we protested because we know GEJ and his cohorts can do better than this

lets talk about this present day subsidy regime, the Cbn gov has already confessed he has evidence of round tripping , he said he paid subsidy on 15 fake vessels approved by customs.
what did madueke do? nothing

the reasons investors did not build refineries over the years was lack of cheap crude but the biggest reason is corruption
how?

licences were given to companies without the financial muscle to build refineries also part b of the license clearly states that these armed robbers have oil lifting license embedded in their refining license,
tell me who will choose refining over lifting where he makes instant profit and inflated subsidy?
what did madueke do? nothing as usual

do you know that NNPC does not have storage facilities for all those millions of products they are quoting and importing. how exactly does Nnpc wish to store 30million litres of pms? do you know that these fg goons went ahead to licence importers without storage facilities leading to the govt paying extra
for storage on a product they are paying over 70 naira as subsidy can u beat this
stup1dity and incompetence?

what did iweala and madueke do? nothing,

do you know that these leppers in Nnpc have no grading structure for imported pms low grade,mid grade and high grade all are pms same subsidy, same price even ethanol blends have subsidy paid on them,
can you beat that?
even abroad where the products come from have different prices. some are far cheaper than others which ordinarily should attract low subsidy

what did madueke do? nothing.

do you know that these bingos at Nnpc dont maintain their pipeline networkswhich ordinarily should link one depot to the other, they have to pay extra for tankerstransporting these products all are
subsidies.even though their foreign jv partners are maintaining over 1000 pipeline networks in
Nigeria.
what did madueke do? nothing.

do you know that under madueke's watch demurrage is paid as subsidy to these importers .how cant they be reponsible for their import schedule? is it not commonsensical for madueke to prioritize the discharge of those vessels quickly in tank farms as not to attract demurrage for a product you are subsidizing?

and they want us to tighten for a better future? which future ? can iweala,Sls and madueke plan for a sustainable future if given the task? dead failures.


for every extra kobo you pay on pms you paid for madueke's incompetence.now they can see high expenditure but cant see how their incompetence is inflating the subsidy regime. Do u seriously think iweala will see it
coming if truly the economy will crash?


Let us analyze the genere and politics of these issues There are more misnomers than facts surrounding this subsidy brouhaha.

First,

the Govt said the economy will collapse, ridiculous indeed

secondly,

the Govt said oil importers are a 'cabal', nearly fell off my seat. Comrades, there are no cabals, in 2009 the
scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with
the supply of pet. Products and that phenomenon gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for. Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.
These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics, storage and administrative costs, these were quantified before they arrived at a price.The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance not oblivious of the fact that the landing cost is higher than the stipulated price
To my greatest chagrin, the Jonathan’s administration woke up and termed them
'cabals' who are fleecing the nation.


We are not docile, If Nnpc lived up to their responsibility, we won’t have need for the importers in the first place.There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeasance?

the Governor of central bank confessed during the town hall meeting that he paid subsidy to 15 fake vessels who connived with customs to falsify their papers. is this not fierce corruption? And we have a shameless commander in chief? by the way, how many naval officers patrol our waters on tax payers account? efcc,icpc etc The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.

This is the si1liest approach any human being with brain if they have one can summon.

Thirdly,

Jonathan insulted the intelligence of Nigerians telling us that we don't benefit from this subsidy except for the importers and he had the unbridled temerity to be advertising it on NTA saying the rich are getting richer. This people are demons.

I feel sorry for people that think that competition will crash the deregulated price erroneously juxtaposing it with GSM.

Do you know that the price of crude being the raw material for refined pet. Products are sold at the same price world over? If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive.You will still need to subsidize it to 65naira, exactly why deregulation of diesel in part did not work.The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira. At this verge, you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel.

I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem either because there is no cheap crude to supply these refineries. Do you know that even the petroleum products from our present refineries at a disappointing capacity attract subsidy? that is what Sanusi is not telling Nigerians. This Sanusi's buisness model of increasing local price to attract investors is misleading.

He should ask himself why so many buisnesses left the USA for Asia and Africa between 1998 till 2008.The reason was because cost of doing buisness in America was high so there was need to tap into Africa's cheap land and asia's cheap labour. If you increase the pump price the spiral inflation will discourage investors, you pay high for land,labour, enegy etc.

A brief insight in Nigeria's oil and gas model gives us a better outlook The oil production of Nigeria stands at 2.37 million barrels of crude daily. Nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of thelot, if we go by 60% then, that gives a total of 1.4m barrels daily.If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.In that case, Nigeria makes 140,000,000usd daily from this JV. Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.

Our three refineries at optimum capacity utilizes about 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,The total cost becomes 270,000,000usd per day.There is no way you can refine that crude at that price and sell it 65naira/ l and make profit. Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/ l (you now understand why NNPC subsidizes the products from our refineries) With this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l .
So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.

I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, I realized i was dead wrong. I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price. This i believe was proposed for the

following reasons:


1 the refineries are working below capacity so what the heck does Nnpc use the crude for?


2, there is a benchmark on crude price for budget implementation.With these reasons, any existing or yet to exist refinery in Nigeria will get crude at a international price and must need subsidy to sell at 65naira/ l, at this cross road, the then GMD of Nnpc decided that all crude should be exported and subsidy be paid on imported products.

At this verge, i must reiterate here that competition amongst importers will only crash the negligible profit margin but not cost price .Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.

Before this issue of subsidizing petroleum products can be addressed,You must have the following at the back of your minds:

1, Nigeria pegs a benchmark on crude prices to enable it implement budget. This stands at 75usd/bbl. And this crude is sort from the JV

.2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)
3, conversely, if we make excess crude revenue, the price of subsidy on refined products shoot up.With the above analogy, One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its
own challenges.
By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba, jigawa and some other states have a genuine case.With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.
(you now understand why all state governors are for subsidy removal
including the literally "one of us" comrade Adams oshiomole, because they know it will be shared just like the ECR)


The way forward:


In the short run:


FG, must
consider these options
1, identify and tackle the corruption and incompetence prevalent in the subsidy regime above. That will push down the cost of the subsidy in the first place.Like i said in April, no matter how sincere GEJ think his administration is, he cannot make any reasonable progress in the face of corruption,

2, the power projects must come upstream before removing subsidy, this will reduce the demand on pet. Products to a very great extent.

3, Nigeria must accommodate Gas export, port duties and other forms of revenue in their budget implementation policies.

4, Govt must never invest an extra kobo in our moribund refineries, by doing otherwise, the cost price of the refineries will rise to an extent that it will no longer be attractive to investors or will prolong their repayment plan Thereby making it very capital intensive.

5, Instead of deceiving Nigerians with their cabal bullshit and deluding them that they don't benefit from this subsidy, the FG should channel that propaganda withintense lobbying to the senate,NLC and civil society organizations to stop the state governors from demanding for the ECR, this can be achieved by the FG asking the state to pay whatever increment they can afford for the workers that way the ECR will be used for subsidizing pet. Products.



In the long run:


Nigeria must seek local production capacity.It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people. Nnpc through its subsidiaries Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/ day which is a huge failure for an agency set up 23yrs ago,

The IOC's has made us believe that it will cost less than 12usd to extract 1bbl of our oil.
The Management of NPDC must be reshuffled and if possible experts brought in on contract basis to improve NPDC's production.These experts must be placed on targets appraised by milestones.

In ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,

If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV.
This cheap crude is what will attract investors to build refineries and create jobs against sanusi's pump price increase to attract investors and create another monster called INFLATION, A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries. A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 30naira per litre of pms from these refineries.With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products. These refineries shouldn't be operated by the Govt for any reason.The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically. this is necessary because Nigeria as a member of OPEC has a limit to crude export but we can earn more revenue from petroleum products export. Once the above takes effect, there won’t be any need to be paying subsidy because pump price will be around 23naira/ l and inflation will reduce by 40‰.

Now, how competent is Allison Madueke and iweala if they can’t figure this out? To think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide.

I cant believe iweala and sanusi are using trial and error approach to economic solutions please try the next country or preferably Haiti.

What iweala forgot is that in the face of inflation, the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.
As a sound economist, she should tell Nigerians the value of 1.3 trillion naira
( she intends to save on subsidy removal) in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy remova? If you remove subsidy and the money disappears, then it is a NO NO for Nigerians.

Now, let us analyze possible solutions to
this economic quagmire.

I have a deal for iweala.


fight corruption and inefficiencies in the subsidy regime and bring it down to
300billion for this year. The management of Npdc must have a
Target of 150,000bbl/d by dec 2012. on january 2013 subsidy will go by 50% and by dec 2013 Npdc should guarantee 200,000bbl/d on
1st january 2014 subsidy must go 100%. with or without the refineries on ground, then if Nigerians are sacrificing, they will know it has a limit pending when refineries that will utilize the cheap oil on ground arrives.
tell me what WE are sacrifising for today? eternal slavery?

I and my generations cannot and will not sacrifice for Govt's incompetence.

Nigerians should never accept partial deregulation, it is more dangerous than total deregulation because Nigeria hasn't a price regulatory agency who ordinarily should put the markets and commuters on check.

Deregulation in the down stream sector is not same as telecoms, we need structures to support it which Nigeria have not got unlike the later.

0