigerian borders.

I hope this helps

I modified the posting based on questions asked

Example of Subsidy Calculation for August 2011 - A Bit More Detailed

Let me give more clarifications on how the Open Market Price (OPM) which determines the subsidy per liter is arrived at. The OPM is the end price that arises after all the players in the product value chain are being compensated. It is PPPRA that sets the benchmark compensation (margin) for each player in the value chain. Below is actual detail computation of Subsidy for the month of August 2011 for PMS showing the players in the value chain, their margins and thus the Open Market price and finaly the subsidy per liter.

PMS Template August 2011 (from PPPRA Website)

Price Element/Player        Naira/Litre

PMS International Price    123.00
Freight                         3.23
Lightering                           3.94
NPA                                   0.60
Fiancing                           2.91
Jetty                                   0.80
Storage                           3.00
Retailers                           4.60
Transporters                   2.99
Dealers                           1.75
Bridging Fund                   5.85
Marine Transport           0.15
Admin                              0.15
Final price    (OPM)       152.97
Pump Price                  65.00
Subsidy                          152.97-75 = N87.97/L

This implies Subsidy for the month of August for PMS only will be based on 31 days in August with 35 million Litre of PMS per day
= N87.97/L*35,000,000L/day*31 days =  N95,447,450,000 ie N95 Billion Naira for August 2011 for PMS only.

Computations for Kerosene are similar, the major difference will be the international Kerosene price and the Pump price of Kerosene, and volume of 8 million litres per day

Brief Explanations of the Cost Elements/Players

PMS Import Price - this is the international price for PMS for a refinery offshore(mostly Europe) as quoted on Platts. Also includes the traders margin.
Freight - Cost of shipping it to Nigeria
Lightering - Cost of Ship to ship transfer to bring the product to berth at the Jetty. It includes demurrage allowance of 10 days
NPA - Nigerian port authority charges
Financing - Interest incurred by the traders or marketers on money they got from bank to buy the product
Jetty - provides a platform to pipe the product from the ship to the depot on the land
Storage - Cost of storing at the depot
Retailers - This is the person buys bulk from depot and takes to a dealer or his own petrol station
Transporters - sure u know these guys, they drive the truck from the depots to the petrol station
Dealers - the person running the petrol station
Bridging Fund - this pool is created to compensate longer haulage trucks with trucks travelling shorter distances
Marine Transport - provision for marine transport
Admin - administrative charges
Final price - this is the open market price and is the sum of all these on top
Pump Price - this is the regulated price at the pump price which was N65/L.
Subsidy - THis is the difference between the Open market price (real cost of delivering the petrol at the pump) and the pump regulated price of N65/L.


Anwser to a question on Why Smuggling increased over the years from 2009

This is how it works the Higher the difference between the Open market price (OPM) and your regulated official selling price of N65/L, the higher the opportunity/incentive for arbitrage (arbitrage is the practice of taking advantage of a price differentials between two or more markets). So what this means is that the incentive for arbitrage has increased over the years. (an incentive is any factor (financial or non-financial) that enables or motivates a particular course of action (smuggling))

Year          OPM(N/L)      Pump Price   Subsidy(N/L)      Incentive
2009            90             65                   25                    1.0
2010           112            65                   47                    1.9
2011           145            65                   80                    3.2

From the above looking at the subsidy(N/L) column, you can see that the incentive/opportunity for arbitrage has more than tripled from N25/L in 2009 to N80/L in 2011 (320% precisely). As the incentives (rewards) increase more investors (smugglers) take the risk of smuggling to take advantage of the arbitrage, its a Risk/Reward thing. This naturally pushes up the demand volumes that could be diverted to markets of economic advantage. The lower the incentives the lower the investors that will take the risk, the higher the incentives, the more the investors that will take the risk. Its is basic economics.

You can cross check some of these figures from PPPRA, website its public information though they might have removed some of historical numbers due to the change in the pricing regime. You might also need to process the information to make more sense of it.


Answers to some questions being asked, 

This I really just wrote this article to explain how subsidy was computed not really to justify N1.3 Trillion its actually very possible that the demand volumes of 35 million for PMS and 8 million may not be contestable but what if you this number is true this is the kind of Subsidy figures u will get. Its very easy for subsidy money to skyrocket like with the numbers above for PMS only. The Subsidy is very sensitive to price and volume,  so though even if volume didnt change much,  price did and these numbers see below.

Year Subsidy/liter Consumption      days/yr   PMS Subsidy Only
2009 25.00        33,000,000.00 365.00          301,125,000,000.00
2010 47.00        35,000,000.00 365.00          600,425,000,000.00 
2011 80.00        35,000,000.00 365.00          1,022,000,000,000.00

Irrespective of the volume, the price differential is a key driver for subsidy values. Honestly i'm not taking any sides, these are the numbers used for the computations if they are contestable PPPRA will be in a better position to defend its self.

Question about local refineries
Product from different sources are usually pooled together in order to have even prices in the country ie both imported and domestic products. Actually there are some misconceptions about the price of PMS if produced domestically. Actually i will send a more detailed computation of how prices are determined Ex a refinery gate. but without any calculation you cannot sell PMS lower than the price of crude oil in the international market except you want to do cross subsidy ie making another product e.g diesel subsidize PMS. so if crude is purchased for $100/bl PMS price should be about $105-$110/bbl or N105-N110/litre ex-refinery gate for an already existing refinery, for a new refinery which has capex components, the numbers may be higher based on the cost of the refinery plant, the economic life cyle and the target return on investment and some other factors.Don't forget there are other players in the product value chain that will still add thier own margins for distribution, transportation and marketing to the price ex-refinery gate of N105-N110/L if crude price is $100/bbl

like i said earlier except you do a cross subsidization with another product refined in the refinery like diesel or kerosene or the government subsisdizes, you may not be able to sell your PMS below the price of crude oil,  if crude price drops, product prices will also drop. I will update this post later to throw more light on some Cost per liter of PMS in Nigeria computation that have been in  circulation.

Question about crude prices variances
Please dont forget that crude prices differ based on API value of the crude which determines how heavy or light the crude is, how sweet or sour the crude ie sulpur content, and one or two other factors so sometimes can find various quotes of crude prices with differentials as high ans $10-$15/bbl. Nigeria's crude is generally of high quality and premium in the market.

Request for Exchange rate
Somebody was asking for historical exchange rate. this the historical exchange rate in nigeria since 1994, This may help in some computations,

Year          Naira/$
1994 21.7761
1995 31.20620833
1996 81.15630833
1997 81.46590833
1998 85.54126667
1999 95.07350833
2000 104.32295
2001 112.6153846
2002 120.4927236
2003 133.9547755
2004 132.9978
2005 131.1466667
2006 126.8735802
2007 123.9003478
2008 116.9051004
2009 146.814878
2010 148.3077439
2011 151.7863485
2012 160.00

,  To be Continued

What about the N240billion Budgeted?
Honestly i don't think Subsidy has never been N240billion based on my computations

Year        OPM                         Pump Subsidy(N/L) Subsidy(Billion Naira Approx)
2006       74.00                     65.00    9.00          260
2007       86.00                     65.00         21.00          270
2008       96.00                     65.00         31.00          660
2009       91.00                     65.00         26.00          470
2010      112.00                     65.00         47.00          850
2011      145.00                     65.00         80.00         1,300

Why N240billion was budgeted, What i heard from the minister of state finance say was that the number was a budget for 2 months because FGN planned deregulate before election but they must have thought twice that it would not have been wise as you will loose the support of the people if this is done before election ( as is proved now) so the subsidy continued,  This was the explanation from the Minister of state which mathematically makes sense. I you gross up N240 for two months into 12 months you will get about N1.4trillion. ie 240*12/2= N1.44 Trillion. This is the mathematical explanation. N240 billion for the whole of 2011 just doesnt add up.

I totally agree that 35 million liters per day for PMS is most likely blotted, the problem is that you may never be able to measure the true actual demand in Nigeria as long as the is incentives for products to move across the borders because of price differentials.

To smuggle u have two options;
1. We have a true demand figures for Nigeria and  Smugglers will steal from Nigeria's actual demands thereby causing shortage and scarcity,  this was rampant during the military era.

2.  The other option is that the actual Nigerian demand is grossed up to accommodate for the potential volumes that could be smuggled to neighoring countries hereby mitigating against fuel scarcity in Nigeria but FG will be subsizing for other parts of West africa. This may be the case now.

I objective really is just want to explain the mathematics behind the subsidy numbers. I honestly dont have any bias except for numbers.

what is the difference in average crude oil prices in 2009 and in 2011 in the global market?

WHat was the daily consumption in 2009 and in 2011?

Obviously, threads like this ain't for donkey types. Let the entertainment commence.

Well done OP.

dayokanu:

what is the difference in average crude oil prices in 2009 and in 2011 in the global market?

WHat was the daily consumption in 2009 and in 2011?

This is the average price of Brent on Platts in $/bbl

Year Crude Price ($/bbl)
2005 54.5
2006 65.1
2007 72.3
2008 97.5
2009 61.5
2010 79.4
2011 110.1

Actually prices in 2011 almost hit $130/bbl at a point in time;
2009 was a bad year for crude prices after the spike in 2008 when oil prices hit like $149/bbl around July 2008.
2009 prices was so low that there was a time 2009 when the Landing cost was even less than the Official Pump price of then N70 which meant there was no need for subsidy, thus prices then was reverted back to N65/L from N70/L if you can remember,

Consumption in 2009 was much lower, cant give an authoritative exact figure either for PMS or Kerosene, but another thing you should note is that increase in smuggling was a major driver for the increasing demand for PMS and Kero because of high price differentials across the borders between Nigeria and neighbouring countries.

nice analysis

newsnaija:

This is the average price of Brent on Platts in $/bbl

Year Crude Price ($/bbl)
2005 54.5
2006 65.1
2007 72.3
2008 97.5
2009 61.5
2010 79.4
2011 110.1

Actually prices in 2011 almost hit $130/bbl at a point in time;
2009 was a bad year for crude prices after the spike in 2008 when oil prices hit like $149/bbl around July 2008.
2009 prices was so low that there was a time 2009 when the Landing cost was even less than the Official Pump price of then N70 which meant there was no need for subsidy, thus prices then was reverted back to N65/L from N70/L if you can remember,

Consumption in 2009 was much lower, cant give an authoritative exact figure either for PMS or Kerosene, but another thing you should note is that increase in smuggling was a major driver for the increasing demand for PMS and Kero because of high price differentials across the borders between Nigeria and neighbouring countries.

WHy would there be a sudden increase in smuggling there has always been huge price differential between Nigeria and other West African countries

And the lower consumption in 2009, Does it have any basis? Did people suddenly choose not to drive cars? or did electricity supply improve in 2009 to reduce generator use?

some say the rise was due to election.

This can't be right. This figures are made up from hell. So far from all the available government data-. Subsidy payments is a combination of interest payments, demurrages, inflated figures, actual imported fuel. The figures supplied by the op is based on so called consumption only.

When I find the document. I will post the link.

Well done @ OP. Intact Bakare fell short of telling us he've got a divine revelation yesterday. Enemies should leave GEJ alone. True Nigerians support subsidy removal. No going back on that.

dayokanu:

WHy would there be a sudden increase in smuggling there has always been huge price differential between Nigeria and other West African countries

And the lower consumption in 2009, Does it have any basis? Did people suddenly choose not to drive cars? or did electricity supply improve in 2009 to reduce generator use?

This is how it works the Higher the Open market price [b](OPM) [/b]determined by the Landing Cost from PPPRA and your Fixed official selling price of N65/L, the higher the opportunity/incentive for arbitrage (arbitrage is the practice of taking advantage of a price differentials between two or more markets). So what i meant was that the incentive for arbitrage has increased over the years. (an incentive is any factor (financial or non-financial) that enables or motivates a particular course of action (smuggling))

Year          OPM(N/L)   Pump Price Subsidy(N/L)      Incentive
2009            90          65                25                    1.0
2010           112      65                47                    1.9
2011           145        65                80                    3.2

From the above looking at the subsidy(N/L) column, you can see that the incentive/opportunity for arbitrage has more than tripled from N25/L in 2009 to N80/L in 2011 (320% precisely). As the incentives (rewards) increase more investors (smugglers) take the risk of smuggling to take advantage of the arbitrage, its a Risk/Reward thing. This naturally pushes up the demand volumes that could be diverted to markets of economic advantage. The lower the incentives the lower the investors that will take the risk, the higher the incentives, the more the investors that will take the risk. Its is basic economics.

You can cross check some of these figures from PPPRA, website its public information though they might have removed some of historical numbers due to the change in the pricing regime. You might also need to process the information to make more sense of it.

So the op wants to absolve gej and 'the cabal' of any involvement in the monumental corruption behind this fuel subsidy issue.
Well you know its only gonna end here, take your silly economics and go meet baba ijebu on the streets and explain to him why he can no longer afford a cup of garri.
You spring up with figures from anywhere and pro gej people are so quick to applaud you. what a shame!

This are additional reasons why the volume went up.
1. The mathematical relationship between exchange rate and value of
imports is not linear. For example between 2007 and 2011, there was a 20% increase in exchange rate
whereas there was a 400% increase in imports ( see attached figure). The main factor responsible for value of imports in Nigeria is forex
availability. If you extend this to the import of vehicles and generators, the inference is clear. That is to say that the volume of generator imports and SUVs may have doubled.
2. The prices of petrol generators have declined by more than 100% within the
last 6 years. SUV prices have also been on a sharp decline. Some SUVs sell for as low as 800k now. The high demand for SUVs is influenced by the deterioration of our roads.

This are additional reasons why the volume went up.
1. The mathematical relationship between exchange rate and value of
imports is not linear. For example between 2007 and 2011, there was a 20% increase in exchange rate
whereas there was a 400% increase in imports ( see attached figure). The main factor responsible for value of imports in Nigeria is forex
availability. If you extend this to the import of vehicles and generators, the inference is clear. That is to say that the volume of generator imports and SUVs may have doubled.
2. The prices of petrol generators have declined by more than 100% within the
last 6 years. SUV prices have also been on a sharp decline. Some SUVs sell for as low as 800k now. The high demand for SUVs is influenced by the deterioration of our roads.

See diagram

blacksta:

This can't be right. This figures are made up from hell.  So far from all the available government data-.  Subsidy payments is a combination of interest payments, demurrages, inflated figures, actual imported fuel.  The figures supplied by the op is based on so called consumption only.

When I find the document.  I will post the link.

You are very correct sir. Let me give more clarifications on how the Open Market Price (OPM) which determines the subsidy per liter is arrived at. The OPM is the end price that arises after all the players in the product value chain are being compensated. It is PPPRA that sets the benchmark compensation (margin) for each player in the value chain. Below is actual detail computation of Subsidy for the month of August 2011 for PMS showing the players in the value chain, their margins and thus the Open Market price and finaly the subsidy per liter.

PMS Template August 2011 (from PPPRA Website)

Price Element/Player Naira/Litre

PMS International Price 123.00
Freight                       3.23
Lightering                        3.94
NPA                                0.60
Fiancing                        2.91
Jetty                                0.80
Storage                        3.00
Retailers                        4.60
Transporters                2.99
Dealers                        1.75
Bridging Fund                5.85
Marine Transport        0.15
Admin                              0.15
Final price (OPM)       152.97
Pump Price               65.00
Subsidy                       152.97-75 = N87.97/L

This implies Subsidy for the month of August for PMS only will be based on 31 days in August with 35 million Litre of PMS per day
= N87.97/L*35,000,000L/day*31 days =  N95,447,450,000 ie N95 Billion Naira for August 2011 for PMS only.

Computations for Kerosene are similar, the major difference will be the international Kerosene price and the Pump price of Kerosene, and volume of 8 million litres per day

Brief Explanations of the Cost Elements/Players

PMS Import Price - this is the international price for PMS for a refinery offshore(mostly Europe) as quoted on Platts. Also includes the traders margin.
Freight - Cost of shipping it to Nigeria
Lightering - Cost of Ship to ship transfer to bring the product to berth at the Jetty. It includes demurrage allowance of 10 days
NPA - Nigerian port authority charges
Financing - Interest incurred by the traders or marketers on money they got from bank to buy the product
Jetty - provides a platform to pipe the product from the ship to the depot on the land
Storage - Cost of storing at the depot
Retailers - This is the person buys bulk from depot and takes to a dealer or his own petrol station
Transporters - sure u know these guys, they drive the truck from the depots to the petrol station
Dealers - the person running the petrol station
Bridging Fund - this pool is created to compensate longer haulage trucks with trucks travelling shorter distances
Marine Transport - provision for marine transport
Admin - administrative charges
Final price - this is the open market price and is the sum of all these on top
Pump Price - this is the regulated price at the pump price which was N65/L.
Subsidy - THis is the difference between the Open market price (real cost of delivering the petrol at the pump) and the pump regulated price of N65/L.

I might as well use my last three explanations to modify the initial posting to make clearer.

lagbaja:
This are additional reasons why the volume went up.
1. The mathematical relationship between exchange rate and value of
imports is not linear. For example between 2007 and 2011, there was a 20% increase in exchange rate
whereas there was a 400% increase in imports ( see attached figure). The main factor responsible for value of imports in Nigeria is forex
availability. If you extend this to the import of vehicles and generators, the inference is clear. That is to say that the volume of generator imports and SUVs may have doubled.
2. The prices of petrol generators have declined by more than 100% within the
last 6 years. SUV prices have also been on a sharp decline. Some SUVs sell for as low as 800k now. The high demand for SUVs is influenced by the deterioration of our roads.



Apart from the above analysis The subsidized fuel consumed by the 36 varies with LAGOS having the highest consumtion because of its population and that is where we have most of the super rich,rich, who owns most of this SUV's and some of them have more than one of the SUV's ,d more cars they consume more of this subsidized fuel in LAGOS while the rest consumption by rhe poor is low in this state so they consume the larger junk of the subsidy oil to the detriment of the less pupolated and poorer states like jigawa,kebbi,ekiti,nasarawa and other poorer state that don't consume as MUCH AS LAGOS!!! And what government is saying is the that instead of subsidizing this fuel for the super rice and those that have 2,3,even 5 cars that. Majority live in LAGOS!! The government is say instead of giving NNPC this money for subsidizing fuel for the supa rich and the reach in states like LAGOS and KANO Let us share this
money equally among the 36 states and over 700 LGA in the federation so that this money can get to the poor people who need it and not the rich who actually benefit from the subsidy that the poor is been deceived to protest on the streets for !!! So sad some elite have let there creed and polital affilition resort to misleading and mis informing the poor masses history would judge the people like bakare and co

newsnaija:

Hi guys, I've been seeing this question asked in many quarters and i just thought i shed some light on how subsidy is calculated and how the 2011 subsidy amount was arrived at, its just a simple calculation of volume and price

Products subsidized in Nigeria - PMS and Kerosene
Demand
PMS - 35 million litres /day
Kero - 8 million litres/day

Prices
PMS Open market Price (OPM) - N145/L ( this number varied from N125 - 165 in 2011 because of crude oil price in 2011)
Kerosene Open Market price  - N150/L (this also varies)

Subsidy Per Liter
PMS Subsidy per liter = 145-65 = N80/L
Kerosene subsidy per liter = 160-50 = N110/L

Subsidy Per day
PMS = N80/L* 35,000,000 L = 2,800,000,000/day  = 2,800,00,000*365days = 1,022,000,000,000 = N1.022 Trillion/year
Kero= N110/L * 8,000,000 L = 880,000,000/day = 880,000,000*365days = 321,200,000,000 = N321 Billion/Year

Total Subsidy
PMS subsidy + Kerosene Subsidy =N 1,022 billion + N321 Billion = N1.342 Trillion

This is a very good estimate on how 2011 was arrived at.

Why the change of subsidy value from previous years, the average crude price for last year was largely above $100/bl, coupled with exchange rate differentials and  increase in energy demand  due to population growth, GDP growth & increase in smuggled products across Nigerian borders.

I hope this helps

I modified the posting based on questions asked

Example of Subsidy Calculation for August 2011 - A Bit More Detailed

Let me give more clarifications on how the Open Market Price (OPM) which determines the subsidy per liter is arrived at. The OPM is the end price that arises after all the players in the product value chain are being compensated. It is PPPRA that sets the benchmark compensation (margin) for each player in the value chain. Below is actual detail computation of Subsidy for the month of August 2011 for PMS showing the players in the value chain, their margins and thus the Open Market price and finaly the subsidy per liter.

PMS Template August 2011 (from PPPRA Website)

Price Element/Player        Naira/Litre

PMS International Price    123.00
Freight                         3.23
Lightering                           3.94
NPA                                   0.60
Fiancing                           2.91
Jetty                                   0.80
Storage                           3.00
Retailers                           4.60
Transporters                   2.99
Dealers                           1.75
Bridging Fund                   5.85
Marine Transport           0.15
Admin                              0.15
Final price    (OPM)       152.97
Pump Price                  65.00
Subsidy                          152.97-75 = N87.97/L

This implies Subsidy for the month of August for PMS only will be based on 31 days in August with 35 million Litre of PMS per day
= N87.97/L*35,000,000L/day*31 days =  N95,447,450,000 ie N95 Billion Naira for August 2011 for PMS only.

Computations for Kerosene are similar, the major difference will be the international Kerosene price and the Pump price of Kerosene, and volume of 8 million litres per day

Brief Explanations of the Cost Elements/Players

PMS Import Price - this is the international price for PMS for a refinery offshore(mostly Europe) as quoted on Platts. Also includes the traders margin.
Freight - Cost of shipping it to Nigeria
Lightering - Cost of Ship to ship transfer to bring the product to berth at the Jetty. It includes demurrage allowance of 10 days
NPA - Nigerian port authority charges
Financing - Interest incurred by the traders or marketers on money they got from bank to buy the product
Jetty - provides a platform to pipe the product from the ship to the depot on the land
Storage - Cost of storing at the depot
Retailers - This is the person buys bulk from depot and takes to a dealer or his own petrol station
Transporters - sure u know these guys, they drive the truck from the depots to the petrol station
Dealers - the person running the petrol station
Bridging Fund - this pool is created to compensate longer haulage trucks with trucks travelling shorter distances
Marine Transport - provision for marine transport
Admin - administrative charges
Final price - this is the open market price and is the sum of all these on top
Pump Price - this is the regulated price at the pump price which was N65/L.
Subsidy - THis is the difference between the Open market price (real cost of delivering the petrol at the pump) and the pump regulated price of N65/L.


Anwser to a question on Why Smuggling increased over the years from 2009

This is how it works the Higher the difference between the Open market price (OPM) and your regulated official selling price of N65/L, the higher the opportunity/incentive for arbitrage (arbitrage is the practice of taking advantage of a price differentials between two or more markets). So what this means is that the incentive for arbitrage has increased over the years. (an incentive is any factor (financial or non-financial) that enables or motivates a particular course of action (smuggling))

Year          OPM(N/L)      Pump Price   Subsidy(N/L)      Incentive
2009            90             65                   25                    1.0
2010           112            65                   47                    1.9
2011           145            65                   80                    3.2

From the above looking at the subsidy(N/L) column, you can see that the incentive/opportunity for arbitrage has more than tripled from N25/L in 2009 to N80/L in 2011 (320% precisely). As the incentives (rewards) increase more investors (smugglers) take the risk of smuggling to take advantage of the arbitrage, its a Risk/Reward thing. This naturally pushes up the demand volumes that could be diverted to markets of economic advantage. The lower the incentives the lower the investors that will take the risk, the higher the incentives, the more the investors that will take the risk. Its is basic economics.

You can cross check some of these figures from PPPRA, website its public information though they might have removed some of historical numbers due to the change in the pricing regime. You might also need to process the information to make more sense of it.

[img]http://ngc0228.files./2007/01/0infinity.jpg[/img]

@Newsniaja. Though im against subsidy removal but i must admit that u r doing a good job, u seems to be more convincing than these bunch who comes on air and make a fool of themselves e.g the petroleum minister, the information minister, the cbn governor, the finance minister and mr president himself. Wish some1 can post an articulate and logical counter analysis just like urs so that some of us can get a better perspective of the workings in the petroluem sector and its secrecy demystified. Hp to read more objective coments and wish d tribal self employed e-warriors wnt derail the thread and drop their subjective inclinations for once.

May God punish whoever is posting this nonsense, please find a link to oil prices fluctuations from 2003 to 2010.  http://en.wikipedia.org/wiki/2003_to_2011_world_oil_market_chronology
http://www.wtrg.com/prices.htm
As can be seen we had the highest price in 2008 and yet subsidy was under 500 billion Naira as prices improved towards the end of the year and we were shipping 33 million liters of fuel o (2011 was 35 million liters), abeg tell Dizeani to supply you another set of data, this one don fail. Prices were hitting 130 dollars per barrel in 2008.
Oya find below the prices of oil for the 2000s

http://www.nyse.tv/crude-oil-price-history.htm

Please note that average price of crude in 2008 was $98.24 dollars per barrel while for 2011 was $93.15, abeg make una dey fear God.

newsnaija:

Hi guys, I've been seeing this question asked in many quarters and i just thought i shed some light on how subsidy is calculated and how the 2011 subsidy amount was arrived at, its just a simple calculation of volume and price

Products subsidized in Nigeria - PMS and Kerosene
Demand
PMS - 35 million litres /day
Kero - 8 million litres/day

Prices
PMS Open market Price (OPM) - N145/L ( this number varied from N125 - 165 in 2011 because of crude oil price in 2011)
Kerosene Open Market price  - N150/L (this also varies)

Subsidy Per Liter
PMS Subsidy per liter = 145-65 = N80/L
Kerosene subsidy per liter = 160-50 = N110/L

Subsidy Per day
PMS = N80/L* 35,000,000 L = 2,800,000,000/day  = 2,800,00,000*365days = 1,022,000,000,000 = N1.022 Trillion/year
Kero= N110/L * 8,000,000 L = 880,000,000/day = 880,000,000*365days = 321,200,000,000 = N321 Billion/Year

Total Subsidy
PMS subsidy + Kerosene Subsidy =N 1,022 billion + N321 Billion = N1.342 Trillion

This is a very good estimate on how 2011 was arrived at.

@ OP: We don follow you come today.

So,  you are the original Professor abi?

You too,  clap for yourself.

Let me know when you are done clapping.

Finished?

Answer me this.


If the daily demand for PMS is 35million litres (bogus figure with zero documentation) and we pay N80/litre as subsidy refund,


DO WE IMPORT ALL THE PMS THAT WE CONSUME??

If not,

DO WE PAY SUBSIDY ON PMS (and even Kerosene) REFINED IN NIGERIA??



445,000 barrels per day of crude goes to the NNPC.

Since you are so smart, why not calculate how many liters of PMS that translates to and delete that amount from your 35 million liters.



No let me vex here o.

@Jensimi, he is even working with flawed figures, as at 2008 we were importing "33 miilion liters" according to PPPRA documents, yet in 2011 it is "35" million and subsidy has tripled.

diluminati:

So the op wants to absolve gej and 'the cabal' of any involvement in the monumental corruption behind this fuel subsidy issue.
Well you know its only gonna end here, take your silly economics and go meet baba ijebu [b]on the streets and explain to him why he can no longer afford a cup of garri[/b].
You spring up with figures from anywhere and pro gej people are so quick to applaud you. what a shame!

Shows some people can never have a sensible/logical discourse. So just because you find his analysis contrary to your standpoint does not mean you should diss it,

hercules07:
@Jensimi, he is even working with flawed figures, as at 2008 we were importing "33 miilion liters" according to PPPRA documents, yet in 2011 it is "35" million and subsidy has tripled.


So since 2008 their has not been an increase in ownership of vehicle in Nigeria expecially in LAGOS who consume more subsidized fuel than my state and deprive my state and LG development!!!! Please GEJ don't go back to N65 and subsidize for the rich in lagos send the money to my LG to subsidize the pms for them they don't own JEEPS and two cars like in LAGOS!! DON'T GIVE THE MONEY TO NNPC to continue the madness!!let LAGOS pay its own petrol tax and stop cheating poorer states and less populated state of their share of Nija resources,

@Karl

Your minister said imports moved from 33 million to 35 how did subsidy almost triple when prices were higher in 2008 than 2011? Lagos also pays the highest of VAT in Nigeria and we do have our oil offshore, abeg shift.

So Ʊ want tell me that the naira to dollar rate has not increased since 2008?

Answer this primary school questions

What is the exchange rate of the dollar to the naira in 2008 and 2011?

2.Is the international rate of pms been stable since 2008?
3.Is pms imported with the dollar currency.

If ur answers are YES it would answer ur lame question above. So are Ʊ now stating that only lagos pays vat for there commodities ? Like I said GEJ should not release that Money to NNPC to continue subsidizing fuel for rich men in lagos to the detriment of the poorest in JIGAWA.they should pay their fuel tax

Im loving the debate going on here, dfrnt perspectives but same goal, which is to fix Nigeria or to ur tents o isreal.

@OP,
Great analysis and very enlightening as well, although I am strongly against subsidy removal. However, how can you reconcile your above analysis with an equally excellent analysis from the one time petroleum minister, Prof. Tam David West


QUOTE:
IMPORTANT INFORMATION
1) One barrel of Crude oil = 42gallons or 159 litres

2) Our Refineries (i.e 4) Installed (combined) capacity = 445,000 ,  barrels per day

3) Actual refineries capacity due to ageing equipment = 30% i.e. 133,500 barrels per day.

4) . . 133,500 barrels = 21.2 million litres

5) Local required consumption (F.O.S) = 12millions litres

6) It means that even our MORIBOND refineries can actually meet our local consumption need of petroleum.

7) The cost structure of crude oil (i.e. Qua Iboe Crude Oil) production; - Findings / development - $3.5
- Production cost - $1.5
- Refining Cost - $12.6
- Pipeline/transportation - $1.5
- Distr/bridging fund Margin -$15.69

True cost of one litre of petroleum anywhere in Nigeria;
- Total sum cost = $34.8
- 1ltr cost = $34.8/159 litres = $0.219
- Naira equiv. 0.219xN160= N35.02k
- Add Tax N5 + N35.02 = N40.02

9) Let FGN refute the above composition and if not, they should tell us how they came about N65/litre.

10) Locally refined products cannot be sold at International price.

11) We really do not need FGN SUBSIDY as there was NONE in the first place.

12) What is LACKING, is the WILL to enforce LAW ON CORRUPTION.

Pls re-post until it gets to the right quarters for their response; We still stand a chance as a COUNTRY.

Analysis by Professor Tam David West, former Petroleum Minister.

SOURCE: http://www.naijapals.com/modules/naijapals/nigeria/topic,88026.0.html

newsnaija:


Products subsidized in Nigeria - PMS and Kerosene
Demand
PMS - 35 million litres /day
Kero - 8 million litres/day

Am interested in understanding what ur post is all about and in giving my comments but can u kindly substantiate the above. Better still with supporting documents if possible.

@Karl Max

So it is exchange rate now abi, okay, in 2008 dollar was exchanging for around #130, lets even say #120, in 2011, it was #150, that is a 20% increase, can that now justify a 300% increment in subsidy payment? Abeg try another one.

hercules07:
@Karl Max

So it is exchange rate now abi, okay, in 2008 dollar was exchanging for around #130, lets even say #120, in 2011, it was #150, that is a 20% increase, can that now justify a 300% increment in subsidy payment? Abeg try another one.

Pls factor the price of fuel to ur analysis above Ʊ would get ur answer is not MAGIC !!! We in lekki here pay vat and pay road tax with the toll erected which people like Ʊ supported

LAGOS is one of the most populated state in nigeria there we have the richest people in the country they consume more of the subsidized fuel to the detriment of the poor and less populated states the fg is saying let me give this 36 states this money to provide for their people individually instead of giving it to NNPC to continue the subsidy for the RICH in lagos