₦airaland Forum

The PDP is, indeed, shameless and unrepentant. They think they can us cheap blackmail or propaganda to arm twist or slow down the President.

Unfortunately, we live in a country where all critical information are left to government propaganda. Independent analysis by industry experts would be welcome.
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For instance, what is "Price Modulation"? Why still FIX price, if subsidy has been removed?
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On the comment by Fashola, you need to take into consideration that the official exchange rate was around N155/$ by then. With a higher exchange rate right now, the differential will affect price.

So, the vile propaganda and blackmail is not working. Now, they want to play the solidarity and loyalty card.

Bubu should get Magu to shine light on this Akpabio guy, he's got a whole lot of skeleton in his cupboard. If they can promise me 1% of recovered loot, then I can provide them with useful information.

EternalTruths:
I know about the sharing formula. That's why I brought it to demdem2 notice


As for you,

I believe you can provide data of other nations and foreign companies production cost. Since NNPC is a nest of corruption that dish out false figures to hide the massive looting taking place in the organization.

Comparison with other oil organizations with that of Nigeria can expose the real corruption in the system

Thank you

Okay, I'll check production cost in other countries and compare it to Nigeria. But I'd like to belief that the cost in Nigeria will be relatively lower due to low labour cost compared to other countries.

Oricha62:
Al-Baqara : 28

كَيْفَ تَكْفُرُونَ بِاللَّهِ وَكُنتُمْ أَمْوٰتًا فَأَحْيٰكُمْ ۖ ثُمَّ يُمِيتُكُمْ ثُمَّ يُحْيِيكُمْ ثُمَّ إِلَيْهِ تُرْجَعُونَ

How can you disbelieve in Allah when you were lifeless and He brought you to life; then He will cause you to die, then He will bring you [back] to life, and then to Him you will be returned.

And how is this gibberish relevant to the subject matter or my earlier comment?

EternalTruths:
You said federal government gets 54% of the total revenue

My question

Who gets the remaining 46% .? Is it the states and LGs or others I don't know


Question 2

If it is the states and LGs that get the 46%, why then did you include them in the 54%.





Thank you but

Unknown to you, the cost of production is where the true corruption takes place.

If Buhari don't know the true cost of production, he could be outsmarted.

Now look at this calculations below

1.66tr - 830b = 830b

That figure is too much

If the real production cost is 400b or less, it means that someone can disappear with the extra 400b or more


Think deeply my friend

Put aside your political inclination

Nna, the sharing formula from the Federation Account is public knowledge. Use Google bro, it will cure your ignorance. The only reason I am bothering to respond to you is for the sake of others that may stumble on this thread. The sharing formula is:
(1) Federal Government - 52.60%
(2) State Governments - 26.72%
(3) Local Governments - 20.60%

http://businessnews.com.ng/2012/04/06/revenue-sharing-formula-governors-propose-42-percent-for-states/
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Make some research bro, some oil fields have production cost that is as high as $30/bbl. How much do you think will be the profit from those fields when oil is selling at $38. You need to be speaking with somebody with industry experience & knowledge to help you out. You also need to start reviewing the NNPC monthly report, it will help you a lot - i.e. if you are really interested in understanding the sector or you are simply interested in criticizing Tinubu and Buhari.

EternalTruths:
It is clear how you arrived at that figure

Now tell Nigerians why Buhari declared an expected revenue of 830Billion naira from oil, when your figure below which I highlighted blue is 1.66 Trillion naira

Is Buhari being outsmarted by Tinubu's boys.?

Guy, you are obsessed by Tinubu and I believe he is really smart but clearly overrated. Tinubu cannot outwit everybody. Incase, you have not noticed, he has already been cut to size - he lost control of the National Assembly and had very little or no input in the Ministerial List.
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Back to the subject. I told you that the N1.66tn figure is GROSS EARNINGS. If you deduct the COST OF PRODUCTION (which I have heard to be around 50% - not sure), then you arrive at a figure much closer to N820bn.

You've got to realize that it cost money to produce the oil and transport it to the market. The final selling price ($38) is not all profit.

EternalTruths:
Dear Nigerians

Put aside political difference and be objective to

Look at the highlighted figure in blue colour


Please ask him to explain how he arrived at that figure of $30.15 when Buhari pegged it $38

Thank you

My dear, you are too much in a haste to find fault and all you end up doing is displaying your ignorance in a public forum. That is what happens to a hate-filled and prejudiced mind.
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First and foremost, that figure was presented by the OP of this thread. Go back and check the figure and you will see that it says "GROSS EARNINGS FOR ENTIRE 2016" (that is if you know what that means) and not price per barrel. That figure is gotten by multiplying price per barrel ($38) x daily production (2.2mbbls/day) x the whole year (365 days) to arrive at an annual gross earning of $30.15bn

chosen04:
So are you telling us that the govt produces at a lost cos that is the only way that you can remove the cost of production from N1.66tn to arrive at an income of = N820b....Try and come up with another line. This one is stale

"S/He who does not and s/he does not know that s/he does not know ......".

My dear, you have a prejudiced and biased mind. I am giving you alternative information and instead of you to take it on board and make more research on it, you are still trying to justify your earlier ignorant & prejudiced position.
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The $38 used in the analysis is the SELLING PRICE. Your elementary Commerce, Economics or Mathematics will tell you that there is something called COST PRICE. Therefore SP - CP = Profit.
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I do not know for sure what the exact cost of production is, so I cannot tell you if the budget figure of N820bn is absolutely correct. But what I can tell you is that your analysis is way off the mark and does not reflect market reality. I have heard that the cost of production is somewhere around 30-70% depending whether the rig is onshore, offshore, or deep-water. This brings the AVERAGE cost of production to around 50%. If you discount my earlier figure of N1.66tn by 50%, then you get a final NET figure of around N833bn (profit) roughly.

Mind you, I am not holding brief for the FG and I am not privy to all information regarding operations, so my analysis is not intended to be laser correct. But based on my industry knowledge and experience, I am very confident that the end result should not be too far off from the analysis.

According to him, in another 24 months, Nigerians would see a positive change in the refinery model, to meet needs not only in Nigeria but in the West African sub region. Speaking on the December deadline for the refineries, Kachikwu said the reports before him showed that, two of the refineries were likely to meet the deadline.

Precisely the kind of stories I want to be hearing.
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Thinking Export is the key to conserving/increasing our foreign reserves and creating local employment. The refineries need to operate like profit centres with revenue targets instead of the scam we call TAM every year.

Enough of exporting jobs through senseless importations.

This is the exact reason why PMB's anti-corruption crusade is the TOP priority of this administration.

PDP bots might point to the Economy and other sectors as more critical but the truth is that they are not really interested in those sectors, they just want to distract PMB from his anti-corruption drive.

Who are these ones that are suddenly interested in anti-corruption and the prosecution of political criminals.

Is the EFCC or the FG complaining? Do you lot think you are more interested in the prosecution of Tompolo more than the FG?

Is this the new format in town since your shameless protests against anti-corruption is not working.

mazzi:
akpa amu,show me a proof that he attended council of state meeting during GEJ regime.

You accused PMB of not attending COS meetings. The Burden Of Proof is on you to show that he never did.

Well said Mr President. The Leadership of this country, by their actions & inactions, sank Nigeria into the hole we find ourselves. They must all come together to dig us out of it.

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Good development.
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Unfortunately, the PPPRA template is never fully understood. With oil price as low as $38 and with Naira still exchanging @ N197/$, it is difficult to understand why petrol should not be selling below N70 without subsidy.
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Those who understand better can shed more light on the subject.

I think the size and composition of the Budget is good and addresses our current realities.

The issues that are more important, though, are:
(1) Proper implementation of the budget by the Executive, especially as it concerns the CAPITAL component.
(2) Effective oversight of MDAs by the National Assembly
(3) Absolute probity to make sure that budgeted funds don't walk through an equivalent of Dasuki-Gate.

Sounds patronizing to me. Not buying it.

TimeManager:
OPEC Would Not Be Defensive, It Would Rather Be Cautious Yet Aggressive In Its Approach. OPEC Would Not Cut Production, Far From It. Opec Would Encourage More Production. Shale Oil Cannot Compete In The Long Run Because Its 'Shale'. Opec Would Maintain Its Market Share. Alternative Eneargy Is Neither A Threat To Oil. How Many Nations Would Forego A Moneyspinning Oil For Alternative Energy. OPEC Is S Till The Largest Supplier Of Oil. A Big Factor That Counts.

OPEC Would Not Cut Production, Far From It. Opec Would Encourage More Production.
And what would be the implication of OPEC increasing supply in an already over-supplied market? The price will just go further south.
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Shale Oil Cannot Compete In The Long Run Because Its 'Shale'.
That is exactly what has been said over the last few years. They said Shale cannot survive with oil price under $70, but yet they are still here at under $40. You need to realize that the West is technology driven, and so they are aggressively looking for new technology to bring down the cost of shale oil production.
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How Many Nations Would Forego A Moneyspinning Oil For Alternative Energy.
You need to realize that oil exporting countries have a completely different interest from oil importing countries. Lower oil prices or alternative energy is bad news for oil exporting countries but VERY GOOD NEWS for oil importing countries. Do you have an idea of what will happen to oil importing countries if oil collapsed to $20? Gasoline prices at the pump will come down, cost of powering factories will come down, companies will report higher earnings, their GDP will shoot up, unemployment will come down, inflation will come down. So you see, very few countries have interest in high oil price.
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Alternative Eneargy Is Neither A Threat To Oil.
When Smart Phones surfaced, NOKIA thought they were not a threat until they were cannibalized. When Digital Cameras came out, some traditional photographic film companies thought it was not a threat but today we know better. Nothing stays the same forever bro - the game is ADAPT or DIE!

#NoMoreFoolsParadise

TimeManager:
So Much For A Dollar-happy Economy. Its Simple; When You Fail To Plan, You Planning To Fail. The Decisions Of Yesteryears Biting Us In The Face. We Must Sink And Swim Together. One Thing I'm Sure Of Is That OPEC Will Not Fold Its Hands And Watch Things Go So Dip.

No Lie Only Truth!

@ the bolded. Unfortunately, there is very little OPEC can do right now and I'll explain:
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(1) OPEC controls only around 30% of global oil supplies
(2) If they try to cut production, in a bid to drive up oil prices, they will simply loose market share while other non-OPEC countries would still benefit from the price increase, albeit now with increased market share. This is something major OPEC countries like Saudi Arabia, Kuwait, etc are not prepared to do. Saudi Arabia has Foreign Reserves of over $750bn, so they are not desperate and can comfortably survive oil price below $20.
(3) There is already a supply glut in the market, and any action from OPEC will have little impact - IRAN supplies is coming on stream, US Shale oil is coming more on stream, US Congress has approved for US to start oil export which will simply add to the glut in the export market.
(4) Cost of alternative energy (like solar & electric cars) is coming down, so there is a strong chance that demand for solar and electric energy will increase in the coming years at the expense of traditional fossil energy.
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The best we can pray for is a little temporary respite in oil price to around $45 next year in the hope that our leaders will finally understand the gravity of the situation and use the funds to diversify the economy.

If oil drops to $20 next year, there would be dire consequences on the economy.
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(1) Oil revenue will drop from N820bn to under N300bn, since cost of oil production is above $15/bbl.
(2) Tax Revenue will drop by a significant amount - since Petroleum Profit Tax (PPT) and Company Income Tax (CIT) of oil companies contribute a lot to Tax Revenue.
(3) Foreign Reserves will drop under $20bn.
(4) Naira will collapse to around N300/$ officially.
(5) Budget deficit will either increase or govt won't be able to implement it's budget.
(6) Many states will not be able to pay salaries or do any capital projects.
(7) Unemployment will increase, GDP will shrink and Nigeria will officially be in a recession.
(8.) Rating Agencies (like Moodys) will downgrade the country to Junk status.This will increase the yield (interest) on our debts.
(9) The Stock Market will crash as investors run away from the country's financial assets
(10) Pension Funds who invest in the capital market will have their assets drop in value, thereby putting the funds of pensioners at risk.
etc
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Unfortunately, a lot of people will put the blame squarely on PMB's table - with very little consideration to the fact that, over the last few years, our lazy and corrupt leaders choose to make us a Mono-Economy, refused to save for a time like this and refused to invest in infrastructure - even with record high oil prices.
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No matter how bad things get, I am 100% positive that PMB is the right man to steer the country through this trying period. With all the DasukiGate and DiezianiGate revelations, GEJ & PDP would simply have been nothing but a complete disaster with such low oil prices.

WaffenSS:
Let's use you as a case study to answer your question:

You've a large family. You've got to feed them 3 times a day, pay school fees, utilities etc.

Let's say you earn 100k a month. but of this you can only save 1k every month after meeting your obligations.

But lately your employer is having some financial problems due to poor sales, and your salary is cut down to 30k.

Obviously this cannot even pay your transport to and from work.

Thus, you brainstorm on your fate, and hit the brilliant idea to farm the little piece of land in your compound and also open a small kiosk for your wife in order to supplement your income.

Now remember, you need farm implements, seeds, water hose etc. You also need to buy wood, aluminun, nails etc to construct the kiosk. Then you need to buy stock.

And all you've is 30k. And your family still needs to feed.

Therefore, the only option before you is to borrow enough to feed your brood, get your farm and shop going. Hopefully, both ventures would be successful enough that you won't need to bother much with your dwindling salary.

The above is a very crude and simple way of realizing that in order to develop other revenue streams to supplant oil, Nigeria must spend.

We don't have the cash to do much. Thus, we've to borrow.

Every one borrows, even the US. The problem was that all these years government was borrowing not ro invest in infrastructure, but to sponsor its gargantuan luxury hunger.

We borrow to consume. All those jets and yachts and cars and girls cost money.

Also, the amount PMB is borrowing is still many percentage points lower than the GDP. That's a healthy ratio.

Brilliant! Couldn't have said it any better. You'd make an excellent lecturer - you can teach monkeys economics and they'd understand.

NANS Zone B (SS/SE Region) - the beef is understandable. But let's forget about that and deal with the facts.
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They claim that UNESCO demands a budget minimum of 15%. But do they know what percentage FAO demands for Agriculture, WHO demands for Health, UNEP demands for Environment, ILO demands for Employment, etc. My point is that it is practically impossible to satisfy the standards set by all these United Nations organizations. Every nation has its own unique challenges and priorities, and so will tailor their budget to reflect that. Can you imagine the chaos if every sector came out to demand that government meet the UN requirements?

CAPEX in the 2015 budget was around N500bn, while CAPEX proposed in the 2016 budget is around N1.8tn. So, you see, a good chunk of the N6.08tn is going to be spent on infrastructure. The government will not take up that huge deficit to invest in non-revenue generating ministries. In any case, Education has the highest recurrent expenditure @ N369.5bn. There is also another N37bn budgeted for CAPEX. Add another N77bn budgeted for UBE.
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With the current reality of low oil prices, those ignorant students need to realize that the priority of government right now is massive infrastructure investment to help diversify the economy. If so much is spent on education, which jobs will the graduates do when they finish?

drss:
ones upon a time there was a president in who's tenure saw oil price at $120/barel. in his wisdom together with his minister of finance Ngozi formed Soveriegn wealth fund (SWF) to help save monies from from crude oil sales. This account was to help save for rainy day should international oil price falls in d future. dat president in good fate saved over $1 billion in soveriegn wealth fund for nigeria as soon as it was formed.
but like devils send to wreck havoc on society, nigerian govs forum thieves led by d judas himself, judas ameachi took GEJ to court in protest against soveriegn wealth fund. D judas alleged dat GEJ's SWF is against d constitution of nigeria. Judas ameachi den accused GEJ and okonjo iweala of operating swf illegally with d intention of staving states of d need funds for development. In their prayers to d courts, NGF demanded for d scrapping of SWF n monies saved in it shared to states for more development projects. They claimed that federal govt under GEJ has no authority to save any excess funds from crude oil sales where price was $120/barel.
Dat was how NGF led by ameachi under d influence of APC frustrated GEJ's effort to save huge funds for d country through SWF.
Despite d sabotage by NGF, GEJ was able to save $2.5 billion in excess crude oil account (ECA) for buari govt.

Is that what they told you? How about I widen the perspective for you.

The president and his team of bandits wanted a SWF for the entire Federation and they wanted to fund it by withdrawing from the Federation Account before FAAC/JAAC is shared to other tiers of government. The governors revolted because it was illegal, but more importantly because there was no structure on managing the funds. They knew from the experience of ECA during OBJ that FG might just unilaterally drawdown on the funds using any flimsy excuse.They argued that the money in the Federation Account should be shared to all tiers of government. Any State government that find the need can choose to have its own State SWF. The Federal Government too can choose to save its own share in a Federal SWF.

If you go and check your records, you will find that Gov Amaechi was saving about N1b monthly in the Rivers State SWF during the oil boom. If the FG was really sincere about savings, why did they not save their own share in a Federal SWF? They simply wanted everybody to contribute so they can unilaterally withdraw and give to Dasuki to "fight BH".

It may also interest you to note that GEJ inherited ECA of more than $10bn but was able to only leave $2bn, even with oil prices being consistently above budget benchmark price throughout his term.

HzRF:
Resultant effect of eating Aisha's Rice and maltina

I admire your sense of humour. I had a nice laugh.

Look at them - trying to behave like gentlemen in the hope that it will endear Nigerians back to them.

You lot can insult all you like. The PDP and IPOB bots are free to vent vile vituperations all over the place. Baba doesn't know that you exist and he doesn't care. An Army General, a Former President, a 70+yr old man has seen it all. He won't bat an eyelid at your frustrated insults.

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The enraged residents anchored their reason on the ground that they were tired of seeing abandoned project in the street, saying that they preferred the worn out road which had been abandoned for years.

Wise decision by the young lads. Enough of politicians using deceptive tactics to win elections. Did David Mark suddenly realize - after 16yrs as senator and 8yrs as SP - that his people need good road?

This is a good first step by the youths but they need to go for the jugular by voting him out of the Senate. Time to flip the cards. Politicians need to learn that they are accountable to the people, else nothing for them..

members canvassed the formation of a masses movement that will provide a voice for the masses, since PDP can no longer be a credible opposition party.

And who contributed the most to sinking the Credibility of the party?

PDP has become a symbol of corruption, impunity and lawlessness. It will be difficult for PDP to win future elections in Nigeria.

Did you just realize this after your benefactor lost election? Is that not exactly how the party has always been? Treacherous bunch of hypocrites!

Apparently, these lot think that the "Hero" still has some residual followers and lovers and so they want to leverage his reputation for personal gain. But I'll tell them this for free - Jonathan's Incompetence, Inexperience and Improbity cost PDP the Presidency. Anything built around Jonathan right now is DOA!

I'll help cure your ignorance, not for your sake but for the sake of others that may stumble on this junk.

First of all, there is a Joint Venture Contract (JVC) and Profit Sharing Contract (PSC) between the Nigerian Government and the International Oil Companies (IOCs). While there are slight variances in each of the contract, the Nigerian State has an average of about 59% stake in the contracts.

When oil is sold for $38, the Nigerian State only has around 59% of that total figure. Secondly, the amount that comes to the Nigerian State goes into the Federation Account to be shared to all tiers of government. The Federal Government has only around 54% of this amount.

Now let's deconstruct your figures again:
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(1) Gross earnings for entire 2016 = $30.51bn
(2) Nigerian share in Dollars (59%) = $18.00bn
(3) Budget Naira Exchange Rate = N197/$
(4) Nigerian share in Naira = N3.54tn
(5) 13% to Oil Producing States = N461bn
(6) Balance in Federation Account = N3.083tn
(7) Federal Government Share (54%) = N1.66tn

The figures above are GROSS figures. You'll have to discount the COST OF PRODUCTION to arrive at a NET figure for the Federal Government.

mekaboy:
I believe 30% of the 6.8 trillion will be spent on capital expenditure . I believe it's mostly infrastructure that drives the economy. The remaining 70% will be used to pay salaries and some welfare programs. But these programs will have little or no impact in revenue generation, since it will enter the stomach and go down the toilet.

Well I hope they know what they are doing.

Not completely true bro. There is usually a transmission effect on consumption on the real economy. For instance, those salaries and welfare payments will be spent by consumers to by products in the market. At the very least, this increased demand will help small companies increase their bottom-line. Also large companies who make this items will need to ramp up production to meet the increased demand. This will lead to more employment, which will lead to employment tax (PAYE) for government. As these companies make more profit due to increased demand, they will pay more Company Income Tax (CIT) to government.

Also, most of these monies will find its way into the banking system, thereby increasing the bank's capacity to lend. These extra lending to companies will help companies increase their production leading to more profit and more tax to government. As banks make more money, they will also pay more tax to the government.

So, consumption can increase a country's GDP. Infact, the US economy is driven by 70% consumption, that is why the government does everything to support welfare programs and employment.

mekaboy:
We will be borrowing about 2 trillion and only 30% of the total budget will be spent on capital expenditure.

This is like borrowing 100 for bizness, investing 30m and sharing 70m among friends and relatives. How will the loan be paid?

There is a projection of increase in non oil revenue. How will that happen when several businesses are suffering due to harsh economic policies?

Firstly, 100% of borrowed funds will go into capital/infrastructure spending.

Secondly, recurrent expenditure is not like sharing among friends and family. It is like SG&A in accounting.