mandarin:


I don't agree with you sir or ma. If you have 110millionpoor people that you want to take out of poverty, you don't take them out of poverty by making them pay more. For every liter of petrol that sells higher you take more from them but what they need is not spending more but saving more. You are increasing their cost of living and when a tailor who needs to power hie electric sowing machine to sow for cloth for Uche or Sami, they will pay more. Who do you think get richer when more money leaves your country? Those countries where you import, they will have more jobs for their citizens and expand their own economy.My brother, concerted efforts are required to move the economy forward o

You take people out of poverty by education. 100 million people will remain poor if you do not give them access to MDG. You can not do that with using half of your mere 4 Trillion dollars for subsidy. Get your priorities right.

wirinet:


Very poor analogy. Why? Because power is critical in modern society.

Now lets go back to your example.
In the example you provided the family cannot survive on N100, they would have to augment their salary in order to meet the basic requirements of a modern family.
Let me use my Family as an example. My children get back from school and lesson around 5PM, they eat and shower, most times my wife would have to switch on the generator to pump water into the overhead tank from the borehole. They take a 30mins rest and start doing their home work, by then it is almost 7 and getting dark. So by 7.30pm the generator would have to be switched on to enable them do their home work. By 8.30 they go to bed, but the weather is usually too hot for them to sleep, so we have to leave the generator on until about 12 midnight to enable them to sleep deep before switching of the generator. Even at that my two youngest children breaks out in heat rashes often and i would have to buy various remedies to help relief the itching.

So whether i like it or not, i spend 500 everyday on fuel just to run my gen for 5 hours everyday.
Now, if you do not provide these basic energy needs for your children, you might end up having disfunctional children.

How do kids in Togo sleep?

989900:


I've seen the above floating around. Naturally, lighting the house would be the last on the list.

However, can I tell my wife and kids I can't pay the rent, nor school fees, but go binge drinking and patronizing prostitues every night?

OTOH (though of less consideration in this case), fueling the 'Gen', might be paramount if it guarantees our security/safety, or if it powers anything at the office/home that will bring income to pay those rents/fees/debts.

Do you know what your government earn annually? Your budget is 4 Trillion (deficit). Even if binge drinking and patronizing prostitues every night stops, you are flat broke. binge drinking and patronizing prostitues every night and you double that figure to 8 Trillion, you are still flat broke.

In this case, your security lies in building infrastruture (Military, Agriculture, Education). It does not lie in fueling your generator. You have proven that you did not die the last week. You have proven that when the price was almost doubled from 65 naira to 97 naira, you did not die. Infact you bought more cars. Your poorer neighbours are not dead. Do not mortgage you kids future.

wirinet:


Thanks gohome, your posts are putting some lost glory back to nairaland. Those good old days when we had good intellectual joists. This was before it degenerated to tribal and political "roforofo" fights between Igbos and Yorubas and PDP vs APC.
.

Thank you. You have been brilliant so far

wirinet:


Having said that, i am a firm believer of cheap energy cost, this is because we have abundant energy in africa. As Fela says "energy for Africa... plenty plenty energy for Africa.... Energy for sun, energy for moon, energy for oil..." And i will add energy for Gas, energy for water (hydo), energy for ground (geothermal). We have abundant energy. What we lack is abundant manpower, visionaries, planners. We should not and never buy energy at the same price other continents and countries are buying it. I do not expect Gas to be same same price in Russia as it is in Germany. Russia is even supplying its former USSR countries at subsidized rate.

True. We have energy, but we need to harness it. We are at the mercy of those who can. We need to teach our kids technical education. China has broken free. We have too. Your Raw material is worthless if you dont have the technology

wirinet:

As I said the problem we have is bad and visionless planner apart for them being corrupt. A good Energy planning can give us an energy mix that is less dependent on petrol and diesel. It is it an irony that year to year our rivers are over flooding and yet we lack hydo power? apart from lacking drinkable and agricultural water. It is a unpardonable that we consume 40 miillion litres of petrol per day, how many cars are actually in Nigeria? We should not be running our homes, industries and offices with diesel and petrol. We should not be transporting manufactured, imported products and even the same fuel with petrol. Every individual should should not be moving around in single cars, motorcycles or tricycles. We need to go back to the drawing board and plan a transport system befitting of a modern state.

Others countries make policies to limit PMS usage. In the UK, you are taxed heavily for car insurance. PMS and Diesel prices are also taxed to discourage people from owning cars. We need to start paying subsidy to the real sector and not PMS imported. Support subsidy in agriculture, manufacturing. These are what create Jobs. expensive PMS will drive public investment in diesel, electric or coal mass transit, dont you think?

wirinet:

That is why i always accuse you of not looking at the big picture. Private investors cannot and would not build refineries unless government promises them "subsidized" crude. Refinery business is not a profitable business, if the crude is bought at international prices. The margins are extremely thin and the capital investments are extremely huge. If i have $2billion, i would rather leave the money in a bank and collect 4 - 5% annually or better still invest in a government bond, than invest it in a refinery.

The big picture is what advanced nations saw. They dont subsidize crude for their refineries. The good thing here is that we have volume. 40 million litres from Apapa port finishes every single day. The market is there. Do you know chad has a refinery? Do you know, Uganda one of the world's poorest country are in the process of building a 60K capacity refinery at a cost of 2.5 billion dollars? ( http://www.bloomberg.com/news/articles/2013-10-08/uganda-seeks-investor-to-build-2-5-billion-oil-refinery) Dangote is currently building a 650,000 capacity refinery. The entire venture would cost $9bn, with $3bn in equity from Dangote Industries and $6bn to be raised in loan capital. Though not enough will go along way to drive other investors?

[/quote]

wirinet:

Now let me let you on a small secret, lots of refineries depend on black market (stolen) crude to make good profit. The Nigerian coast is a beehive of activities for stolen crude. There are foreign agents (lebanese and Europeans) waiting a brief cases of dollars to pay for anyone who can get into international waters with stolen crude. These agent then go on and sell these stolen crude to refineries in Europe and the Americas. Why i am telling you this is to let you know that refinery business is not very profitable business. Government need to maintain the existing refineries and build new one as a social responsibility to Nigerians or in the alternative sign a MOE with investors willing to invest in refineries that they would sell crude to them at "subsidized rates"

like I said, it is better to subsidize the real sector that imported PMS. I kind of agree with you on this

wirinet:

Countries use fuel (petrol) as a sort of micro economic tool. Western rich nations use it as a tax instrument to try and reduce social inequalities (poor people hardly buy petrol, it is the rich people that want the luxury of driving cars that buy petrol), while in not so rich countries where the poor needs to buy petrol petrol is made affordable to reduce social inequalities between the rich and poor. Nigeria falls into such a category. In a country where the minimum wage is N18,000 and this minimum wager would need to fuel his "okada", fuel his "i batter pass my neighbour" enter a petrol driven car or bus to work and buy kerosine to cook his beans, asking him to pay international price for fuel is unrealistic.

How come other poor countries like Togo, Chad, Niger, Kenya, SA, Eritea, Pay the international market price for crude?

Most Expensive Places to Buy Petrol in the World

1

Eritrea

$2.54




2

Turkey

2.52




3

Netherlands

2.13




4

Norway

2.12




5

Greece

2.05




6

Denmark

2.00




7

France

1.98




8

Finland

1.94




9

Hong Kong SAR, China

1.92




10

Monaco

1.92




11

United Kingdom

1.92




12

Germany

1.90




13

Belgium

1.87




14

Italy

1.87




15

Sweden

1.87




16

Israel

1.85




17

Portugal

1.85




18

Cape Verde

1.84




19

Ireland

1.78




20

Czech Republic

1.75




21

Cuba

1.72




22

Central African Republic

1.71




23

Iceland

1.71




24

Malawi

1.71




25

West Bank and Gaza

1.71




26

French Polynesia

1.70




27

Slovak Republic

1.70




28

Cote d’Ivoire

1.68




29

Hungary

1.67




30

Slovenia

1.67




31

Liechtenstein

1.66




32

Switzerland

1.66




33

Zambia

1.66




34

Austria

1.63




35

Djibouti

1.63




36

Kosovo

1.63




37

Malta

1.63




38

Rwanda

1.63




39

Montenegro

1.62




40

Japan

1.60




41

Croatia

1.59

adanny01:


Thats the problem when you think i use petrol on generator only.

Is it not the same government who coudnt maintain refineries, build new ones, build hospitals, schools, poorly manage the subsidy regime? I should make sacrifices for them to continue their fraud and mismanagement?

A government has to earn the peoples trust before the people will make sacrifices for the government. The only way for me to trust a government is when they build new refineries and maintain the old ones. Before then, they should carry their cross since the mismanged their own share of the petroleum bounty and now they want my own (Subsidy).

You are not making any sacrifice for them. They are stealing from you blind with the subsidy. If you can trust them with 4 trillion annual budget, then why not trust them with 1, 2 300 billion. You can not maintain a 170 million people with 4 Trillion Naira. You just cannot.

989900:


Obviously, no doubt.

How about N20>N0? I mean, that's what the common man gets when you remove subsidy, and the withdrawn subsidy funds are still siphoned by another ilk of unscrupulous subversives.

I am for 'subsidy' removal, given the level of unrelenting corruption that's on in that scheme. Putting a kibosh to it entirely would work. #Iknowmypeople

You are the head of your house, and you have an annual budget of 100 naira. Rent in a dilapidated house is 20 Naira. School fees is 20 Naira. Transportation to work and school is 30 Naira. Fueling your generator is 30 Naira. Let say you want to start up a new business to increase your income and as such you need to save 20 Naira. You also need to move from your present apartment because the ceiling leaks water any time it rains, which will require you save an extra 10 Naira. You took a loan from the bank, and the monthly deduction is 10 Naira. You have relations that cannot run their family and they have come asking for money because the landlord is about to evict them from the house. In the middle of all these, Something happened and your annual budget is reduced to 50 Naira. Will you keep paying for fuel to light up your house while you cannot pay rent and your kids can not go to school?

If you continue to pay for subsidy, your kids wont go to school, your medicare will be moribund. No roads, no bridges, no refinery. Your Country can not afford subsidy. You are borrowing money to pay salaries, you military is under funded, you do not have reserves, no infrastructure for food and fuel reserve. You wont last one day in any war.

KriTic24A:



This thread is highly informative!!!!
I appreciate all contributors either for or against.
I'm the one being lectured by YOU All.....
I have read all comments.
I say Thank YOU...

Thank you. I have learnt alot too from 989900 and PassingShot:

989900:


Go thru the below at your leisure, not perfect (slight adjustments here and there could be made for exchange rates and the like), it will help your perspective.

December 10, 2011, if you stopped at the Mobil filling station on Old Aba Road in Port Harcourt , you would be able to buy a litre of petrol for 65 naira or $1.66 per gallon at an exchange rate of $1/N157 and 4 litres per gallon. This is the official price. The government claims that this price would have been subsidized at N73/litre and that the true price of a litre of petrol in Port Harcourt is N138/litre or $3.52 per gallon.

They are therefore determined to remove their subsidy and sell the gallon at $3.52. But, On December 10, 2011, if you stopped at the Mobil Gas station on E83rd St and Flatlands Avenue in Brooklyn, New York, USA, you would be a able to buy a gallon of petrol for $3.52/gallon. Both gallons of petrol would have been refined from Nigerian crude oil. The only difference would be that the gallon in New York was refined in a US North East refinery from Nigerian crude exported from the Qua Iboe Crude Terminal in Nigeria while the Port Harcourt gallon was either refined in Port Harcourt or imported. The idea that a gallon of petrol from Nigerian crude oil cost the same in New York as in Port Harcourt runs against basic economic logic. Hence, Nigerians suspect that there is something irrational and fishy about such pricing. What they would like to know is the exact cost of 1 litre of petrol in Nigeria .

We will answer this question in the simplest economic terms despite the attempts of the Nigerian government to muddle up the issue. What is the true cost of a litre of petrol in Nigeria ? The Nigerian government has earmarked 445000 barrel per day throughput for meeting domestic refinery products demands. These volumes are not for export. They are public goods reserved for internal consumption. We will limit our analysis to this volume of crude oil. At the refinery gate in Port Harcourt, the cost of a barrel of Qua Iboe crude oil is made up of the finding /development cost ($3.5/bbl) and a production/storage /transportation cost of $1.50 per barrel.

Thus, at $5 per barrel, we can get Nigerian Qua Iboe crude to the refining gates at Port Harcourt and Warri. One barrel is 42 gallons or 168 litres. The price of 1 barrel of petrol at the Depot gate is the sum of the cost of crude oil, the refining cost and the pipeline transportation cost. Refining costs are at $12.6 per barrel and pipeline distribution cost are $1.50 per barrel. The Distribution Margins (Retailers, Transporters, Dealers, Bridging Funds, Administrative charges etc) are N15.49/litre or $16.58 per barrel. The true cost of 1 litre of petrol at the Mobil filling station in Port Harcourt or anywhere else in Nigeria is therefore ($5 +$12.6+$1.5+$16.6) or $35.7 per barrel . This is equal to N33.36 per litre compared to the official price of N65 per litre. Prof. Tam David West is right. There is no petrol subsidy in Nigeria . Rather the current official prices are too high. Let us continue with some basic energy economics.

The government claims we are currently operating our refineries at 38.2% efficiency. When we refine a barrel of crude oil, we get more than just petrol. If we refine 1 barrel (42 gallons) of crude oil, we will get 45 gallons of petroleum products. The 45 gallons of petroleum products consist of 4 gallons of LPG, 19.5 gallons of Gasoline, 10 gallons of Diesel, 4 gallons of Jet Fuel/Kerosene, 2.5 gallons of Fuel Oil and 5 gallons of Bottoms. Thus, at 38.2% of refining capacity, we have about 170000 bbls of throughput refined for about 13.26 million litres of petrol, 6.8 million litres of diesel and 2.72 million litres of kerosene/jet fuel.

This is not enough to meet internal national demand. So, we send the remaining of our non-export crude oil volume (275000 barrels per day) to be refined abroad and import the petroleum product back into the country. We will just pay for shipping and refining. The Nigerian government exchanges the 275000 barrels per day with commodity traders (90000 barrels per day to Duke Oil, 60000 barrels per day to Trafigura (Puma Energy), 60000 barrels per day to Societe Ivoirienne de Raffinage (SIR) in Abidjan, Ivory Coast and 65000 barrels per days to unknown sources) in a swap deal. The landing cost of a litre of petrol is N123.32 and the distribution margins are N15.49 according to the government. The cost of a litre is therefore (N123.32+N15.49) or N138.81 . This is equivalent to $3.54 per gallon or $148.54 per barrel. In technical terms, one barrel of Nigerian crude oil has a volume yield of 6.6% of AGO, 20.7% of Gasoline, 9.5% of Kerosene/Jet fuel, 30.6% of Diesel, 32.6% of Fuel oil / Bottoms when it is refined.

Using a netback calculation method, we can easily calculate the true cost of a litre of imported petrol from swapped oil. The gross product revenue of a refined barrel of crude oil is the sum of the volume of each refined product multiplied by its price. Domestic prices are $174.48/barrel for AGO, $69.55/barrel for Gasoline (PMS or petrol), $172.22/barrel for Diesel Oil, $53.5/barrel for Kerosene and $129.68/barrel for Fuel Oil. Let us substitute the government imported PMS price of $148.54 per barrel for the domestic price of petrol/gasoline. Our gross product revenue per swapped barrel would be (174.48*0.066 +148.54*0.207+172.22*0.306+ 53.5*0.095+129.68*0.326) or $142.32 per barrel. We have to remove the international cost of a barrel of Nigerian crude oil ($107 per barrel) from this to get the net cost of imported swapped petroleum products to Nigerian consumers. The net cost of swapped petroleum products would therefore be $142.32 -$107 or $35.32 per barrel of swapped crude oil. This comes out to be a net of $36.86 per barrel of petrol or N34.45 per litre.

This is the true cost of a litre of imported swapped petrol and not the landing cost of N138 per litre claimed by the government. The pro-subsidy Nigerian government pretends the price of swapped crude oil is $0 per barrel (N0 per litre) while the resulting petroleum products is $148.54 per barrel (N138 per litre). The government therefore argues that the “subsidy” is N138.81-N65 or N73.81 per litre. But, if landing cost of the petroleum products is at international price ($148.54 per barrel), then the take-off price of the swapped crude oil should be at international price ($107 per barrel). This is basic economic logic outside the ideological prisms of the World Bank. The traders/petroleum products importers and the Nigerian government are charging Nigerians for the crude oil while they are getting it free.

So let us conclude this basic economic exercise. If the true price of 38.2% of our petrol supply from our local refinery is N33.36/litre and the remaining 61.8% has a true price of N34.45 per litre, then the average true price is (0.382*33.36+0.618*34.45) or N34.03 per litre. The official price is N65 per litre and the true price with government figures is about N34 per litre (even with our moribund refineries).

There is therefore no petrol subsidy. Rather, there is a high sales tax of 91.2% at current prices of N65 per litre. The labor leaders meeting the President should go with their economists. They should send economists and political scientists as representatives to the Senate Committee investigating the petroleum subsidy issue. There are many expert economists and political scientists in ASUU who will gladly represent the view of the majority. The labor leaders should not let anyone get away with the economic fallacy that the swapped oil is free while its refined products must be sold at international prices in the Nigerian domestic market.

The government should explain at what price the swapped crude oil was sold and where the money accruing from these sales have been kept. We have done this simple economic analysis of the Nigerian petroleum products market to show that there is no petrol subsidy what so ever. In the end, this debate on petrol subsidy and the attempt of the government to transfer wealth from the Nigerian masses to a petrol cabal will be decided in the streets. Nigerian workers, farmers, students, market women, youths, unemployed, NGO and civil society as a whole should prepare for a long harmattan season of protracted struggle. They should not just embark on 3 days strike/protests after which the government reduces the hiked petroleum prices by a few Nairas. They must embark upon in a sustainable struggle that will lead to fundamental changes. Let us remove our entire political subsidy from the government and end this petroleum products subsidy debate once and for all. It is time to bring the Arab Spring south.

Izielen Agbon Izielen Agbon writes from Dallas, Texas. izielenagbon@yahoo.com

He is former HOD , Petroleum Eng Dept, former ASUU chairman University of Ibadan, trained many operators in nation's energy industry with pratical experience on our practices and policy focus in the last 20yrs

http://saharareporters.com/2011/12/15/real-cost-nigeria-petrol-dr-izielen-agbon

These numbers here are wrong. Believe at your own peril. I want Tam West to be the Petroleum Minister By May 29th 2015. Then we shall buy PMS at 34 Naira/litre. The US with the most efficient refining and produces 12 Million bbls buy at 1.2 dollars/litre. go figure. I am driving now. I will shred those figures into pieces when I park. That articule is a political article.

PassingShot:

Mister, GMB will remove any subsidy that may exist now and fuel price will not astronomically go up. Such action will only save Nigeria the money those cabals steal from our treasury. Try to reason!

Without Subsidy, The price will be 1.1 dollar per litre. Producing nation or no producing nation. corruption or no corruption. Total government hands off - 1.1 dollars per litre. It get worse with naira devaluation. The US with the most efficient refining system with a population of 320 million and production of 12 million bbl/day pays 1.2 dollars/litre, and you think you should pay less.


Read: http://www.economicshelp.org/blog/5862/oil/petrol-price-per-gallon-around-the-world/

adanny01:


I have a little problem with the analogy as it undermine the importance of petrol to Nigerians. You need fuel not just to power generators but for many other goods and services. The cost of those goods and services depends on the price of petrol so such goods or services will go up with the price of petrol. For example, due to the recent fuel shortage in which my initial petrol monthly spending is 25% of my salary, it is now 50%. I am now poorer than i used to be just because of fuel. i may need to dump my car and life becomes harder.

In the end, government will become richer if subsidy is removed, but Nigerians will become poorer. So removal is not the most suitable option. The best option is refining our own petrol. One more thing, the government who is crying for money has the responsibility of refining the crude oil, if they cant do it, they should bear the brunt not innocent Nigerians. Its their failure, so they should deal with it.

You do not need PMS for the Major economic drivers. Diesel yes, but not PMS. You want to waste 300 billion to 1 Trillion on petroleum subsidy and blame your government for infrastructural decay, No power, No light, external and internal debt, non payment of salary etc. You want your kids to be out of school, you want your wife to die in the hospital because you do not have good medicare, but you want to fuel your Gen in a leaking house? SMH

emiye:


Oga, what do you think is the average volume of petrol consumed by Nigerians daily?

We have a 445,000 barrels/day refineries, if the refineries have a 40% performance, that is like 175,000barrels /day.

What volume of Petrol , diesel, kerosene/jet fuel , will a 175,000 barrels/day produce daily?


I have other questions ? if you answer these ones, maybe i can proceed.

Anyone who can help to provide answers is appreciated.

The average petroleum consumed in litres in Nigeria ias 40 million litres. Only 30% of crude oil produces PMS. We have other by products too. Crude Oil is a complex mixture of various Hydrocarbons and some impurities like Sulfur, Nitrogen, metals etc, and different Crude Oils have different composition. There are again different types of Hydrocarbons present in Crude, which can be classified in various ways, but they can be classified in a simple way as Light, Middle, and Heavy Hydrocarbons (distillates). Petrol (gasoline) falls in the category of light distillates, and hence a Crude having higher fraction of light distillate can yield high quantity of Petrol. More over, heavier hydrocarbons can be broken down to lighter hydrocarbons which again increases the yield of light or middle distillates like Petrol and Diesel.

That said, only 52.500 bbls (8 million litres can be produced) Kapish?










[/quote]

Esdb3:



I'm sure whoever gave this answer is a rich man...... Do you know how 'cheap' 1 dollar is to Americans? 1 dollar will feed a man over here, that same 1 dollar is like 10 naira to an American man.... They pay per hour in America. You can earn 18 dollars per hour or in a day sometimes that is 3240..... How many Nigerians earn 3240 in an hour talk less of a day? Corruption is the norm of our society, people don't receive salaries for 7months sometimes. How do you want these people to pay 180-220 naira for fuel?
NIGERIANS CAN'T AND WE WON'T! WE CAN'T ENRICH THE RICH WHILE WE DIE POOR! A senator receives 2billion every year, he spends not more than 50million out of the money meant for empowerment, you want us to now pay more and probably increase his keep to 2billion? THINK PLEASE.

Poorer countries pay this. We produce 2.2 million barrels per day, rich countries like Russia US, China, India UK Brazil that produces up to 5 times more oil than we do pay this. Poorer countries like Haiti Angola Gabon also pay this. Even poorer and remote villages in Nigeria, burutu Nembe, mambila pay 200 plus for a liter. So what is the problem with it all gone?

Protest in Ojota to reduce your Senators Pay.

PassingShot:


In addition to all of these and especially the boldened, GEJ was completely wrong in just waking up to announce an increase in fuel price without previously discussing with major stakeholders. Nowhere in the world would such announcement have been allowed to stay unchallenged.

Anyway, we will soon know that the subsidy is a big scam.

This thread has nothing to do with GEJ. I am talking about my Tax being used henceforth to pay for subsidy. My kids future will be mortgage with debt if we continue like this

PassingShot:


Says who?

Have you checked fuel price in OPEC economies?

Even though we don't refine our crude, there are other arrangements we can have with some international oil companies that operate in Nigeria but have refineries outside Nigeria to refine some crude for us for cheaper rate.

Most OPEC economies do subsidy. The good thing about is that while some have a much more diverse economy, others have smaller population.

The UAE is 8 million migrant and 1.4 millions citizens. Budget is in excess of 4 trillion Naira. Economy is so diversed that only 4% of oil revenue go to Dubai city budget. If AkwaIbom gets 4 trillion annually, let me see how it won't be Dubai with free fuel.

i really do not know how to explain to these guys that we cannot afford it. No country with a population of 150 million plus pay subsidy on PMS.

Let them keep hiding under masses. Borrowing money to enrich few rich men. Sometimes I feel like disowning this country. People you try to help are the same people killing you.

holuphisayor:

I don't accept the fact that Nigeria can't build even 10 refineries when Libya can and also sell PMS far cheaper than nigeria . if you say 3billion is enough to build one refinery....what about the unremitted $20billion....will it not go a long way in turning around our petroleum industry?

Look at your annual budget and tell me where the money will come from?

989900:


Well said.

I posted the below yesterday:


For those asking why we were against subsidy in 2011.

We were against it because;

1. We can't fathom how subsidy payments that never exceeded N200-N300b naira for the past years would suddenly leap to N1.3t (roughly 400-500% increase) within the first year thereabout of President GEJ -- we were shocked. #fraud.

2. We also could not fathom how any half-sane man could be drilling oil in his backyard, with 4 refineries in his backyard (with land and space to build more, and 11 licences issued already to build more), but still imports finished petroleum products. (OBJ and GEJ=culprits).

3. To the common Nigerian man, the only 'direct' benefit he gets from the government is, the so called 'subsidized fuel', which we later discovered to be a farce after all . . . so when you are going to take those extra litres/miles from him, or make him pay extra to get them, he has no choice than to revolt/demonstrate/remonstrate.

4. Unless you are among the 1% of the 1%, every other person on the street knows fuel scarcity goes along with insane inflation.

5. You ask him to make sacrifices while the president feeds on N3m/day and has 10 aircrafts in his fleet, his senators get paid more than their counterparts in the richest country on earth. Yet, they find it hard to pay same minimum wage paid in the poorest countries on earth!
How can we trust people of that ilk?

6. ATEOTD, subsidy was partially removed with promises of palliatives, and prosecution of the defrauders aka 'cabals', what did we get?Nothing, bar further fraud and corruption; from bribery scandals up to the speaker of the house (Cabal Otedola, well played) to mismanagement of the said saved funds from subsidy payments.

How can you trust such people?!!
Same people from the NNPC to the Petroleum ministry, to the CBN, to the Finance ministry, Budgets, both houses, up to the presidency that have no reliable database of how much oil is being drilled/sold per day, nor how much NNPC refines locally, nor how much we do consume/day.

It is not a benefit inany way. PMS subsidy is giving you 20 Naira and taking 200 Naira from you.

PassingShot:

These people will buy their head in shame soon when they find out that we still buy fuel at about the same price now even without "subsidy".

We have been scammed by Jonathan and his cohorts but soon the whole world we tremble when revelations start to come out!

It is mathematically impossible to buy PMS below 1 dollar per litre at the current crudeoil price without some form of subsidy

Rich4god:
Price of PMS in Venezuela is less dan 50naira per liter.... For those of you thinking its difficult to go below the present 97 naira..Abi no b d same refinery dem dey use refine dia own oil... The problem is our govt and corruption...

The price of toothpaste and other groceries in Venezuela is 0 Naira.

PassingShot:


You will be surprised that even after the "subsidy" is removed, fuel will not sell for more than 100 naira a liter. You know why? It's because most of what is claimed as subsidy for fuel consumed locally is false. No subsidy in the true sense of that word.

you can not change the worth of a product by just wishing. It is 1.1 dollars per litre.

holuphisayor:

govt also needs to build more refineries before removing subsidy

A cheap 60K capacit refinery will cost 3 billion dollars we need 6. Government is broke and dont have money to build. If they do? they cant maintain it. It is the practical fact. Only private individuals can. They wont if you have full government interference just like the markerters are facing at th moment.

Doracle2:
With the reduction in crude oil price by almost 50% in the last 10 months, not sure we would be paying more than N120 without subsidy.

There should be plans to refine locally which should further reduce the price of petroleum products

You would. Think exchange rate. price in internation market plus/minus 1.1 dollars per litre.

Sibrah:
Intellectual subsidy!
Why is diesel still fixed at N140/Ltr when price of crude has gone through series of fluctuations since 2012?

The price of crude oil is not directly proportional to the price of diesel. In other words if the price of crude oil is reduced by 40 percent, the price of diesel will only reduce by 5% or less The reason being diesel is a necessary by product from the very cherished PMS. It's prices are determined by refining margins amongst other factors. These margins are calculated from the composition of crude refined

The price of diesel has dropped in several countries but risen in others. From July 2013 to July 2014 (oil price peak), the retail price of diesel dropped by 3.6 percent in Germany. In Japan, prices increased by 9.7 percent during the same time. The United Kingdom had some of the highest prices for automotive diesel, reaching 1.93 U.S. dollars per liter in July 2014. Today in the UK, the price of diesel is 1.91 U.S. Dollars.

bandely:

I see some folks hammering it that they told the rest of
Nigeria that "subsidy" should have been totally removed in
2012.
Well, I (and I know a lot of people too) supported the "non-
removal of subsidy" then on the grounds that:
1. Technically, they may not have been anything called
subsidy, as GMB reiterates in his recent interview with Daily
Trust. Rather, what we might have had were loopholes for
people who were hell-bent of running the country aground.
Suffice to say the "subsidy" may have been a facade


It exist.


[quote author=bandely post=34137697]
2. The second and most important one is that, even if there
is subsidy, the government of the day (2012) cannot be
trusted with the money realized from total removal of
subsidy, due to the perceived gargantuan corruption and
misappropriation that went unabated in the administration.
The logic was, we know they are going to steal it, then let's
have it in whatever manner instead.
I make bold to say it was the best decision to take as at then, and I'd gladly support it again (given the same
circumstance), afterall, in the end, the GEJ administration
did not act contrary to our belief that the money would
"disappeared" via corrupt means as witnessed with SURE-P
fund, the CBN-NNPC $20Billion among others.
However, an opportunity presents itself for GMB to totally
remove the subsidy, if at all the scheme exists! Nigerians
won't complain much this time, afterall, they've bought it
already this week for around 500naira per litre.

Corruption or no corruption, Nigeria is poor and cannot afford to pay subsidy on PMS. If subsidy should be paid it should be on diesel that runs the economy not PMS

Realdeals:
@ gohome

What happen to the 445,000 barrel of crude produced for domestic consumption

450,000 for domestic consumption does not fall from the sky. You have to produce it. It cost 30 dollars per bbl to produce it. Do the maths. Depending on the oil price, you have the potential to lose 9 billion dollars a year just because you would not sell it. In total we are talking 15 billion dollars. Does it make sense to borrow money and pay for subsidy? With an infrastructural decay that needs hundreds of billions to a trillion dollar to fix, you want to pay subsidy? You are in a country where the government expenditure per person to tax is the highest in the world and you want to still pay subsidy. Your economy (mass transit, banks and industries) runs with diesel not PMS

Realdeals:
subsidy a scam! visit this thread https://www.nairaland.com/2339465/buhari-not-use-oil-marketers

"...In the short run, we will not use the marketers for the PMS importation... we shall give all our local PMS needs that NNPC cannot refine to foreign firms to refine for us and pay them the cost of refining...
"We shall provide transport to ship crude to and from the foreign refineries and pay the cost of refining for us...I believe that will remove the subsidy fraud in the short run...
"when I give you 200,000 bpd to refine, you must give me the equivalent outputs that it will bring in kerosene, PMS, Diesel etc...
"...But in the long run, we shall encourage local refineries..."

If you can do this, the you can run your refineries. The sad part is you cannot. Let the Market drive boom in the downstream sector. Alot of potential we have lost with government interference.

Yomieluv:
If subsidy is true,why is the government afraid to remove it?

And what are the benefits of subsidy removal?

Your budget is a mere 4 trillion. Guess what the budget of New York City with 8.9 million people alone is 15 trillion. Your government is poor, it needs money from anywhere. Help it.

Help it create a level playing field to unlock new opportunities. If we show investors we can buy fuel at 200 to 250 naira a liter, you will see them come. We then will be talking about 200K direct jobs easy and another 5 million indirect jobs.

Your country is poor. You need to start paying at least 30% tax so your government can run your country.

If you need to subsidy, it should be on diesel not PMS. Diesel runs the economy not PMS. People that create jobs power their industry (Oil, Bank, Textile, Telecoms etc) with Diesel. They need a break. The Polical will to take PMS subsidy out is the problem.

bignene:
if civil servant are to buy Pms for 180-220 per liter,there is need for salary increment

No need for salary increment. More recurrent expenditure. Just need to put infrastructure in place. Tell your state Gov to provide diesel engine power public transport

Segadem:
Let be truthful to ourselves, are we ready to buy a litre @ N145 or more?
Are we ready to pay times two of what we are paying right now as transport fee,even wen ur salary still remain the same?
if ur answer it yes,then no problem.

We were at 65 Naira, It increased to 97 Naira, Did we die?

omenka:
Interesting!

I have just a few questions.


1). How much were previous administrations paying for subsidy??


2). How much did Jonathan pay on assumption of duty as the president and in subsequent years as president??


3). What necessitated the geometric increase in the expenditure on subsidy soon after Jonathan took over?? It was about 300billion on the budget but burgeoned to nearly 2trillion at the end of the fiscal year. Was there a corresponding increase in the demand of products to have warranted such increase in "supply"?? Did Nigeria get thirstier for petroleum products??


4). Was there any supplementary budget passed by the NASS to accommodate the increase as stated in #3??


5). There were about 40 importers of products prior to Jonathan's regime. After he took over, the list went over the roof to about 150!! What was the reason behind this??


#waiting.

Cc: gohome.

I am not a politician. I am a resercher. This topic has nothing to do with Jonathan. The thread is for you to prove if PMS subsidy should continue, if yes why and how.

shiftmarket:
Subsidy 101: Q &A on Subsidy.


Good. Same thing can happen to petrol even if u remove subsidy or not. So in essence we can both agree that subsidy does not magically solve our problems as u wud have us believe. All the other quoted rhetorics are just that.

A proper investigation will show for example why a refinery is always on TAM as u claim they are. Just for ur info, are u aware that the Nigerian refineries do not get their share of crude to refine?[/i]

Answer

ohzee(f): I believe the reason that the price of diesel is high is because it is not lucrative to import it. The marketers simply ignore it and all rush for the beautiful bride called PMS because of the subsidy they will get from govt. This creates artificial relative scarcity of diesel and the price remains high.

Sibrah:
Subsidy 101: Q &A on Subsidy.:
It all depends of the reputation of the government in charge. If issue of systemic corruption can be tackled by the sitting government then subsidy can go. That's to say If for example Buhari admin is ready to face the challenges of Diesel selling for same rate it sold for in 2012 Jan, when crude price was more than double it is now, then he can remove. If not removal of subsidy will only be a licence for the marketers to form a cabal and be the new government of fuel.[/i]

Answer

[b]The price of crude oil is not directly proportional to the price of diesel. In other words if the price of crude oil is reduced by 40 percent, the price of diesel will only reduce by 5% or less The reason being diesel is a necessary by product from the very cherished PMS. It's prices are determined by refining margins amongst other factors. These margins are calculated from the composition of crude refined

The price of diesel has dropped in several countries but risen in others. From July 2013 to July 2014 (oil price peak), the retail price of diesel dropped by 3.6 percent in Germany. In Japan, prices increased by 9.7 percent during the same time. The United Kingdom had some of the highest prices for automotive diesel, reaching 1.93 U.S. dollars per liter in July 2014. Today in the UK, the price of diesel is 1.91 U.S. Dollars.

With all due respect do some reading and appreciate international commodity pricing. It's is not as simple as buying and selling tomatoes and pepper. The internet has a huge database base.[/b]

Wirinet :
Subsidy 101: Q &A on Subsidy.

[b]
wirinet(m): You are being myopic in this your analysis, you are not looking at the bigger picture. This petroleum subsidy issue is mired in so much mystery and confusion that nothing definite can be known unless there is a forensic audit of NNPC and the whole process.
We need to know exactly how much fuel is consumed, how much it cost to buy from foreign refineries, how much it costs to ship to Nigeria, how much it costs to distribute to various depots and how much it cost to dispense in your cars.What are the costs of corruption and innefficiencies in the system, then we will be in a better position to debate whether we should retain subsidy or not.

Having said that, i am not a fan of deregulation in a critical sector like the petroleum sector. There is never deregulation in the real sense of the word in any country in the world, government always regulate to some extent all industries in order to prevent abuse, monopoly and to protect public interest. It is the degree of regulation we should be debating about. "Deregulation" is good in situations with efficient market economy with strong institutions, but had been proven to be disasterous in countries with inefficient or underdeveloped markets with very weak institutions. All you will produce is monopoly or Oligarchy and the masses being at the mercy of a few powerful cabals.

This is what we have in almost all sectors of the Nigerian economy that had undergone deregulation. This is why deregulated Diesel and aviation fuel will never be cheap and available. This is why DSTV, MTN, Etisalat, etc can charge the masses very high tarrifs with very poor services. This is why deregulated NEPA is worse than regulated NEPA. I can go on and on. Before Thatcher deregulated or privatized the British economy, she made sure that the public run enterprises were running optimally and efficiently and very efficient regulatory bodies were in place

[/b]

Reply to Wirinet Comments


wirinet:


You are being myopic in this your analysis, you are not looking at the bigger picture. This petroleum subsidy issue is mired in so much mystery and confusion that nothing definite can be known unless there is a forensic audit of NNPC and the whole process.
We need to know exactly how much fuel is consumed, how much it cost to buy from foreign refineries, how much it costs to ship to Nigeria, how much it costs to distribute to various depots and how much it cost to dispense in your cars.What are the costs of corruption and innefficiencies in the system, then we will be in a better position to debate whether we should retain subsidy or not.

This analysis has been done by so many Nigerians. It has been done by your neighbors, Ghana, Togo etc. It has been done by your felow African brothers like Kenya SA. The world bank too has done this shockingly. The Average Price (landing cost) of crude oil is +/- 1.1 dollars per liter. It can vary based on Transportation, grade of refine products and taxes.


wirinet:

Having said that, i am not a fan of deregulation in a critical sector like the petroleum sector. There is never deregulation in the real sense of the word in any country in the world, government always regulate to some extent all industries in order to prevent abuse, monopoly and to protect public interest. It is the degree of regulation we should be debating about. "Deregulation" is good in situations with efficient market economy with strong institutions, but had been proven to be disasterous in countries with inefficient or underdeveloped markets with very weak institutions. All you will produce is monopoly or Oligarchy and the masses being at the mercy of a few powerful cabals.

gohome: If you do not deregulate, you wont build efficiency in Nigeria. Refining margines are very small with the volatile oil market you have. Big players like Shell BP Total etc would not build refineries if you do not let you government hands off. When Dangote's refinery is ready he will sell to Ghana, Togo and the likes if your Govt does not hands off. Fuel is not cheap. it is 220 Naira per liter. Get use to it.


wirinet:

This is what we have in almost all sectors of the Nigerian economy that had undergone deregulation. This is why deregulated Diesel and aviation fuel will never be cheap and available. This is why DSTV, MTN, Etisalat, etc can charge the masses very high tarrifs with very poor services. This is why deregulated NEPA is worse than regulated NEPA. I can go on and on. Before Thatcher deregulated or privatized the British economy, she made sure that the public run enterprises were running optimally and efficiently and very efficient regulatory bodies were in place.

gohome:

Thats the good thing about deregulation.

MTN better than NITEL
DSTV better than NTA
NESCO better than NEPA.

If you choose to use NITEL because MTN service is not good, go ahead. If you choose to watch NTA, go ahead. If you choose to use NEPA instead of solar and inverter, or NESCO go ahead.

NESCO is an independent power company in Jos that supplies 24 hours light to its customer


Reply to Shiftmarket Comments

shiftmarket:
Subsidy 101: Q &A on Subsidy.

If u have read all my dialogue with bara, I have always said corruption not subsidy removal is our (Nigerian) problem. Corruption shot up d value from 350billion in 1yr to 1.1T. It is those mysteries that must first be unravelled. Then we can decide and know the exact amount we are removing. [/i]

gohome: I will say it again. Corruption is one of the problems. Maybe the major problem, but it is not all the problem.

The best way to fight corruption is to totally remove what fuels the corruption. It is that simple. Also 100 billion, 350 billion, !1 Trillion, we do not have the money to pay for subsidy.

shiftmarket:
Subsidy 101: Q &A on Subsidy

I supported deregulation in 1999, which to my mind is another name for subsidy removal but btw then and now no gained in the whole process. Simply frees up more money for politicians to steal. That is the issue Oga.

[/i]

gohome: If you can trust them with 4 trillion annual budget, then trust them with 1, 2 300 billion. y dont you go collect the 4 trillion Naira because you dont trust them with it and put in your house. You want to waste 300 billion on petroleum subsidy and blame your government for infrastructural decay, No power, No light, external and internal debt, non payment of salary etc. You want your kids to be out of school, you want your wife to die in the hospital because you do not have good medicare, but you want to fuel your Gen in a leaking house? SMH

shiftmarket:
Subsidy 101: Q &A on Subsidy

If subsidy removal is the only solution to scarcity why is diesel scarce to the extent that businesses were shutting down? Diesel is not subsidised and I believe u know that.
[/i]

gohome: Subsidy removal has nothing to do with scarcity. PMS subsidy does not exist in 90 percent of the countries in the world, yet no scarcity. Why should it be scarce in Nigeria. No subsidy in Ghana, Niger, Togo, Benin, Kenya, SA, No scarcity. PMS is available worldwide if you want to have it at 1.1 dollars per liter. The only reason for Diesel scarcity is the fact that marketers refused to lift. If MTN refuses to give you service, Etisalat will. If OandO refuses to give you diesel, Capital Oil will. Deregulate the downstream sector is the only way. 3% of your budget goes to your National Assembly. Let them pass law and implement policies to guide against capitalism excess. Go and read about the meager between ATT and Tmobile.

SubsidyRobust Wirinet Comments:
Subsidy 101: Q &A on


The analysis was done using wrong parameters and premises. Nigeria own the basic raw materials for making petrol and petroleum products - Crude oil. 450,000 BPD was set aside to take care of domestic requirements, which is not subject to international market price. Nigeria OPEC quota is about 2.2millionBPD, our current production is put at about 2millionBPD, so nothing stops us from removing the 450,000BPD for local consumption. The actual cost of the 450,000BPD will just be exploration, drilling and transportation cost, which should not be more that $20 per barrel. Since we are unable to refine, nothing stops the government from contracting the refining of the refineries abroad and transporting the crude to the refineries and transporting the refined products back into the country.


In the alternative, nothing stops the Federal Government from putting the refineries in order. It is we the masses that makes excuses for government that government cannot run refineries. If we come together and demand that the refineries must work, the refineries will work.





That is where i disagree with you, deregulation does not lead to efficiency in an inefficient market. Yes, refining margins are very small, that is why i insist that the refining of petroleum products should not be left at the hands of the private sector - whether refining or marketing. Availability of cheap fuel must be a fundermental government responsibility as it affects every facet of our lives. Shell, BP, Total, etc can and should never be interested in refining, their expertise and interests lies with exploration and exploitation of crude not just in Nigeria but the world over. They are satisfied with the huge margins they make in the 40% they make from all sales of Nigerian oil. If Dangote refinery is ready he can negotiate with NNPC on how much he will buy crude oil, but he must never be subjected to international price since the crude is obtained locally. Besides that should not affect the 450,000 BPD that is meant for the Nigerian people.

Fuel can be cheap, Fuel is very cheap in UAE and most of the Arab countries. Nigerians cannot afford to buy petrol at N220/litre. The cost of transportation of people and goods would sky rocket, most homes burn about 4 litres a day in their generators to get a few hours of electricity. Most businesses from telecommunications to manufacturing to banking depends on diesel. The inflation would be unbearable. The pressure on the Naira would be tremendrous. Devaluation of the Naira would make nonsense of the N220 in no time, as we buyimport our fuel in Dollars. All these while minimum wage will still remain at N18,000.

If you feel we should be paying N220/litre for petrol, how much do you think the minimum wage in Nigeria should be? And how much do you think the various governments can afford?



I do not know about NESCO, but Ikeja Distribution Company is horrible. The power situation is horrible and they still have horrible practices like the old NEPA, like high bills, non supply of meters, carrying of ladders up and down, etc.

Like i said earlier critical industries like power and education should not be left in the control of the private sector. It is even a threat to National Security.

Reply to Wirinet Comments

[b]450,000 for domestic consumption does not fall from the sky. You have to produce it. It cost 30 dollars per bbl to produce it. Depending on the oil price, you will likely lose 9 billion dollars a year. This is minus the so called subsidy. With an infrastructural decay that needs hundreds of billions to solve, you want to pay subsidy? You are in a country where the government expenditure per person to tax is the highest in the world and you want to still pay subsidy. Your economy (mass transit, banks and industries) runs with diesel not PMS.

What is the population of the UAE? You are 170 million boy. It is not affordable.

Your budget is a mere 4 trillion. Guess what the budget of New York City with 8.9 million people alone is 15 trillion. Your government is poor, it needs money from anywhere. Help it.

Help it create a level playing field to unlock new opportunities. If we show investors we can buy fuel at 200 to 250 naira a liter, you will see them come. We then will be talking about 200K direct jobs easy and another 5 million indirect jobs.

Your country is poor. You need to start paying 30% tax so your government can run your country.

Buhari will not pay a dime on PMS subsidy. Petrol will sell at 1.1 dollars per liter. Unless he wants to throw away 9 billion dollars (465000 bbl) another form of subsidy. You won't die. My grandma in the village buys petro at 210 per liter, food are transported via diesel, mass transit is via diesel, industry via diesel. Nothing will happen

Because 9 million people with a budget the same as yours can afford it doesn't mean we can.

The UAE is 8 million migrant and 1.4 millions citizens. Budget is in excess of 4 trillion Naira. Economy is so diversed that only 4% of oil revenue go to Dubai city budget. If AkwaIbom gets 4 trillion annually, let me see how it won't be Dubai with free fuel.

i really do not know how to explain to these guys that we cannot afford it. No country with a population of 150 million plus pay subsidy on PMS.

Let them keep hiding under masses. Borrowing money to enrich few rich men. Sometimes I feel like disowning this country. People you try to help are the same people killing you.

[/b]

Shiftmarket:
Subsidy 101: Q &A on Subsidy


Am not sure I understand you but fact is the whole subsidy issue is shrouded in mysteries. Once the real position of things is known, Nigerians can now decide if they want subsidy or not.

Kindly explain why radio, TV stations, banks and telecoms are shutting down because of diesel. Or is diesel subsidised?
[/i]

Answer

[b]The subsidy issue is not shrouded in mystery. You have chosen to be ignorant. The average price of PMS around the world is about 1.1 dollars per liter. That's 220 Naira per liter. Poorer countries pay this. We produce 2.2 million barrels per day, rich countries like Russia US, China, India UK Brazil that produces up to 5 times more oil than we do pay this. Poorer countries like Haiti Angola Gabon also pay this. Even poorer and remote villages in Nigeria, burutu Nembe, mambila pay 200 plus for a liter. So what is the problem with it all gone? I'm 2012, sanusi and Iwealla with Allison went round TV stations explaining the steps to fully deregulate the downstream sector, no one listened. 65 Naira or nothing was the chant. I remember when Sanusi said the best way to put a fire out is to eliminate the source of the fire.

It was shame that GEJ and his ministers did not have the political tenacity to completely do way with this fire. Buhari seems to have it. He will remove it, fuel will sell at 180-220 per liter[/b]

Question

shiftmarket:
Subsidy 101: Q &A on Subsidy:


OK. You have tried desperately to take us from the crust of our discuss. My first post says subsidy is not the issue in Nigeria at the moment, corruption is. I have said this at least 4 times.

Bringing the issue of government refineries vs private refineries is a different topic entirety. Pls stay on topic and teach ur students to do same.

Answer

[b]Nigeria can no longer afford to pay subsidy on petroleum products full stop. Corruption or no corruption we do not have the money to pay. You have to let it sink in your head. We have an infrastructural decay that will take 200 billion dollars to fix, you have annual 'deficit' budget of less than 20 billion dollars of which 40 percent is used to fund lazy states and you want to continue to spend 25% of your the remaining budget to subsidize PMS?

Hope the anology below helps

You are the head of your house, and you have an annual budget of 100 naira. Rent in a dilapidated house is 20 Naira. School fees is 20 Naira. Transportation to work and school is 30 Naira. Fueling your generator is 30 Naira. Let say you want to start up a new business to increase your income and as such you need to save 20 Naira. You also need to move from your present apartment because the ceiling leaks water any time it rains, which will require you save an extra 10 Naira. You took a loan from the bank, and the monthly deduction is 10 Naira. You have relations that cannot run their family and they have come asking for money because the landlord is about to evict them from the house. In the middle of all these, Something happened and your annual budget is reduced to 50 Naira. Will you keep paying for fuel to light up your house while you cannot pay rent and your kids can not go to school?

Before you critic always put yourself in a leadership position and provide practical solution
[/b]