₦airaland Forum

nstore:
But why private companies to operate Port Harcourt refinery?..

Government agencies have proven over the years that they are incapable of doing anything. The government has no business running refinery in the first place. Government should only concern themselve with security and critical infrastructure.

All refineries should be handed to private companies. Also, the government should look into wooing investors into other areas like the dead steel industry.

Our ticket out of poverty is Industrialization and we must take the pain the achieve that.

mrvitalis:
Economic growth happens when you earn more than you export

Now my idea is this... There are things Nigeria can have comparative advantage in ( this means we can produce them cheaper than most people in the world) examples are

Ethanol, garment, leather works, ICT labor force, medical staffs, glucose industry, poultry, piggery and some others

So my idea is simple focus on this areas make the laws n framework that would make export and production of this produce possible

Produce excess export and use to pay for our import

We can invest and expand in what you highlighted while blocking more leakages from unnecessary imports.

I'm not against imports. Every nation must import to survive. I'm only against the importation of everything because we can get a cheaper alternative elsewhere.

We can pull in Nigerian industrialists and make them invest in a particularly field with the guarantee of market protection. We don't even need to burn our scarce FX. We just make the tough decisions and assist in the creation and expansion of locally viable Steel plants, refineries and Industries.

With steel and petroleum products out of our import list, there will be less pressure on the naira and so we can have enough to finance our agricultural programs and train more medical staffs while providing adequate equipments for their programs. Closing our borders to fuel or steel imports doesn't mean we shouldn't invest in other areas.

It was just some ten years ago we started manufacturing tiles/PVCs in Nigeria. The Nigerian government still allow the importation of these products with no much tarrifs. Shouldn't we be giving the industries in Enugu and Ogun a favourable edge ?

mrvitalis:
So since country is producing and selling to its self where would the growth come from

What growth?

Do you prefer we sell raw crude oil, use all the profit to import what can be produced locally?

Or do you prefer we sell crude, use the profit to support the expansion of local industries and save some for other critical projects?

Why do you think our currency is loosing value? We sell $100 worth of crude, we use all to finance importation. How the hell do you think we can attain any reasonable growth with that ?

Buhari burnt billions in building some nonsense rail projects when we still import fuel, steel and other things that we know too well can be produced locally. We could channel all energy in getting these critical projects running then pocket what is left. It's better than the madness we are currently operating.

Sell crude
Import everything.

Oops, why are there no jobs. Or oh, why are Nigerians poor.

Again, I'm asking you, what area do we have comparative advantages on? Can we even compete in the international market?

mrvitalis:
You haven't answered by question...

The problem with your policy is that you are limiting your market to market within your country..


Let's have two countries A and B same population and everything

You are saying country A should stop its import of what ever it can produce and produce them locally to meet demand and for you in this way the economy would grow right?

Is this your idea? Yes or no

Simple answer is YES.

if country A has Iron Ore, Crude oil. It must totally put a ban on imports that has products derived from these raw materials.

If at this stage you don't know we are in a mess because of our lack of productivity, then I have nothing to say.

If you kill your steel industry because you can import cheaper steel from China, you will also kill your refineries because of course you believe that you can always get cheaper products somewhere (This happened in Nigeria. From the 80's, industries collapsed because of this nonsense idealogy you are postulating). In all you debate, you have never factored in the well being of the people, impact on the currency or the economic security of the country. Do you know the indirect jobs you create by operating steel plants ? The jobs? How local industries will stabilize the economy?

I earlier asked you a question. In what field do we currently have comparative advantages on? Just name any Field.

We have allowed the importation of Steels, petroleum products into the country for decades, why haven't any local industry sprang up to take advantage of the cheaper imports? If there is cheap steel, there will also be cheap tyres, cheap tiles etc. It never ends. You just collapse your economy to satisfy some stupid urge. Is that what you want for your people? Or don't you live in Nigeria to see the poverty that is staring at us?

Dangote refinery is up and running and I'm drinking wine to celebrate this big win for the black race. Good afternoon!

mrvitalis:
China had a path way to world dominance, China first started importing
This grew the market Increased demand
This inturn grew the investment into the sector from China and outside
Then the industry grew

We don't have a market for profitable steel production here... If we did companies would be begging to invest

And China imports many things why don't tge world factory produce every thing?

China started by meeting local demands. China will never import what they can source locally. If China has crude oil, they will never import a drop of fuel. Doesn't matter how cheap it is. The Chinese are deliberate. They take the pain to build.

Competing with US at their infant stage would prove fatal. They waited for decades before venturing into the international market. We should leave international markets for the now and see ways to totally dominate our space with the resources we have available.

Steel, fuel, electricity, food, beef are what we can successfully produce if we put in the work. Did I say we shouldn't import machines and other electrical components? Hell no, I'm saying we must produce what we can source locally.

mrvitalis:
Being self sufficient at what expenses?... If we can't produce steel at the landing cost of steel from China you have effectively increased the cost of production of every industry that uses steel

You are just seeing just steel, we can sacrifice steel industry for example, import cheap steels us it to start other industries

Cooking pots and pans production for example... Importing cheap steel can give us global comparative advantage.. We would not only satisfy local demand but export international ( but this can be done online if you can produce below average price)

Bangladesh for example allows import of fabrics... They don't farm cotton, they rarely produce fabrics... But their garment Industry earns over 5 times what we earn from oil

If they hard protected their cotton farming industry and fabric production industry they would never have had the comparative advantage in garment which is a bigger far bigger industry

This is basic logic

We allowed the importation of fuel for 3 decades how did it help us in any way?

We allowed the importation of cheap steel for 3 decades, how has it helped us? What local industry has taken advantage of the cheap steel to make pots or other finished products? Aren't our kitchen wares still imported from China? Once you inject people with this idea of "cheapness," it never ends and the Chinese are likely to produce far more cheaper goods because of their economy and technological advancements.

We can never take dominance or benefit from international trades if we are not ready to compete and possibly displace. I don't give a rat-ass about China or any country. I'm only concerned about how we defeat this poverty that is becoming a norm and we can only do that by making tougher decisions and burning our fingers.

How much a product cost in China is none of my business. I'm concerned about how we learn to do things out self and not depend on other race. We have Iron Ore, then by all means, we must produce steel. We have coal, then by all means we must fire coal plants to produce electricity. We have crude oil, then by all means we must produce fuel and diesel.

This is how we will grow as a nation not your theory of cheap importation. Look what cheap importation did to Venezuela.

skj1377:
India, china ( they joing world trade organisations only after they opened their economy to the world some time in the 90s. as we speak American has gone back to protectionism of strategic industries like their steel and iron ores. If you like import steel from China once it gets to USA they impose a huge tariff that makes it more expensive than US steel. I can't argue with you your thinking is basically stupidity cloaked in intellectual jargons. Imagine if your industrial sector is based on imputes from china?? Will you ever produce a ship cheaper than China What if war or a virus like COVID 19 breaks out and China closes it's industries down like happened previously what will happen to your industries in your country. Oga I can't argue abeg am tired if you don't get it you can't get it period.

His type of thinking is why we are where we are today and the painful thing is that the people with these thoughts are influential and make critical decisions that affects us all.

Imagine how we killed all local industries because of our quest for "cheapness" and not wanting to displace and compete with others.

I wonder what will become of the black race in the coming decades. What a pity!

mrvitalis

The US once had total control and dominance of the steel industry in the 60-70's. Why didn't China say, oh, US is already dominating in this field, let's not compete and allow them dominate us.

You think you achieve any reasonable thing in life by fearing competition? You go out. Compete!

mrvitalis:
You are a poor nation with irrelevant GDP and you think the best way to grow your GDP is to start and Industry that China has dominance over?

What's the Nigerian steel industry work? what if the potential? Can we compete with China? Or u just want to sale to Nigerian market?

There by denying Nigerian other industries that depend on steel opportunity to be comparatively advantaged to take on international trade

Same way nigeria has been protecting cotton farmers and fabric industry to the point we lost out on a 500 billion dollar garment industry that we could have dominated

How do you guys think even

I don't get your point. How does China dominance in steel prevent us from striving to be self sufficient? So because the Chinese are dominating, we shouldn't explore what we have in abondance, not to talk of the huge benefits to the economy?

For a start, satisfying our local needs will be a big win. Who wants to compete in the international market? Just not yet!

Also, I'm one of those who believe the Nigerian government is too corrupt to run any industry. Industrialist can purchase these dead steel plants with the protection assurance of the government and support.

Can you tell me just one thing we have comparatively advantaged on? Are you not aware that we are behind in almost everything?

You logic brought us to this stage. We don't need any of that now. If I eventually get the opportunity to lead this country. You will see fight hand what it means to position your people.

mrvitalis:
Firstly the biggest industry in America is military complex who are heavily depending on steel.. Handling something that links directly to defence ro your enemies is messed up.. And America had a steel industry to proctect

Nigeria doesn't have a steel industry to protect

Nigeria is not a treat to anyone, there is absolutely nothing to protect, if China wants Nigeria would can Nigeria defend itself?

Even mere UK

Tell me something outside security related us protect?

US also places high tarrifs on auto parts, some electrical components, tobacco etc. These things have nothing to do with national security but the economy of the country. You don't allow every cheap things into your country when they can be produced and sourced locally. Every 1st world country practices this.

We once had a working steel industry. But people said oh, let's open our border to cheaper products from China. These actions coupled with the bareface corruption led to the collapse of the steel industry. If we had acted right and took the tough decisions, by now more steel industries would have sprang up.

Doesn't matter if we are no threat to anyone. I'm saying as a race, we must put in the fight to capture our space. If we continue with this weak path and easy way to life, we will be trampled upon. Our generation to come will be subjected and subjugated.

We don't need to be advantaged to compete. With the available resources, we can strive and put in the fight. With discipline, maybe we can capture our markets in the coming decades. For now, the Chinese are having a field day and I bet may of our kind have no problem with that.

mrvitalis:
USA has of of two works highest deposit of oil and gas yet import

Most American cars have their parts built in China

IPhone are largely made in China

The fashion is made in China Vietnam and Bangladesh

I can go on and on

China imports American corn, soy they America is their biggest supplier

Should I go fast food etc many American brands allow to thrive in China

There is what is called comparative advantage
There is protectionism that's allowed Africa is just being plain stupid

As far it's not a matter of national security America doesn't practice protectionism I dare you to prove me wrong

How is steel a matter of national security? Or you are not aware of the decision the US government took around 2018 to slush out the importation of cheap Chinese steel so as to protect the local industries? Do you even know why very high tarrifs are placed on steel importation from China?

US steel industry would have collapsed if they didn't practice protectionism. And we are not talking of steels alone. Many imports from China are under very high tarrifs. Goods imported from China that would naturally cost $300 but with tarrifs, they cost above $400, giving local products an edge.

Who will buy an imported product of $400 when they can get that same product with far more superior quality that is locally made for $320? Ordinary, the imported product should cost $300 or less but the tarrifs are a way to protect what is locally made. You think everything is about cheapness?

Still wonder why industries in US are still operating when Chinese produces cheaper steels ? Your logic is not only flawed but incomprehensible.

And steel isn't the only items under tarrifs. Lots of electrical equipments, electronic components and products, chemicals produced in China are under stiff and strangling tarrifs.

We are discussing protectionism here and not trades between nations. No one is opposed to trades between nations. We are saying we shouldn't kill industries because we can import cheaper products from US/China or whatnot. I've given you solid and verifiable examples. Respond with superior argument.

By the way, most of the products you listed are ran by Americans and the core of the revenue still falls back to the US. While Apple Inc has partners in China that produces some of its components, a huge part of its annual earnings and operations falls to back to the United States.

A black man doesn't want us to make any advancements in exploration of our resources because we can import cheaper products from China. We should leave our Iron ore untapped and import cheap irons from China.

Nice logic.

mrvitalis:
china doesn't produce everything cheap oga stop lying

Of course, electronics, phones, machines, engines, cars are more expensive in China than in US, Germany or Canada . Or perhaps we should tell producers in US to close factory and import the cheaper gadgets from China.

Remind me again why Almighty US with a diverse economy practices protectionism.

China is one of the biggest importers in the world

From machines to wheat to soy to corn to chips

Importing mostly raw materials is different from importing mostly importing finished goods. Raw materials are processed, adding more values to the economy. Finished products adds zero/nothing to the economy.

Nigeria imports finished goods. We don't import raw materials to be processed. We import what others have produced. Don't ever compare China's important importation to Nigeria's importation.

Why is China importing crude oil and not 100% refined crude oil products from oil producing nations?

You Africans need to know the problem is never what you import... It's always what can you export

Wanting to produce something you know would be cheaper to import is primitive thinking

What exactly can we export? Our race hasn't even taken the pain to refine and utilise the raw materials found beneath our soil, you are talking of exportation. What can Nigeria export to China with this our current predicament? Cassava I guess Heck, we don't even farm enough for our population.

You said Wanting to produce something you know would be cheaper to import is primitive thinking. Do you know that almost all 1st world countries practices protectionism. What do you think that entails?

Not every race is black. The Europeans won't allow the Chinese suddenly overran their space.

Again, we lack the fighting spirit and we are doing nothing to capture our space. With established and influential people like yourself supporting this non-benefiting behaviour. I dare say we're in for a long thing. Once the Chinese are done exploiting us. They will pass us to the Indians. Oops, those guys are already warming up

mrvitalis:
So why exactly are you telling us why not just do it




The steel industry is owned by China we don't have comparative advantage ( meaning it's impossible to make locally made steel cheaper than imported ones)

Allow cheap steel import from China... Let's focus on what we can export to China to balance the trade ( for me Cassava chips is the most obvious solutions)

This is how economy works

China produces everything cheap, should that mean all industries in the world must close down and countries import everything from China? Do you even know how much effort and resources 1st world countries pour into keeping industries alive ? Look at what Germany is doing at the moment.

Do you prefer cheaper things and a dead economy? We have every reason to resurrect our steel industries.

I'm not even arguing for this government because I've come to expect nothing less from them, but any body that can resurrect the steel industry will do us a huge favour.

Our quest for cheap steel was what crippled everything in the first place. I've discussed with people who worked in Aladja steel here in Warri and I know what it means to having things functional.

The black man is unwilling to compete, scared and always give excuses while they should remain stagnant. Abundant Iron ore, but no, let's import cheaper products from Asia

jmoore:
It will be foolish for anyone to ask Obi to be Atiku's running mate.

What will it take PDP to zone the ticket to South East? Isn't it time for the zone to produce the president? Is equity not on their mind again?

I'm beginning to believe the party is not ready to get to Aso villa. We are watching!

Nigercity:
Efik/Ibibio if grouped as one, will be second after the igbos, unless your are trying to leave in denial!
In delta Anioma covers the entire delta north, and extend to Edo!
In awka ibom there is ndoki, in cross River there's izza (you have YouTube, search about them, you will see them crying about marginalization ) in rivers state, excluding ikwerres the other igbos speaking part (ndoki, etche, omuma e.t.c) are actually they largest group followed by ijaw
So how do you come to the assertion that Efik/ Ibibio are more populated than igbos in South South? Let's not add the millions of South East igbos that migrated to rivers state, Bayesla e.t.c


In Abia state! Only ABA and it metropolis has a strong Efik/Ibibio presence not the entire Abia state as you wrongly claimed!
Also excluding igbos from south west expect Lagos is just the height of denial am surprised at!
In Ibadan after Yoruba nah igbos,(infant igbos are plenty in Ibadan to the extent Igbo language is being offered in uni ibandan, like it's done in unilag) same thing goes to Ogun from mowe,ota to Abeokuta e.t.c
In Akure it's still the same thing!
There's no way igalas will be more populated in Ogun than igbos,
Me and you know this ota Sango mowe alone can boost of millions of Igbos,

Efik/Ibibio is the largest ethnic group in the South South. They occupy two states. Let's take a look at the 2006 data and when discussing with me, don't just pull millions from your anus. Millions in ota Sango mowe? Bayelsa? What's the population of these places to start with?

2006 census
Rivers state (multi ethnic) - 5.1m
Delta state (Multi ethnic) - 4.1m
Akwa Ibom (Efik-ibibio) - 3.9m
Cross River (Efik-ibibio) - 2.9m

% of Igboids in Delta and Rivers
Rivers State (60% of 5.1m) = 3m
Delta state (35% of 4.1m) = 1.43m
Total = 4.43m.

Please note I will be ignoring the anioma villages in Edo because their population is very insignificant.

Efik-ibibio has a combined population strength in Akwa-Ibom and Cross River of 6.8m. Please don't refer me to some border communities and use that as an excuse to undermine the Population strength of Efik-ibibio. What's the population of Izza? Are they up-to 100k?

What population of Igbos are in Bayelsa? What's even the population of Bayelsa. Do you even know the population strength of the Urhobo people in the so called Bayelsa?

Again, you are pulling numbers from your anus. All stats point to the fact that Akwa-Cross holds the biggest population and strength. Not even the Edoid or Ijoid even come close. They are almost times two of every other groups.

As for South West. I will let that pass but please it will be better for you not to miseducate readers or downplay the actual numbers of groups occupying the region.

How will this benefit the people?

Nigercity:
Let's not be sentimental here!
After south east,
Igbos are still majority in South South ...

Efik/Ibibio are the largest in South South. The Ijaws should follow. I once debated the Ijaw strength, but I think they have the numbers (Although concentrated in a given location).

Also the population of South West is diverse and you can't easily pinpoint the second largest group outside Yoruba. Igbos tail Yoruba in Lagos, but not other states. In Ondo, the Urhobos are far more in numbers outside the aboriginals. In Ogun they have a threatening Igalla population and some other minorities from the North central that are into farming.

There's a lot about Nigerian ethnicities and their migratory movements. In Delta state (Warri axis) The Esans/Afemai/Bini tails the aboriginals when it comes to population strength i.e, these Edoid groups move more in their numbers to Warri than they do to Akure or Onitsha. In Aba, you have a strong Ibibio population, and sincerely, they should be the second largest group in Abia.

In all, you can find a group of people in their numbers in State A, but not necessarily in State B. Also, no ethnic group in the present day South South outnumbers the Efik/Ibibio. Not the Edoids, not the Igboids and definitely not the Ijoids.

Efik/Ibibio

DrDoc:
Unless you have excess, it is better to expand income generating systems. I.e build more businesses than build a house that doesnt generate or create substantial wealth on time

Only few people will understand you. If you have ever involved in a house project, you'd know how capital intensive it's. But then again, it's a long term plan. Something to fall back to.

If I'm op. I will split the 20 million. Use 10 to get a perfect structure like he submitted.

Death sentence!

OfficialAPCNig:
No, Middle Eastern countries.

Ghana and some other WA countries import lots of fuel from Europe, most Especially Italy. Middle East/Europe still doesn't change the fact that it cost far more buying fuel from Saudi Arabia/Italy than buying from Nigeria.

That's is not how international trade work. Countries trade with each other more for political reasons than economies.

Egypt and Libya has one of the cheapest oil, yet many Africa countries prefer to trade with other nations.

Egypt to China is shorter than Nigeria to China, yet China gets more of their crude from Nigeria.

Why?

Nigeria is Chinese largest trading partner in Africa.

So, there is no guarantee these countries will just wake up and dump their current suppliers for Nigerian suppliers because of little difference in price.

China gets lots of cheap crude from the Middle East (most especially from Iran) & Russia. They also source from Brazil and Saudi Arabia. Infact, Nigeria isn't even among their top 10 oil
trading partners. They have doubled down on their crude oil imports from Nigeria especially since sanctions were lifted on Iran and Russia beamed their search eastwards after the invasion of Ukraine.

Iran and Russia offered China a far better deal, and they didn't look back before dumping our sweet crude. Not everything is politics. Cheap crude oil will do China's economy more good than purchasing expensive Brent crude from Nigeria. Despite our years of trading, they dropped us for a far better deal when opportunity came knocking.

India didn't agree to West pressure to let go of Russia's crude oil. Infact, they came up with other means when the pressure was much on them. Do you think they took all those risks because of "Political reasons?" Heck no, Just like China, Cheap crude will do India's economy far more good. Or how do you expect their refineries to compete with others if they buy expensive crude ?

Take a look at China's top 10 oil trading partners in the first quarters of the year.

https://www.eia.gov/todayinenergy/detail.php?id=60401#:~:text=China%20sourced%20much%20of%20the,(250%2C000%20b%2Fd).

Governments all over West Africa are under pressure to beat down petrol prices, do you think they would turn down cheap fuel purchase from Nigeria when the opportunity comes?

If Nigeria, the largest economy in Africa is struggling to pay off FX backlogs, then there is no quarantee they can meet their FX obligations.

What are they currently using to buy fuel from refineries in Saudi Arabia? Italy? Do these West African countries use their Cedis or CFA? Or they source dollars to purchase the fuels and haulage fees?

Whatever means they use to settle Foreign refineries can also be used to settle our local refineries here.

By the way, You don't expect Nigeria to clear FX backlogs when majority of our FX earnings realized from crude oil sales are used to settle fuel importation. For decades we sold crude oil to import fuel.

Two things are off with these analysis.

1. You are also assuming that Dangote will sell a litre for $0.6, that's about $95 per barrel. A barrel of crude is $75.

The cost of refining Saudi Arabia crude is around $20 per barrel while Nigerian crude cost nearly $13.

So, it will cost Dangote about $88 to refine a barrel. Now, when you factor in the costs of transporting the crude ad running the refinery, then you'll understand why Dangote will never sell at $95 per barrel or $0.6 per litre.

Cost of refining fuel in Nigeria will always be cheaper than anywhere in the Middle East and Europe, which is even an edge. Our crude is sweet and light. There's also cheap labour.

Even it it takes $16/barrel to process, transport and run the refinery, a net profit of $4/barrel will still be a plus to Dangote.

How do you think the Chinese were able to knock our most steel industries? The mass produced cheap steels and aimed a very minimal profits. Plus it was cheaper to operate a steel industry in China that in USA. Dangote knows the task ahead and so he won't sought out huge profit margins.

The goal it to chase foreign competitors from our black market.

2. You are assuming that we will get 158 litres of refined petrol from a barrel of crude oil. That's wrong. A barrel can only give 73 litres of PMS.

So, even if Dangote runs at full capacity, he can only get 47.5 million litres which is still short of 50 million daily consumption.

So, there is nothing to export if he prioritises local consumption.

Of course I know It isn't possible to get only PMS from a barrel of crude. We get approx. about 72-82 litres of PMS / Barrel , 42 liters of Diesels / barrel, 20 litres of Jet fuel per barrel...

Now remember we use scarce FX to import PMS, Diesels, Jet Fuel etc. At full capacity. We won't be burning scarce resources to import these things.

Which do you prefer? We export every oil we drill and burn all revenue/FX sales to import fuel, Diesels, Kerosene etc?

Or you prefer we use a Portion of drilled crude oil meet local needs and export what is left, leaving some money to handle other important needs?

Please note that we can ramp up our production to 2m/day.

Daily petrol consumption in South Africa is nearly 600,000 barrel per day, that is almost Dangote capacity.

If Dangote targets this market, then will need to import PMS to meet local demand.

Once investors sees the potentials of having refineries, they will surely want to set up local refineries. Remember we have PH and Warri refinery coming up. I don't just want to count on anything the government is involved. They have proven to be failures.

Let's put our bet on Dangote and BUA. If these two refineries runs a full capacity, we will have enough to export. We don't need to satisfy the SA need. We just need to corner a portion.

Did I say that?

I only said that there will be less significant impact on our FX if all the refineries in Nigeria run at FULL capacity and we continue to produce 1.7 million barrels per day.

Unless we double out crude output, we will only cannibalize our largest FX source to minimise our FX usage.


By selling 650,000 barrel to Dangote daily, we will be losing a potential $17.8 billion in FX annually.

And still have nothing to export.

Why do you Omit the fact that Nigeria will earn FX by selling refined products to other African countries. Will South Africa pay Dangote in Rands? If we refine our entire oil production, we will still made a fortune.

Plus the massive jobs that will be created

Africans have zero leverage.

How do we have leverage when we don't want to take the pain to build? How do we grow when we are scared to compete and capture our space?

We are the only race that isn't in full charge of their space and we are doing nothing about this.

OfficialAPCNig:
You are right.

But what guarantee do we have that we can offset about 50 to 70 million refined petroleum daily in the international market?

Again, if we find a market for these products, we will likely sell below $1 per liter to remain competitive. Egypt is the world's 25th largest exporter of petroleum and a litre sells for less than $0.4.

To compete with Egypt, Dangote needs to sell at least $0.5 per litre, this will generate about $35 million daily, far less than what we get from crude export.

Again, if Dangote pushes 50 to 70 million litres into the African market daily, it will cause the price of these products to fall.

If we target our West African neighbours, our biggest market will likely be the Benin Republic. A litre of fuel is about $1 there. So, we will likely be at $0.5 per liter for bulk purchases.

And these countries can't offset our 50 to 70 million daily surplus. Benin Republic consumes about 28,000 barrels per day which is less than 5 million litres.

Again, even if we offset all these products, what guarantee do we have that these African countries have the FX reserve to repatriate those funds?

And do you honestly think Dangote will move the earned dollars to Nigeria? And even if he does, what guarantee do you think our Northern politicians will allow those USDs to circulate through the banking system?

A lot of Nigerians make money from FX speculation and stabilizing the Naira is never in their plan.

Do you remember that Tinubu recently released up to $10 billion into the economy to pay off FX backlogs?

What happened?

Naira strengthened marginally for a few days and then depreciated heavily.

What do you think likely happened?

The influx of dollar crashed the price, these hawks bought and hoard the cheaper dollars and start selling through the black market at higher rate.


So, no matter how you look at it, Dangote Refinery will not have any substantial positive impact on our FX.

For me, cannibalizing our biggest FX sources to reduce FX usage is not wise. The refinery will only make Dangote more powerful not our Naira.


My analysis was based on Dangote running at full capacity.



I have already explained why selling refined petroleum to these countries won't make up for the shortfall of supplying 650,000 barrels daily to Dangote and 400,000 to other refineries.

At the end of the day, these refineries will resort to importing their crude from other countries.

And this will kill the FX further.

Most West-African countries, if not all relies on European refineries for fuel importation. And fuel currently sells everywhere for a little under $1 in these countries.

Now, remember that proximity is a big plus to us and our west African neighbours. It won't break a bank for a ship to sail from PH/Lekki port to Ghana, but when importing fuel from Europe, these countries pay extra for haulage and insurance. We are at the upper hand, and if there's anything, it should be those Foreign refineries who should be worried because we are about snatch their markets.

Also, what makes you think African countries won't have the FX reserve to repatriate those funds? Aren't they paying those foreign refineries with $? Remember Ghana will be dealing with a private entity, and not the Nigerian state.

Let's look at the margin of profit when we refine and export, and compared to when we export raw crude.

A barrel currently cost $75. So 650,000 barrels should earn us $48,750,000. Now, if Dangote is to refine 650,000 and export to nearby west African countries at the rate of $0.6, we now have;

158 litres = 1 barrel
$0.6 X 158 = $95/barrel

$75 (Price of crude in the international market) - $95 = $20.

So Dangote makes $20 for a barrel refined. Please note that the profit will be higher if he's to sell at 0.7, but pegging at 0.6/litre is the most logical at the moment.

$95 X 650,000 barrels = $61,750,000.

$61,750,000 - $48,750,000 = $13,000,000.
After paying Nigeria for crude purchase, Dangote can only pocket $13,000,000, if he chooses not repatriate these funds to Nigeria, it won't still make any difference because we are not supplying him free crude. He buys like every other marketer.

There's also South African countries, in South Africa, fuel goes at high as $1.21 and they mostly import from European countries. Our refineries can key into these markets and crash the price of fuel by supplying for 0.6/litres.

There's no way you spin it that exporting raw crude is more beneficial than refining locally and exporting to nearby markets.

I'm optimistic about us coming out of this mess and local production of raw materials found in our soil is our only ticket out of poverty. If anyone should be exploiting the African markets, it should be blacks, no Europeans, not Russians, Not Indians or even Arabs.

So, if Nigeria no longer burns scarce FX on fuel importation, won't it be beneficial to the overall scheme of things? By not importing fuel, we are saving a whooping $11B yearly. Think the impact of this to the naira.

90dbest:
You are too simplistic in your analysis. So dangote refinery will automatically stop the Nigerian factor of corruption in oil sector? Those amount you re projecting as gain will be looted be looted from the source by politician and dangote himself. I don't know what gives you people false hope in Nigeria sef.

No, I'm saying these thieves will have no excuses for their theft. If we refine our product, there won't be oil-for-fuel swap, so NNPC won't see any reason not to remit to the federal purse.

By the way, we are not discussing the elimination of corruption in the oil sector. We are debating how refining locally will be of impact to the overall scheme of things.

OfficialAPCNig:
But you forgot that we earned most of FX from crude exportation.

If we meet the budget projection of 1.7 million barrels per day at $70, that means we will earn about $119 million daily and $43 billion daily.

Government only gets between 12% and 15% of that money as royalties, which is about $7 billion. Oil companies take the rest and many of them will repatriate their profits in USD.

If we sell 650,000 of our projected 1.7 million barrels, we will be left with 1.05 million barrels. If BUA and other refineries, take up to 400,000 barrels, we will have just 600,000 to sell to the international market.

This will give us approximately $15 billion.

Remember again, FG will take at most 15% and most of the companies will repatriate their profits.

If Dangote and other refineries buy the crude in USD, then he will have to source the USD and this will even put greater pressure on the FX.

As far as we continue to produce at less than 2 million barrels per day, these refineries won't solve our FX problems.

We spend only $11 billion to import refined petroleum and we will likely lose more if we sell crude to Dangote in Naira.

Nigeria currently consumes 30-50million litres on a average daily.

If Dangote is to refine 650,000 of our crude daily, he is likely to get over 102,700,000 litres of fuel, which is far above our daily usage. Meaning surplus will be available for export to nearby African countries who are to purchase these refined products with USD.

Now, that's assuming the refinery will work at full capacity which is not likely at the moment. If Dangote is to meet our local demands, he just needs to refine 180-200k barrels/day and when you subtract that from our daily 1.5m crude production, you will see that we have 1.3m left for export.

Remember at a time we did crude oil swap. We gave foreign refineries free crude for them to supply us fuel and even at that, we ran at a huge loose. NNPC remitted nothing to the government coffers in 2022, this is because the revenues from crude sales was used to cover this shameful and shady oil-for-petrol swaps. Infact it was reported that NNPC owed merchants up to $3 billion this year alone.

Now, with Dangote refinery coming online, we are not bound to these things. Revenues made from selling crude to nearby African countries is enough to cover crude fee.

OfficialAPCNig:
Explain how Dangote refinery will solve our forex crisis if it runs at full capacity.

A huge chunk of our FX earnings goes into petrol importation.

Let's say we made $1M from crude oil sales in 2023. We then use $350k to service fuel importation from foreign refineries. With Dangote's refinery, we won't be needing to burn those scarce FX on fuel importation. We will buy petroleum with naira and if and when Dangote needs FX to settle foreign loan, it won't be up to 1/7th of what we use now to import fuel.

Fuel importation is what drains our naira most. If we can fix that, we can stabilize the naira.

IamAtikulate:
Dangote Refinery won't solve our FX problem. It might exacerbate it if the refinery operates at full capacity.

Wrong!

If eventually the Refinery runs at full capacity, it will go a long way in solving our FX crisis. Sincerely, I'm praying this project works. I'm so eager to so us kickstarting industries, that's our only ticket out of poverty and unemployment.

You may not like Dangote's approach, but he's one of the few that dare to invest in a sector when the big shorts where comfortable with just importing, like he did with local production of cements, if this refinery comes online fully, our FX drain will reduce drastically.

I'm also hoping a serious investors look into our steel industry. We shouldn't be importing steel.

SadiqBabaSani:
Omonigho in Bini means Child pass money, it sound Isoko as well Igho for Ugho and Omo for Child

I thought the name is only limited to Isoko/Urhobo. Of course Omonigho means same here.

Do Bini also bear Omonigho? This lady I believe is Esan.

Unrelated.

Edoid historians should dig more about Edo central. I believe this place is the root of all Edoid groups.

Heck, "Omonigho" almost got me.

Destroying properties is bad. These are people's years of hardwork. Doesn't matter the tribes they are from.

Lagos could have handled this better. Also, it's ill-timed.

We had power in my layout last week but that was it.

Effurun/Ekpan down to Jeddo and even Osubi haven't had power for almost a week now. Painful thing is that Bedc isn't saying anything.

JASONjnr:
Because Nigeria can't even contain the potentials within us, and just like the ancient Egyptians, we have to travel around to where people with little or no potentials are, to make use of it.

Site your country for instance, we are there because many of you black S/Africans are lazy and rely on shop looting to survive. So we do your jobs for you and get paid.

And we don't wait on the government like you lazy folks.

Why do you think South are lazy ? Have you been to SA before ? Where is all this arrogance coming from ?

In what way are we "Superior" to our black brothers in SA? Can't we even look at the mirror?