₦airaland Forum

@ chuxyn
fuel subsidy removal is not deregulation as it stands.
the viable arguement that the govt makes over 140million usd daily in oil export daily is true.
the 2011 budget had 240bn naira as subsidy till corruption finished the system.
Nigeria can comfortably afford as much as 500b anually. paying subsidy is not a soln but local production capacity is. oil and gas and telecoms or airlines buisness are not the same. things will get worse. in the international market crude is already expensive so what are you deregulating? perhaps profit margin but the landing cost will still be high and there is no hope in sight of oil prices going down in the next 5 yrs.
the US naval war college has realeased a statement that it will take 5 months to neutralise iranian blockade at the strait of hormuz should iran carry out its threat.
that alone will cut off 60% of world oil supply for a while, what will be the price of crude with 60% supply cut? and how can Nigeria survive those 5months?
rem. that the prediction is not sacrosanct just like they thought they will finish iraq in 6months but ended up staying 8yrs.
you cant imagine what jona has done till you buy petrol at 1k/l and trust buisness guys their price no dey come down.

let me remind you that this stock of pet.products had subsidy paid on them and people are selling as much as 150,
check oil price as we speak the next consignment will come almost 200bucks.
deregulation will only work in the oil industry if you have the structure that support it.
jonathan is not smart, if he can guarantee cheap oil in this country, a lot of investors must come to build refineries.
did you remember when people were saying that Mtn wont survive the nigerian mkt because of lack of electricity?
what happened ?the natural Nigerian mentality plus corporate patronage blessed them.
if Nigerians had angolean mentality, mtn wont stand a chance cos the exploitation was glaring.

dont tell me abt the airline industry,Nigeria till date still has one of the most expensive air services in the world.
if your idea of degulation is high price then u dont have a point.
competition forced telecom price down, in oil lifting, it is a different ball game the landing cost must be high since crude is already expensive in the. intl market.

I feel sorry for Nigerians, we love hearing stories pls lemme remind you that jonathan has a lot of fair options, this is extreme, a corper I saw today was begging for transport to make it back to the east.
jona decieved us with saving money. where is best to save money if you are in his shoes?
run an expensive govt or take food from the poor?
I am yet to see the sagacity behind this subsidy removal if he cant fight corruption there in. is jonathan saying that should corruption creep into the subsidy funds implementation regime he will scrap it again?
jonathan sounds like a college boy.
where will he get the money to implement his palliatives? every sector of the economy has been budgeted for
or are we paying diff for govt functions? I dont just get it. where did obasanjo get this daft from?

occupy and torch every govt offices, torch every refuelling station belonging to the cabal since jonathan is scared of them
burn these bastards alive,

@mr know all,
you are a beast, my president will enjoy a meal of 1billion this year while I drive around with blood fueled by darkness after 23yrs of paying tax.
guy abeg comot mouth for Naija matter concentrate in ur Uk mortuary attendant job.
petrol dey 11naira you disappear to the uk come and enjoy it at 150
scrotum like u

yeah ph is a dead city at the moment peeps aint back from xmas break, it must happen everywhere the suffering is just too. much, where are the unemployed youths?

@ papabrowne
I can confidently tell you that this administration that makes over 140,000,000usd on daily bases can comfortably afford an annual subsidy of 200bn naira.
the question is,
how did corruption push it to 1.3 trillion a quarter which we cant afford?
the round tipping guys have they been arrested?
the custom guys that encourage smuggling through our borders have they een arrested?
you should start from the simple step before going to the more difficult step.
I propos local production capacity as the soln but I knw we cant achieve it in a day,
while we pursue the solution, we can maintain a low subsidy void of corrupt practices.
go to any depot and see what is going on there, corruption at full glare and our scrotu.m of a president chose to do nothing instead make the crimminals richer from my own pocket.
WTF

@ timmy quit cursing

there is a civil rally on the 3 rd, join the rally and incript your opinion on a huge placard,
if it turns violent, give ur blood for the good of you generation, pdp must go.
occupy all govt houses and buildings, bros just called office has sent circular on downsizing, 40% job cuts
give us heads up what is happening in your various offices

@ point b

well, you have a point because there was a. prediction about today by experts one professor of pet eng university of ibadan in 1992.
he said that Nigeria will meet disaster if we continue depending on crude from the ioc's, the good news is that babangida listened to him, it was during that era that Nigeria sort local production capacity, I can still remember when buhari as the petroluem minister was saying in his crude hausa accent that our oil will be useless if we dont own it all.
when I grew up I now realised nigeria owns just a part of their oil and they are not making effort to help themselves, I was telling my uncle yesterday that this country has no oil of their own and he said im deluded, but that is the reality.
if we make a cut fom our 60% what do we implement budget with?
oil prices are soaring, instead of being a blessing like libya it turns out to be a curse because we have a woman as a president.
his campaign was intense and I knew it will come with a price.
I only differ in ur opinion where you tried to absolve jonathan to blame the past leaders,is like comparing a Roosevelt who saw a world war with a bush who saw a terrorist attack.
the evidence before me is glaring that jonathan odechukwu caused 90% of this problem.
he increased minimum wage without due consultations with state governors just to score an election cheap point
why will he do that is he insane, what is the internally generated revenue plus federal allocation of jigawa and Anambra states to skyrocket their recurrent expenditure to almost 3billion naira monthly.
is he from the gutters, does odechukwu not knw the implications?
ok, what he could have done was sanction an inceeament so that the states will pay what they can afford, because of this huge error the states demanded for excess crude revenue which accrued to us from high crude price.
this same high crude prise gave us high subsidy.
now that Ecr has been shared, subsidy becomes recurrent expenditure and we are shouting.
1.3trillion is not a joke no reasonable govt will be spending it like that, but the big question is; what can we do to trim down the cost, odechukwu blatantly refused all the options.
the good ones are
1 remove storage from subsidy for god's sake those importers must store at their own cost, it is unreasonable to pay profit to someone on his commodity and still pay storage for him its like govt paying for warehouse for all the Alaba importers.
2 remove demurrage from subsidy, let the importers design and maintin their import itinery and schedule, odechukwu refused
3 let subsidy be paid by type of product, someone that imports ethanol used to blend high grade petrol is paid same squre subsidy rate that is wrong
3 fight corruption in round tipping people collect subsidies 3 times on the same vessel he refused again
now tell me if jonathan is not culpable?
if he had done all these, the subsidy price will be down to 200billion annually, within which we do something about Npdc.
a lot of peoople errorneously think that high pump price will attract investors to build refineries that is a dead man's approach because increase in pump price will cause inflation which will translate to high cost of production for the investors.
what will attract investors is to have cheap crude on ground, nnpc's npdc has already failed in that light and jonathan is not telling them jack.
read and understand my post and tell me exactly why jonathan is not culpable.
as u pay this new pump price, you are paying for gross govt ineptitude.

@all4naija
you are a block head because you dont understand what has been explained over and over again
you re a stone skull because you dont know the profit margin of oil companies in Nigeria
you are an illetrate because common sense could have told you to hide your ignorance.
this price you are seeing will get worse by next week, by next month we will start sacking your parents from work because my profit can no longer sustain their pay,
all you charge and bail nairaland economists, if u believe in subsidy,your ignorance stink to high heavens. let me say it for the upteenth time.

a country like Nigeria has no buisness paying subsidies on petrol.
the oil fompanies that drill this oil have told us it is costing less than 12usd/barell, based on that info the govt set up a subsidiary called Npdc charged with giving us our own cheap crude
after 23yrs of sleeping they could manage to produce a paltry 90,000bbl/day which is not enough
to make up for the short fall the govt resorted to importation, from import to crude exchange then to this mess.
people that dont know what is happening are just whinning, the govt is just trying to cover up a huge ineptitude here.
the bigger cover up is the fact that jonathan used subsidy regime to settle political bigwigs during his campaign as it stands, the corruption in the rgime that soared a 200billion naira venture to 1.3trillion will never be looked into,
iweala saw the mess and promised to clean it up and that was why she was hired as head of exonomic team.
a proposal was given to jonathan to break the hands of corruption to drive down the cost of maintaining the regime, he refused because he is scared of what the bigwigs will do, then iweala passed the bulk from the fg to you.
the bigwig re making 4times their profit now than before. by next week when the first shipment arrives price will be 210 naira,God help us iran doesnt carry out their threat to cut off major oil supply,
if he does then brace youeself for 480naira per litre so experts assume
PDP has fu.cked us.

and we take this? subsidy or no subsidy is a lose lose situation for us, jonathan do what oil and gas experts told you
God has given us a pump price of less than 25naira per litre, we dont need your subsidy it destroys the economy.
Npdc after 23years should guarantee our local production capacity which will bring cheap crude to the market.
subsidy is a monster to cover up ur ineptitude, now that it is obvious you can no longer maintain the subsidy regime coupled with the fact you swore to your deities that you wont fight corruption.
take your subsidy give us a local production capacity. all the oil companies produce crude at less than 12usd/barell,
investors will refine it and guarantee a pump price of less than 30naira.
subsidy is the biggest scam in Nigeria's oil and gas history, local production capacity is the way to go.

I wish that odechukwu will wake from slumber and fight corruption in this country

I wish beaf will be infected with incurable leprosy this year

gbawe, do you know that majority of NL are m0rons? how do think you can ever sell a reasonable point?
these were the same people that were warned before hand before electing odechukwu, 8 months on they are regretting, now they want to support subsidy because an insect like beaf tells them
I feel sorry for some Nigerians who have mortgaged their common sense.
gbawe wait till they experience what is going on in ghana now then I will see whether they can weather the storm

look at the people fighting for the common men, the falanas are living far above average and efisher and beaf think they have a point.
well, for the other guy that think subsidy removal will give him refinery jobs please read this; while reading prepare to march at eagle square on the 3 rd of january if your dream of getting a good job will materialise in this life time in Nigeria.
How many of you have researched on this subsidy issue before taking a stand?There are more misnomers than facts surrounding this subsidy brouhaha.First, the Govt said the economy will collapse, ridiculous indeedsecondly, the Govt said oil importers are a 'cabal', nearly fell off my seat.Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenon gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics, storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance not oblivious of the fact that the landing cost is higher than the stipulated priceTo my greatest chagrin, the Jonathan’s administration woke up and termed them 'cabals' who are fleecing the nation.
Let me remind you that same last year shortly before the elections, this same Jonathan increased the number of pet. Import licenses and signed new pet. Supply deals with foreign refineries that guaranteed stability during the festive period just to score a cheap election point. Today they have become “cabals”Assuming Ruben Abiati goes abroad to buy a TM underwear for 1k and decides to sell it 1.5k adding purchase price  plus logistics plus profit and the Govt tells him to sell at 900 naira, won’t he ask for the 600naira balance?  When the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?Are we this docile? If Nnpc lived up to their responsibility, we won’t have need for the importers in the first place.Why is Jonathan so insensitive?
There is serious round tripping going on in this subsidy regime and he turns a blind eye
NNPC has very low storage capacity for both refined and imported products hence they rely on private tank farms for storage who charge as much as 6 naira/l can you imagine? These same marketers in connivance with NNPC under quote the stored products, which country operate like that? A product whose subsidy is over 70 naira? and Jonathan feigns ignorance because he is scared of corruption or what?
What kind of leadership is this?
Nigeria is the only country whose regulatory agency have no rating for petroleum products ,leaded and unleaded, low grade, mid grade and high grade Pet. Products what a chemical blunder, yet they pay a level subsidy for even ethanol blended products cheapest in other countries, yet someone is sitting at helm of affairs? Some one that brings in a high grade petroleum product is paid the same subsidy as someone with crap oh!! Nigeria
There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeasances?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.This is the si1liest approach any human being with brain if they have one can summon. Thirdly,Jonathan insulted the intelligence of Nigerians telling us  that we don't benefit from this subsidy except for the importers and he had the unbridled temerity to be advertising it on NTA saying the rich are getting richer.This people are demons. When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?So when the transporter buys PMS @ 65naira and fixes his price based on that, he says his mother did not benefit from the subsidy that guaranteed the price in the first place?
In generator driven economy like ours?It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.I feel sorry for people that think that competition will crash the deregulated price erroneously juxtaposing it with GSM.Do you know that the price of crude being the raw material for refined pet. Products are sold at the same price in the whole world?If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira.At this verge you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignmentIf he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to a remote village in the delta between Belema and Kola communities and i saw the local refinery myself. I will post the pictures later.Conduct a chemical test on those cheap diesels if you are not convinced and you will realize a lot of additives are missing.Sounds incredible but those are the realities on ground.You now know why many importers in the delta hardly have diesel.
I feel sorry for the folks that think subsidy removal will create jobs, an organization that maintains 6 staff with petrol cost of 60k a month will definitely fire a staff to accommodate a 150% increment. So expect drastic job cuts.
I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem either because there is no cheap crude to supply these refineries.The oil production of Nigeria stands at 2.37 million barrels of crude daily. Nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% thenThat gives a total of 1.4m barrels daily.If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.In that case, Nigeria makes 140,000,000usd daily from this JV.Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,The total cost becomes 270,000,000usd per day.There is no way you can refine that crude at that price and sell it 65naira/l and make profit.Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/lWith this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realized i was dead wrong.I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.This i believe was proposed for the following reasons:1 the refineries are working below capacity so what the heck does Nnpc use the crude for?2, there is a benchmark on crude price for budget implementation.With these reasons, any existing or yet to exist refinery in Nigeria will get crude at a high price and must need subsidy to sell at 65naira/l, at this cross road, the then GMD of Nnpc decided that all crude should be exported and subsidy be paid on imported products.Guess he was left with no choice.At this verge, i must reiterate here that competition amongst importers will only crash the profit margin but not cost price.Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.Before this issue of subsidizing petroleum products can be addressed,You must have the following at the back of your minds:1, Nigeria pegs a benchmark on crude prices to enable it implement budget. This stands at 75usd/bbl. And this crude is sort from the JV.2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)3, conversely, if we make excess crude revenue, the price of subsidy on refined products shoot up.With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its own challenges.By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba, jigawa and some other states have a genuine case.With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.The FG had no choice but to capitulateWith this development, the FG is left with little or no choice.The way forward:In the short run:While the FG is consulting, they must consider these options,1,  identify and tackle the corruption prevalent in the subsidy regime. That will push down the cost of the subsidy in the first place.Like i said in April, no matter how sincere GEJ think his administration is, he cannot make any reasonable progress in the face of corruption,2, the power projects must come upstream before removing subsidy, this will reduce the demand on pet. Products to a very great extent.3, Nigeria must accommodate Gas export, port duties and other forms of revenue in their budget implementation policies.4,  Govt must never invest an extra kobo in our moribund refineries, by doing otherwise, the cost price of the refineries will rise to an extent that it will no longer be attractive to investors or will prolong their repayment plan.Thereby making it very capital intensive.5, Instead of deceiving Nigerians with their cabal bullshit and deluding them that they don't benefit from this subsidy, the FG should channel that propaganda with intense lobbying to the senate,NLC and civil society organizations to stop the state governors from demanding for the ECR, this can be achieved by the FG asking the state to pay whatever increment they can afford for the workers that way the ECR will be used for subsidizing pet. Products.In the long run:Nigeria must seek local production capacity.It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,The IOC's has made us believe that it will cost less than 12usd to extract 1bbl of our oil. The Management of NPDC must be reshuffled and if possible experts brought in on contract basis to improve NPDC's productionThese experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries.A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 22naira per litre of pms from these refineries.With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.These refineries shouldn't be operated by the Govt for any reason.The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically.Once the above takes effect, there won’t be any need to be paying subsidy because pump price will be around 23naira/l and inflation will reduce by 40‰.Now how competent is Allison Madueke and iweala if they can’t figure this out? To think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide. Please if the both of you want a trial and error approach to economic solutions please try the next country or preferably Haiti.What iweala forgot is that in the face of inflation the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.As a sound economist, she should tell Nigerians the value of 1.3 trillion naira ( she intends to save on subsidy removal) in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy removal.If you remove subsidy and the money disappears, then it is a NO NO for Nigerians

gbawe, do you know that majority of NL are m0rons? how do think you can ever sell a reasonable point?
these were the same people that were warned before hand before electing odechukwu, 8 months on they are regretting, now they want to support subsidy because an insect like beaf tells them
I feel sorry for some Nigerians who have mortgaged their common sense.
gbawe wait till they experience what is going on in ghana now then I will see whether they can weather the storm

look at the people fighting for the common men, the falanas are living far above average and efisher and beaf think they have a point.
well, for the other guy that think subsidy removal will give him refinery jobs please read this; while reading prepare to march at eagle square on the 3 rd of january if your dream of getting a good job will materialise in this life time in Nigeria.
How many of you have researched on this subsidy issue before taking a stand?There are more misnomers than facts surrounding this subsidy brouhaha.First, the Govt said the economy will collapse, ridiculous indeedsecondly, the Govt said oil importers are a 'cabal', nearly fell off my seat.Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenon gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics, storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance not oblivious of the fact that the landing cost is higher than the stipulated priceTo my greatest chagrin, the Jonathan’s administration woke up and termed them 'cabals' who are fleecing the nation.
Let me remind you that same last year shortly before the elections, this same Jonathan increased the number of pet. Import licenses and signed new pet. Supply deals with foreign refineries that guaranteed stability during the festive period just to score a cheap election point. Today they have become “cabals”Assuming Ruben Abiati goes abroad to buy a TM underwear for 1k and decides to sell it 1.5k adding purchase price  plus logistics plus profit and the Govt tells him to sell at 900 naira, won’t he ask for the 600naira balance?  When the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?Are we this docile? If Nnpc lived up to their responsibility, we won’t have need for the importers in the first place.Why is Jonathan so insensitive?
There is serious round tripping going on in this subsidy regime and he turns a blind eye
NNPC has very low storage capacity for both refined and imported products hence they rely on private tank farms for storage who charge as much as 6 naira/l can you imagine? These same marketers in connivance with NNPC under quote the stored products, which country operate like that? A product whose subsidy is over 70 naira? and Jonathan feigns ignorance because he is scared of corruption or what?
What kind of leadership is this?
Nigeria is the only country whose regulatory agency have no rating for petroleum products ,leaded and unleaded, low grade, mid grade and high grade Pet. Products what a chemical blunder, yet they pay a level subsidy for even ethanol blended products cheapest in other countries, yet someone is sitting at helm of affairs? Some one that brings in a high grade petroleum product is paid the same subsidy as someone with crap oh!! Nigeria
There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeasances?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.This is the si1liest approach any human being with brain if they have one can summon. Thirdly,Jonathan insulted the intelligence of Nigerians telling us  that we don't benefit from this subsidy except for the importers and he had the unbridled temerity to be advertising it on NTA saying the rich are getting richer.This people are demons. When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?So when the transporter buys PMS @ 65naira and fixes his price based on that, he says his mother did not benefit from the subsidy that guaranteed the price in the first place?
In generator driven economy like ours?It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.I feel sorry for people that think that competition will crash the deregulated price erroneously juxtaposing it with GSM.Do you know that the price of crude being the raw material for refined pet. Products are sold at the same price in the whole world?If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira.At this verge you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignmentIf he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to a remote village in the delta between Belema and Kola communities and i saw the local refinery myself. I will post the pictures later.Conduct a chemical test on those cheap diesels if you are not convinced and you will realize a lot of additives are missing.Sounds incredible but those are the realities on ground.You now know why many importers in the delta hardly have diesel.
I feel sorry for the folks that think subsidy removal will create jobs, an organization that maintains 6 staff with petrol cost of 60k a month will definitely fire a staff to accommodate a 150% increment. So expect drastic job cuts.
I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem either because there is no cheap crude to supply these refineries.The oil production of Nigeria stands at 2.37 million barrels of crude daily. Nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% thenThat gives a total of 1.4m barrels daily.If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.In that case, Nigeria makes 140,000,000usd daily from this JV.Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,The total cost becomes 270,000,000usd per day.There is no way you can refine that crude at that price and sell it 65naira/l and make profit.Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/lWith this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realized i was dead wrong.I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.This i believe was proposed for the following reasons:1 the refineries are working below capacity so what the heck does Nnpc use the crude for?2, there is a benchmark on crude price for budget implementation.With these reasons, any existing or yet to exist refinery in Nigeria will get crude at a high price and must need subsidy to sell at 65naira/l, at this cross road, the then GMD of Nnpc decided that all crude should be exported and subsidy be paid on imported products.Guess he was left with no choice.At this verge, i must reiterate here that competition amongst importers will only crash the profit margin but not cost price.Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.Before this issue of subsidizing petroleum products can be addressed,You must have the following at the back of your minds:1, Nigeria pegs a benchmark on crude prices to enable it implement budget. This stands at 75usd/bbl. And this crude is sort from the JV.2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)3, conversely, if we make excess crude revenue, the price of subsidy on refined products shoot up.With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its own challenges.By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba, jigawa and some other states have a genuine case.With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.The FG had no choice but to capitulateWith this development, the FG is left with little or no choice.The way forward:In the short run:While the FG is consulting, they must consider these options,1,  identify and tackle the corruption prevalent in the subsidy regime. That will push down the cost of the subsidy in the first place.Like i said in April, no matter how sincere GEJ think his administration is, he cannot make any reasonable progress in the face of corruption,2, the power projects must come upstream before removing subsidy, this will reduce the demand on pet. Products to a very great extent.3, Nigeria must accommodate Gas export, port duties and other forms of revenue in their budget implementation policies.4,  Govt must never invest an extra kobo in our moribund refineries, by doing otherwise, the cost price of the refineries will rise to an extent that it will no longer be attractive to investors or will prolong their repayment plan.Thereby making it very capital intensive.5, Instead of deceiving Nigerians with their cabal bullshit and deluding them that they don't benefit from this subsidy, the FG should channel that propaganda with intense lobbying to the senate,NLC and civil society organizations to stop the state governors from demanding for the ECR, this can be achieved by the FG asking the state to pay whatever increment they can afford for the workers that way the ECR will be used for subsidizing pet. Products.In the long run:Nigeria must seek local production capacity.It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,The IOC's has made us believe that it will cost less than 12usd to extract 1bbl of our oil. The Management of NPDC must be reshuffled and if possible experts brought in on contract basis to improve NPDC's productionThese experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries.A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 22naira per litre of pms from these refineries.With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.These refineries shouldn't be operated by the Govt for any reason.The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically.Once the above takes effect, there won’t be any need to be paying subsidy because pump price will be around 23naira/l and inflation will reduce by 40‰.Now how competent is Allison Madueke and iweala if they can’t figure this out? To think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide. Please if the both of you want a trial and error approach to economic solutions please try the next country or preferably Haiti.What iweala forgot is that in the face of inflation the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.As a sound economist, she should tell Nigerians the value of 1.3 trillion naira ( she intends to save on subsidy removal) in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy removal.If you remove subsidy and the money disappears, then it is a NO NO for Nigerians

The gifts I got were nice,I didn't give anybody anything.[quote][/quote]re you a pentecostal church?

[color=#000099]

jona before crashing please read this;

I will like to commend GEJ for backing down on the subsidy removal on the other hand i hope the consultation does not include bribing or cajoling the NLC and civil society groups to accept that demonic policy.

I think i understand Al harem and jason's confusion your confusion was orchestrated by Ruben Abiati and GEJ by proxy.

How many of you have researched on this subsidy issue before taking a stand?

There are more misnomers than facts surrounding this subsidy bruohaha.
First, the Govt said the economy will collapse, ridiculous indeed
Secondly, the Govt said oil importers are a 'cabal', nearly fell off my seat.

Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenum gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.

Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.

These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics,storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance knowing fully well that the landing cost is higher than the stipulated price
To my greatest chagrin, the odechukwu administration woke up and termed them 'cabals' who are fleecing the nation.

Assuming Ruben Abiati goes abroad to buy a TM underwear for 1k and decides to sell it 1.5k adding purchase price plus logistics plus profit and the Govt tells him to sell at 900 naira, wont he ask for the 600naira balance? when the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?
Are we this docile? If Nnpc lived upto their responsibility, we wont have need for the importers in the first place.

There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeaseance?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.

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

Thirdly,

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

When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?
So when the transporter buys PMS @ 65naira and fixes his price based on that, he says his mother did not benefit from the subsidy that guaranteed the price in the first place?

It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.

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

Do you know that the price of crude being the raw material for refined pet. Products is sold at the same price in the whole world?

If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.

The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.
This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira.

At this verge you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignment
If he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to a remote village in the delta between Belema and Kola communities and i saw the local refinery myself. I will post the pictures later.

Conduct a chemical test on those cheap diesel if you are not convinced and you will realize a lot of additives are missing.
Sounds incredible but that is the reality on ground.
You now know why many importers in the delta hardly have diesel.

I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem because there is no cheap crude to supply these refineries.

The oil production of Nigeria stands at 2.37 million barrels of crude daily. nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% then

That gives a total of 1.4m barells daily.

If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.
In that case, Nigeria makes 140,000,000usd daily from this JV.

Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,
In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.

Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,

The total cost becomes 270,000,000usd per day.
There is no way you can refine that crude at that price and sell it 65naira/l and make profit.

Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/l

With this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.
So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.

I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realized i was dead wrong.

I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.

This i believe was proposed for the following reasons:

1 the refineries are working below capacity so what the heck does Nnpc use the crude for?
2, there is a benchmark on crude price for budget implementation.

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

Guess he was left with no choice.

At this verge, i must reiterate here that competition amongst importers will only crash the profit margin but not cost price.

Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.

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

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

2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)

3, if we make excess crude revenue, then the price of subsidy on refined products shoot up.

With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its own challenges.

By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.
This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.

This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,

most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba,jigawa and some other states have a genuine case.
With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.

The FG had no choice but to capitulate

With this development, the FG is left with little or no choice.

The way forward:

In the short run:

While the FG is consulting, they must consider these options,

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

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

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

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

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

In the long run:

Nigeria must seek local production capacity.
It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.

Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,

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

These experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,

If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,

A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries.

A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 22naira per litre of pms from these refineries.

With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.

These refineries shouldn't be operated by the Govt for any reason.

The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically.

Once the above takes effect, there wont be any need to be paying subsidy because pump price will be around 23naira/l and inflation will reduce by 40‰.

Now how competent is Allison Madueke and iweala if they cant figure this out to think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide.

what iweala forgot is that in the face of inflation the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.

As a sound economist, she should tell Nigerians the value of 1.3 trillion naira in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy removal.

If you remove subsidy and the money disappears, then it is a NO NO for Nigerians
[/color]

@ Midas

please read this to trim the rough edges of your enlightenment


I will like to commend GEJ for backing down on the subsidy removal on the other hand i hope the consultation does not include bribing or cajoling the NLC and civil society groups to accept that demonic policy.

I think i understand Al harem and jason's confusion your confusion was orchestrated by Ruben Abiati and GEJ by proxy.

How many of you have researched on this subsidy issue before taking a stand?

There are more misnomers than facts surrounding this subsidy bruohaha.
First, the Govt said the economy will collapse, ridiculous indeed
Secondly, the Govt said oil importers are a 'cabal', nearly fell off my seat.

Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenum gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.

Please don't forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.

These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics,storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance knowing fully well that the landing cost is higher than the stipulated price
To my greatest chagrin, the odechukwu administration woke up and termed them 'cabals' who are fleecing the nation.

Assuming Ruben Abiati goes abroad to buy a TM underwear for 1k and decides to sell it 1.5k adding purchase price plus logistics plus profit and the Govt tells him to sell at 900 naira, wont he ask for the 600naira balance? when the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?
Are we this docile? If Nnpc lived upto their responsibility, we wont have need for the importers in the first place.

There is no doubt that the subsidy regime is met with corrupt practices, is it not the responsibility of the govt to clamp down on those malfeaseance?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy into-to not minding its inflationary consequences.

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

Thirdly,

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

When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?
So when the transporter buys PMS @ 65naira and fixes his price based on that, he says his mother did not benefit from the subsidy that guaranteed the price in the first place?

It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.

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

Do you know that the price of crude being the raw material for refined pet. Products is sold at the same price in the whole world?

If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.

The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.
This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 70naira.

At this verge you will not over rule the fact that these unscrupulous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignment
If he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to a remote village in the delta between Belema and Kola communities and i saw the local refinery myself. I will post the pictures later.

Conduct a chemical test on those cheap diesel if you are not convinced and you will realize a lot of additives are missing.
Sounds incredible but that is the reality on ground.
You now know why many importers in the delta hardly have diesel.

I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem because there is no cheap crude to supply these refineries.

The oil production of Nigeria stands at 2.37 million barrels of crude daily. nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the Nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% then

That gives a total of 1.4m barells daily.

If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.
In that case, Nigeria makes 140,000,000usd daily from this JV.

Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,
In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.

Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, accrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per bbl,

The total cost becomes 270,000,000usd per day.
There is no way you can refine that crude at that price and sell it 65naira/l and make profit.

Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd daily earnings (which will affect budget implementation) and after refining will still spend more money to subsidize it to 65naira/l

With this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.
So, for those of you clamoring for refineries should be careful what you wish for because there is no cheap crude for you to refine.

I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realized i was dead wrong.

I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.

This i believe was proposed for the following reasons:

1 the refineries are working below capacity so what the heck does Nnpc use the crude for?
2, there is a benchmark on crude price for budget implementation.

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

Guess he was left with no choice.

At this verge, i must reiterate here that competition amongst importers will only crash the profit margin but not cost price.

Even if every Nigerian becomes an importer of pet. Prods, we can never change the fact that crude in the int l market is already expensive before thinking of refined prod. So we must need subsidy to make profit.

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

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

2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)

3, if we make excess crude revenue, then the price of subsidy on refined products shoot up.

With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria, it comes with its own challenges.

By law, the constitution clearly states that all revenue accrued to the FG be shared amongst the three tiers of Govt.
This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.

This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,

most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba,jigawa and some other states have a genuine case.
With the above development, the states started scrambling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.

The FG had no choice but to capitulate

With this development, the FG is left with little or no choice.

The way forward:

In the short run:

While the FG is consulting, they must consider these options,

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

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

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

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

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

In the long run:

Nigeria must seek local production capacity.
It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.

Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at a paltry 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,

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

These experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,

If NPDC can extract oil at 12usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,

A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is coming to build refineries.

A crude price of 18usd/bbl from NPDC will guarantee pump price of less than 22naira per litre of pms from these refineries.

With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.

These refineries shouldn't be operated by the Govt for any reason.

The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing periodically.

Once the above takes effect, there wont be any need to be paying subsidy because pump price will be around 23naira/l and inflation will reduce by 40‰.

Now how competent is Allison Madueke and iweala if they cant figure this out to think of removing subsidy at this stage where there is no electricity and high corruption rate will be tantamount to economic suicide.

what iweala forgot is that in the face of inflation the cost of running Govt projects will be high, All Govt contractors will definitely come back for contract variations or Abandon those projects.

As a sound economist, she should tell Nigerians the value of 1.3 trillion naira in the face of 60% inflation and how many projects Nigerians will benefit from the subsidy removal.

If you remove subsidy and the money disappears, then it is a NO NO for Nigerians

Please spare me those revolution clap trap im not interested, how many of you can confront an armed robber let alone a drunk Nig. Soldier?

Remember say na when army slap you, u go know say police na your friend.

Please the suffering mases of Nigeria, if you are tired of enduring what you brought upon yourselves please leave.
Cotonou has more economic prospects than Nigeria y waste your time
Election time, you collect bag of rice,10k and sychophantic uniforms and dance around in public squares, when is time to pay back through tolls and subsidy removal i no go hear word. If Nigerians can vote PDP after 12yrs of darkness then we deserve every bit of this madness
I sympathize with lagosians cos they were conned big time believing in fashola who had a better 1st term.

Could you believe that a maggot like IBB has massive supporters in this present age and time?
When SAP part 2 resurfaces they will start crying wolf, abeg if you are poor in Nigeria and you cant burn your Inec commisioner alive or protest when disenfranchised please take your protest to Ninevea jonah is waiting dafts.
Funny people

In the long run:

Nigeria must seek local production capacity.
It is no longer news that Nnpc and its subsidiaries have failed woefully in meeting the needs of the Nigerian people.

Nnpc through its subsidiary Npdc and Ngc are saddled with the responsibility of the above for oil and gas production respectively, but as i write, the current production of NPDC stands at 90,000bbl/day which is a huge failure for an agency set up 23yrs ago,

The IOC's has made us believe that it will cost less than 18usd to extract 1bbl of our oil. The Management of NPDC must be reshuffled and if possible experts brought in on contract basis to improve NPDC's production

These experts must be placed on targets appraised by milestones. in ogoni land for instance, Anglo dutch has a lot of abandoned production facilities and marginal wells and others scattered all over the country, these can be bought by NPDC with the money FG want to waste on refineries to improve production,

If NPDC can extract oil at 18usd/bbl and make a little profit, with this cheap oil available, Nigeria will have no reason going to the JV. This cheap crude will attract investors to build refineries and create jobs,

A 250,000bbl/d refinery will cost a little above 5b usd, dangote alone can afford two of those only if NPDC can guarantee cheap oil. This is why no investor is comming to build refineries.

A crude price of 25usd/bbl from NPDC will guarantee pump price of less than 28naira per litre of pms from these refineries.

With this plan,By the end of this Administration, NPDC will have robust production capacity and the refineries will guarantee steady refined products.

These refineries shouldn't be operated by the Govt for any reason.

The FG will generate revenue from both ends, export of crude and export refined products and the production of NPDC must be increasing perodically.

Once the above takes effect, there wont be any need to be paying subsidy because pump price will be around 28naira/l and inflation will reduce by 40‰.

With this development, the FG is left with little or no choice.

The way forward:

In the short run:

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

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

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

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

Fourthly, Instead of decieving Nigerians with their cabal bullshit and deluding them that they dont benefit from this subsidy, the FG should channel that propaganda with intense lobbying to the senate,NLc and civil society organisations to stop the state governors from demanding for the ECR, this can be achieved by the FG asking the state to pay whatever increment they can afford for the workers that way the ECR will be used for subsidizing pet. Products.

I further argued that to make cheaper crude available for our refineries, the Govt should reduce the price at which it is supplied unfortunately, the senate mandated the then GMD of Nnpc that the DSO must be sold at international crude price.

This i believe was proposed for the following reasons:

1 the refineries are working below capacity so what the heck does Nnpc use the crude for?
2, there is a benchmark on crude price for budget implementation.

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

Guess he was left with no choice.
At this verge, i must reiterate here that competition amongst importers will only crash the profit magin but not cost price.

Even if every Nigerian becomes an importer of pet. Prods, we cannever change the fact that crude in the intl market is already expensive before thinking of refined prod. So we must need subsidy to make profit.

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

1, Nigeria pegs a benchmark on crude prices to enable it implement budget. This stands at 65 to 75usd/bbl. And this crude is sort from the JV.

2, if crude price exceed the benchmark above, Nigeria makes excess crude revenue (ECR)

3, if we make excess crude revenue, then the price of subsidy on refined products shoot up.

With the above analogy,
One can argue that the ECR be used to subsidize imported petroleum products since both are a function of each other unfortunately in Nigeria it comes with its own challenges.

By law, the constitution clearly states that all revenue acrrued to the FG be shared amongst the three tiers of Govt.
This alone makes it illegal for the FG to keep the ECR to itself for whatever reason.

This is where the wahala started, during GEJ's campaign, he astronomically increased workers salary without consulting the state Governors,

most Governors have refused to pay on the grounds that they cannot afford it. On that grounds Taraba,jigawa and some other states have a genuine case.
With the above development, the states started scramblling for funds and remembered the ECR and insisted it must be shared to enable them pay the new wage and develop infrastructures.

The FG had no choice but to capitulate

I still feel sorry for those who think the Govt should build more refineries, that will not solve the problem because there is no cheap crude to supply these refineries.

The oil production of Nigeria stands at 2.37 million barrels of crude daily. nigeria get this crude in a JV (joint venture) with IOC's (international oil companies) and the nigeria's cut stand btw 55% to 60% of the lot, if we go by 60% then
That gives a total of 1.4m barells daily.
If we average the crude price from 2009 till date, the price falls close to 100usd/bbl.
In that case, Nigeria makes 140,000,000usd daily from this JV.
Nigeria has a policy called DSO (domestic supply obligation) which mandates 250,000bbl/d of this crude to be refined and consumed locally,
In monetary terms, the Nigerian govt is giving us 25,000,000usd worth of crude to refine.
Our three refineries at optimum capacity utilizes 450,000bbl/d which gives 45,000,000usd in monetary terms in other words, the price of raw material in this case, crude, acrued to our refineries comes at 45m usd per day, if you add refining cost and profit of 6usd per day,
The total cost becomes 270,000,000usd per day.
There is no way you can refine that crude at that price and sell it 65naira/l and make profit.

Meanwhile, once we mark out that 45m usd worth of crude for our refineries (assuming they are working at optimum capacity), the govt has already lost 45m usd from their 140m usd earnings and after refining will still spend more money to subsidize it to 65naira/l
With this analogy, you will agree with me that if all our refineries are working optimally, the govt will spend 3times our present day subsidy to bring the pump price down to 65naira/l.
So, for those of you clamouring for refineries should be careful what you wish for because there is no cheap crude for you to refine.

I have argued abinitio that the sales of other derivatives of crude will bring down the cost of most sort PMS,DPK etc but after doing some feasibility studies, i realised i was dead wrong.
So what is the way forward?

Thirdly,
Odechukwu insulted the intelligence of Nigerians telling us that we dont benefit from this subsidy except for the importers and he had the unbriddled temerity to be advertising it on NTA saying the rich are getting richer.
This people are demons. When Ruben abiati's mother goes to the market to buy vegetable at a price, does he not know that the seller included cost of transportation to that price?
So when the transporter buys PMS @ 65naira and fixes his price based on that he said his mother did not benefit from the subsidy that guaranteed the price in the first place?

It is either Ruben Abiati and his employers are drunks or they think that Nigerians are m0rons.

I feel sorry for people that think that competition will crash the deregulated price invariably juxtaposing it with GSM.
Do you know that the price of crude being the raw material for refined pet. Products is sold at the same price in the whole world?
If you agree to this, then, even if you deregulate and license 5million importers the product will still be expensive because crude itself is expensive. You will still need to subsidize it to 65naira. Exactly why deregulation of diesel in part did not work.
The only reason you have not bought diesel @ 200naira is because there are so many illegal refineries who bunker crude, settle JTF and refine diesel at a lower price.
This people still pose a great threat to the importers who buy at a higher price that is why you get diesel @ 140naira elsewhere but in the delta i buy as low as 110naira.
At this verge you will not over rule the fact that these unscruplous elements contribute to the availability of diesel, if you are in doubt, anywhere you see cheap diesel, ask the dealer the source of his consignment
If he is honest he will tell you the truth, when i was told, i took an hr 20mins boat ride to kola a remote village in the delta and i saw the local refinery myself. I will post the pictures later.
Conduct a chemical test on those cheap diesel if you are not convinced and you will realise a lot of additives are missing.
Sounds incredible but that is the reality on ground.
You now know why many importers in the delta hardly have diesel.

I will like to commend GEJ for backing down on the subsidy removal on the other hand i hope the consultation does not include bribing or cajoling the NLC and civil society groups to accept that demonic policy.

I think i understand Al harem and jason's confusion ur confusion was orchestrated by Ruben Abiati and GEJ by proxy.

How many of you have researched on this subsidy issue before taking a stand?

There are more misnomers than facts surrounding this subsidy bruohaha.
First, the Govt said the economy will collapse, this one is ridiculous
Secondly, the Govt said oil importers are a 'cabal' this one threw me off my seat.

Fellow Nigerians, there are no cabals, in 2009 the scarcity of petroleum products became intense and the Govt admitted that Nnpc through its subsidiary PPMC has failed Nigerians by their inability to meet up with the supply of pet. Products and that phenomenum gave rise to licensing of some people to 'assist' the Nnpc in doing their job for which they are paid for.

Please dont forget that hitherto, Nnpc has been doing the importation and refining themselves before corruption eroded their common sense.

These importers went abroad and came back with a price Nnpc is already aware of comprising of logistics,storage and administrative costs, these were quantified before they arrived at a price.
The FG now fixed a price tag of 65naira on Pms and agreed to be reimbursing the importers the balance knowing fully well that the landing cost is higher than the stipulated price
To my greatest chagrin, the odechukwu administration woke up and termed them 'cabals' who are fleecing the nation.
Assuming ruben Abiati goes to abroad to buy a TM lewis underwear for 1k and decides to sell it 1.5k adding purchase price plus logistics plus profit and the Govt tells him to sell at 900 naira, wont he ask for the 600naira balance? when the incompetent NNPC agrees to reimburse him, then he has become a cabal stealing from the GOvt?
Are we this docile? If Nnpc lived upto their responsibility, we wont have need for the importers in the first place.
There is no doubt that the subsidy regime is met with corrupt practises, is it not the responsibility of the govt to clamp down on those malfeaseance?
The only solution that came to the minds of this disgruntled PDP administration is to remove subsidy intoto not minding its inflationary consequencies.
This is the most silly approach any human being with brain if they have one can summon.

Busted!!
Kobojunkie is sleeping with beaf both suffers from the same type of sexually transmitted dementia

Please count me out of your evolution
I started my revolution last year august paying tripple of my internet rate to sensitize people to realise that
odechukwu is not the man for the job
I went further to cancel important buisness engagements to travel miles to register and Vote. As i cast my vote for Gen Buhari, my revolution was over.
If you guys that voted ode needs a revolution to remove him i think it is not my problem

May the gods of our land strike that lettuce called beaf with leprosy and incurable madness for calling tax payers 'beggers'
Every country has incentives for its citizens ranging from health care to unemployment grant and various soft loans including Agricultural subsidy Let alone a country so blessed with free fossil fuel

And that bingo beaf in his kobojunkie wisdom think we dont deserve the only subsidy that stabilizes commodity prices.

I dont blame you i simply blame that cheap C0nd0m that disappointed your father on the day of your conception if not, we wouldnt have a tail wagging local dog mounting the Nairaland podium.

Beaf my consortium commit over 50percent of our profit on logistics,training half baked university graduates to make them employable,buy diesel for electricty and pay Mopol 19 for private security, in the end we commit another 10percent to tax.

Let me make it clear to that body odour beaf im not begging the Govt to judiciously utilize my own sweat. To provide basic amenities that is killing my buisness

Please count me out of your evolution
I started my revolution last year august paying tripple of my internet rate to sensitize people to realise that
odechukwu is not the man for the job
I went further to cancel important buisness engagements to travel miles to register and Vote. As i cast my vote for Gen Buhari, my revolution was over.
If you guys that voted ode needs a revolution to remove him i think it is not my problem

May the gods of our land strike that lettuce called beaf with leprosy and incurable madness for calling tax payers 'beggers'
Every country has incentives for its citizens ranging from health care to unemployment grant and various soft loans including Agricultural subsidy Let alone a country so blessed with free fossil fuel

And that bingo beaf in his kobojunkie wisdom think we dont deserve the only subsidy that stabilizes commodity prices.

I dont blame you i simply blame that cheap C0nd0m that disappointed your father on the day of your conception if not, we wouldnt have a tail wagging local dog mounting the Nairaland podium.

Beaf my consortium commit over 50percent of our profit on logistics,training half baked university graduates to make them employable,buy diesel for electricty and pay Mopol 19 for private security, in the end we commit another 10percent to tax.

Let me make it clear to that body odour beaf im not begging the Govt to judiciously utilize my own sweat. To provide basic amenities that is killing my buisness

Does iweala know that even Govt projects will come at a very high cost?

The 1.3 trillion she intends to save will be value marred by inflation, all govt contractors will immediately ask for variations on their contract.

Iweala tender your resignation you have failed Nigerians

How can you achieve all your 'soft cushions' on your subsidy budget already marred by inflation?

Iweala should tell us how much it costs the govt to tar a kilometre of road now and project it with her 1.3trillion inflation marred budget after subsidy removal.

They will simply loot this fund like any other, even if they implement it,nothing reasonable will be achieved.

Odechukwu please fight corruption in the oil and gas sector and leave subsidy alone.

@ k brown

You simply forgot that the same people who have these license whose subsidy you want to remove are the same people you expect to flood the market for competion.

Let me tell you the end of this road

Once subsidy is removed, these existing importers will unite and create an artificial scacity, the proposed 120naira will remain a mirage

Once scarce, the price will skyrocket and they will make 4times their profit before subsidy removal, as we speak, they are praying for the Govt to miss cue.

The new licensed individuals cannever have the liquidity to saturate the market at lower cost also bearing in mind that the existing cartel already have an efficient structure, all the cabal need is 60percent control of the market and they will be the price determinants

By the end of the first quarter of next year odechukwu will go begging them to crash prices and you know what will happen, they will simply refuse or demand for ridiculos govt soft loans and grants and we will have another cement situation and more expensive subsidy

By the end of the above we will have more professional beggers on the streets of Lagos.

Make no mistakes, the Govt 120naira proposed landing cost and little profit will never interprete as end user pump price because at that level, the Govt will lose its local standi on asking for a price crash.

The new players will meet various degree of obstacles and fustrations from the cabal and kick backs paid to this stinking PDP administration

The only reason it is stable at 65 is because Govt is paying for it once that is removed, you will buy PMS above 250naira/l

Say 'no' to subsidy removal
Say 'yes' to corruption fight
Say 'yes' to accountability
Say 'yes' to the resignation of iweala
Say 'yes' to peaceful civil disobedience
Say 'yes' to enlightenment of the armed forces
Say 'no' to anything PDP whether or not he or she is wearing a hat.

An economy without electricity cannever develop with high energy cost, iweala is bamboozling her PDP boyfriends not Nigerians.

If she she can proove the above, lets debate on Aljazeera 'frost'
Iweala dont be a coward accept this challenge and convince Nigerians i am ready for your Invitation.

One clear fact is that nairalanders make inputs based on emotions and cheap perceptions.
Type subsidy on nairaland search engine and read the arguements of professionals in the oil and gas sector before resorting to beaf's kinda arguements

One obvious fact remains that the govt has no buisness touching petroleum subsidy, read and enlighten urselves before taking a stand.

I challenge iweala to a debate where i will lay down 26 verifyable facts for her to look Nigerians in the eye and tell us that removing subsidy is the answer to infrastructural decay in the country.

The corrupt practises in the subsidy bullshit out weighs the supposed motive for the subsidy abinitio.
Iweala Do the following for Nigerians:

Iweala remove storage from the subsidy being paid to importers

Remove demmurage from the subsidy let every importer be responsible for his import schedule

Propose as a law to the senate that any consortium with liquidity of above 100m naira automatically qualifies for a petroleum lisense whichever capacity they deem necessary

Instruct Nnpc to split petroleum import license from refinery acquisition and OML operational licences

Approve 20naira per litre for locally refined petroleum products at dispense not at depot as subsidy for 1year

Withdraw all dispensing licences from all major importers and refineries

Achieve the above in 3months and tell us how you will spend 1.34trillion again.

Before i will trust you on infrastructural devolopment, i must see a functioning public complaint commision and successes in corruption wars also, give us a break down of the income accrued to the Govt on Gas export alone not forgetting to juxtapose it with developmental projects

If you have no idea on how to achieve the above then tender your resignation and recommend me for your job on a consultancy basis at no extra cost to the Govt but your personal income and allowances.

You musn't shy away from that debate so that Nigerians will judge between your world bank experience and my local ECO 101 experience who is smarter.

You know how to contact me if you have a scintilla of sincerity of purpose for Nigerians.

For the sheep that support this cynical agenda dont regret like those that voted odechukwu and not PDP come next year.