₦airaland Forum

It is said that any successful revolution must start with a revolution of the mind!

It is important to understand the degree and magnitude of corruption, graft and pilferage going on in this country.
How anyone can see these and just shrug their shoulders indifferently is just beyond me!

Please read this article and educate your mind about the Oil industry in Nigeria and the oil subsidy problem. Read it and let the revolution begin in your mind.

https://www.nairaland.com/nigeria/topic-806581.0.html

pls read

Anyone that reads the preceding report on PPPRA's own website which essentially details the history of the agency and the actions that led to it in 2000 and 2001 will see that certain notions and deceptions have been thrown around for long!

In the website: http://www.pppra-nigeria.org/history.asp

On the website, in 2001, we see the frequent use of words such as; "Liberalization", "Deregulation" and "Liberalization of the downstream sector" - essentially nothing has changed! We still hear the same gibberish year in year out!

Is there an argument to be had for the deregulation and liberalization of the domestic fuel market? - Yes! , but as usual, it is not as it seems! Often times, the facts and the arguments being presented by the deregulation pundits is that it will stop the activities of the oil cabal and cut off the undue benefits that they (cabal) derive from government. They also contend that the benefits and resources accrued from deregulation can be redirected to develop other areas of the economy and infrastructure!

I totally disagree and I will reiterate what the writer said:
- What has been achieved with all the surplus earnings of the past 10 years?
- Why should the people trust a government that can't account for the US$23 billion that it just depleted from ECA account??
- Why does the government not act in good faith first, using our resources prudently and efficaciously before demanding that the people pay more?
- If the FGN could not repair refineries, could not build power plants and could not fix roads with all the money that has been at their disposal, how does giving them more money solve the problem??

The problem with the Nigerian government is not that of scarcity of funds, it is much rather a debilitating problem of acute corruption which has resulted in complete impotence, extreme indolence and unabashed intellectual laziness!!!

If the fuel prices were deregulated how does that help or change anything??
How does deregulation break the back of the cabal?? The only thing that would change is that instead of the cabal getting their money from the FGN's purse, they will now be at liberty to derive their 'pound of flesh' from the people directly! Essentially, nothing changes except that the people now pay directly to the confers of the 'super rich cabal members'! Either way, the cabal gets paid and the only party that loses is the people! When prices go up due to governmental incompetence (for example port demurrage), the people will have to pay out even more! The Cabal is already set and cast in solid foundation based on the gains of the past few years, they are equipped and ready to exploit the people brazenly with the consent and approval of the FGN! They have even tested the market with diesel fuel deregulation - has that stopped diesel from being scarce from time to time?? Has it brought down the price of diesel?? Has the mega-rich syndicates behind diesel importation cried out about their back being broken because diesel market was deregulated?? The only thing that happened was that the end-consumer had to bear the added cost while the 'cabal' kept laughing all the way to the bank!!

In a 'normal' society, what people will and should be demanding is for the government to eliminate, expose and break such a cabal so that the names of the individuals and companies are made public and the influences are removed and rendered impotent! If you eliminate and remove the added cost of maintaining the 'cabal' and all other 'associated expenses', and the government acted responsibly in providing the necessary infrastructure for refining oil in-house, there will not be much problems to talk about!

By the way, who is this faceless 'cabal' anyway?? Isn't it government officials, ex-government officials and their close associates Who is fooling who?
I will rest my case until the writer releases or puts out the second part of the article!

sheyguy:
When u consider the inflation US dollar has gone through in the past in the past 39yrs and use the buying power of the money earned from oil proceeds in the last 10 years against the last 29 years u will quickly come to realize that a faulty the highlighted logic can be.

As a matter of fact last time I checked a US dollar in the 70's can buy 13 Us dollar in 2005.

Sheyguy,

This is another example of nit-picking and hair-splitting arguments!!

The writer made a figurative reference to the 'dollar amount' in Revenue NOT the 'dollar value'!
Perhaps in your esteemed opinion, the writer should have made an intellectual dissertation and discourse about the the pro and cons of the global inflationary trend over a period of 40 years OR the economics of the 'purchase parity value' and the 'nominal value' of the dollar over the same period! Then and only then will he satisfy you??

If and when the World Bank, IMF or some other organizations says that; "Nation X's export revenue has increased by 380% over the last 20 years (say from $100 million to $380 million). Do you now question that fact, based on the fact that $100 million 20 years ago is worth a lot more than $100 million today and thus the $380 million today may not actually represent an increase of 380% based on its value

Some people just like to blow hot air! - some criticism is not worth the paper it is written on! How exactly is this criticism relevant to the poor state of affairs in Nigeria today? Instead of our educated elites and intellectuals to engage and concern themselves with having an astute understanding of the magnitude and scope of corruption presently being experienced in Nigeria and what can be done about it, what we have is guys like this, who will much rather give excuses for governmental incompetence and corruption and engage in some nonsensical non-issues just to show that they are intelligent! The important thing is this - what has the FGN done with all the money recently earned?? How prudently has the money been expended?? How much of it is being stolen?? Concern yourself with that and quit blowing hot air!

debosky:
There are a number of factual inaccuracies in the article, though the main thrust of the article rings true - there is an unbelievable amount of dishonesty and shady dealings in the 'subsidy' being provided.

For example, this issue of Domestic Supply Obligation (DSO) is clearly untrue - since the introduction of the PPRA, the NNPC has been forced to buy crude for domestic refining at the international prices, not at any subsidized price.

The issue of 'depot' charges is a familiar one - the lack of capacity at Atlas Cove and the frequent disruptions have forced importers to build their own depots and jetties and charge back for it. This is not necessarily a 'fraudulent' charge, but is clearly another product of the grossly inefficient distribution network in the country.

kalokalo has raised a number of very valid comments about the subsidy - many of which are not addressed by the author of the initial article.

A grossly inaccurate statement. The author himself acknowledges that the PHRC was not finished till 1989 so how could the 'downward spiral' have started in 1986?

The truth is, arbitrary central price control is a haven for corruption in Nigeria because of the lack of transparency. It will always provide opportunity for patronage and outright stealing from the Nigerian state.

Once again Debosky,

You might do well to check your facts properly or alternatively keep quiet and learn facts from those who have taken the pain to do the research. One of the reasons why this article was placed in NL is becos there are a lot of 'small fries' in the Oil industry browsing NL and they think becos they work in the industry and have a little insight, this means that they are well informed!

Your statement above shows that you do not even know the meaning of DSO much less the 'modus operandi'! Casting aspersion on the writer and well researched facts when you do not even have a basic grasp of the industry's practice is pathetic! Domestic Supply Obligation (DSO) has always been the method and the tool with which the government through its proxy in NNPC maintains a favourable and commiserate feedstock price to the local refineries so that they can in turn provide cheap fuel for the public!

Your statement above suggest to me that you do not even know that NNPC does not 'buy' crude oil, much rather NNPC acquires and allocates DSO supplies from its 60% share of the JV agreements, which is done thru its subsidiary NPDC! How can you buy crude oil at international price when you are the primary source of the crude with a share of 60% of derived oil?? Typically, NNPC thru its subsidiary NPDC, accrues between 1.35 million Bpd and 1.5 million Bpd which is its 60% share of the venture!!

Finally, I am sick of people who don't know and won't acknowledge that they don't know, much rather persisting in the limited exposure that they have to cast aspersions and create doubts whereas they are not 'in the know' and are utterly clueless! Someone has taken the time (a lot of time I might add) and expended his resources to dig out, research and present many of this facts! Whereas sloppy fellows like you just sit in your office, all to willing to run down recklessly without recourse to the truth or due diligence - This attitude is utterly despicable!

Here are some documented facts from none other than PPPRA itself:

Overwhelmed with the success of the campaign on liberalisation of the downstream sector, the Government on march 8th 2001, set up the Petroleum Products Pricing Regulatory Committee (PPPRC) as an interim measure to carry out the functions of the PPPRA as recommended by the SCRPPSD while waiting for the enactment of the Act of the National Assembly for the setting up of the Petroleum Products Pricing Regulatory Agency (PPPRA) as required in a democratic set up.

The Committee (PPPRC) was inaugurated by the Secretary to the Government of the Federation.

After series of meetings with the stakeholders and the interest groups, the PPPRC recognised that pricing is a condition precedent for deregulation and liberalisation. It therefore, commenced a phased liberalisation of the downstream sector by announcing the selling prices for PMS, AGO and HHK at N 26, N26 and N 24 per litre respectively on January 1st 2001. The consumption tax N 3.00 per litre of product was abolished while the import duty of N 1.50 per litre was introduced. The sale of crude to NNPC at $9.50 per barrel was raised to $18.00 per barrel.

On 2nd July 2003, the import tax of N 1.50 per litre of products was removed to stabilise the selling prices earlier announced to encourage importation of products by other marketers.

The bill for the establishment of the Petroleum Products Pricing Regulatory Agency submitted by Mr. President on March 2001 to the National Assembly was finally passed by the Senate and the House of Representative on February 5th 2003 and May 22nd 2003 respectively. The President accented to the bill in May 2003 and inaugurated the board of the Agency on 19th June 2003.

With the law establishing the PPPRA, the road to full deregulation and liberalisation of the downstream sector became open for all the stakeholders in the sector to play their parts according to the rules and guidelines as would be unfolded by PPPRA based on its functions.

Here is the website URL for those who want to read it themselves:

http://www.pppra-nigeria.org/history.asp


The above information from PPPRA's website reveals that prior to January 2001, the official DSO price was N9.50. However after the review and agreement reached in January 2001 , the DSO price was increased to N18.00!! The writer also goes on to assert in his article that he has been unable to find any evidence to suggest that the price has been raised up or increased again since 2001! 

If you are going to argue, then argue with facts otherwise please be silent!

debosky:
Quote
It was apparently not so long after this moment that the nation’s refineries started experiencing operational and maintenance issues!  It goes without saying that the nation’s journey from that moment on, especially with regards to Energy and Power, became a quick downward spiral!

A grossly inaccurate statement. The author himself acknowledges that the PHRC was not finished till 1989 so how could the 'downward spiral' have started in 1986?

The truth is, arbitrary central price control is a haven for corruption in Nigeria because of the lack of transparency. It will always provide opportunity for patronage and outright stealing from the Nigerian state.

Mr Debosky,

It is unfortunate that in nit-picking a nearly 6000 word article this is the kind of meager criticism you can come up with! You may disagree with the writers point of view but engaging in hair-splitting arguments about the writers every statement is counter-productive.

If fuel is sold at 23 kobo/litre and the currency is devalued by 1000% - 1500% over a short period, it means that refineries are now truly selling at 10% to 15% of the original price! Refineries need to be able to make enough margin (especially foreign exchange) to sustain operations and pay for maintenance! You may be of the opinion that the point at which things started a downward spiral was when refineries started breaking down,(in the early 90s) however the writer contends that the point was when the refineries capacity to earned adequate income to sustain operation without government help was compromised. The point at which the decision was made to cut a currency's value without due consideration to several other impacted factors and consequences, this was the point when the downward spiral began!

It is like arguing about when a disease began! Is it at the point when the diabetes was diagonised OR was it at the point when the blood sugar content shot up OR was it at the point when the patient made the decision to consume and maintain a diet that was unhealthy?? It boils down to an individuals point of view and it is all a matter of opinion!

if anyone comes here and agrees, please help keep this discussion relevant by bumping thread back to the top so that others can see it and read the article. thank you

Mr Kalokalo,

You may want to read and understand the purpose of the article before running away with your own assumptions. I will be interested in knowing if there is any untruth or false claim in the facts laid out here!

The article deals with the facts on the ground and the truth concerning the current operations and practices in the Nigerian Oil industry - a lot of it obviously is based on government policies and current practices!

The article goes on to expose several facts - many of which are not commonly known (some are even entirely unknown to the public). The author sticks to proven data, statistics and facts with well researched details without engaging in questionable rumors or hearsay! Based on available facts, the author goes on to ask valid and pressing questions with regards to the application of resources effectively by our leadership! He goes on to question the sincerity, integrity and prudence of former and present leaders!!

What the author has not yet done is to proffer or suggest a way out or recommend a solution! He has however promised to deliver on that premise in the second part of the article. I would recommend that you wait for the second part before making a lot of assumptions about where the writer is going with his conclusions!

Many of your questions are dealing with possible solutions and perceived problems that the writer has not yet proclaimed! Your questions are also very slanted (obviously we know where you stand) and presumptuous in assuming that the only solution to a problem is to deregulate! You also wrongly assert that certain practices elsewhere in the world will NOT work in Nigeria even though you are less willing to take a closer look as to why this wild assumption may be so! Nor do you show any interest in finding out or even having a measure of insight into what exactly is done in those countries to ensure that cheap fuel is made readily available to citizens!

I will admonish you, as I will others, to read and assimilate the facts contained in this article and in so doing, everyone will be better equipped and armed with vital information and knowledge, so that Nigerians will no longer be bamboozled and forced into positions of compromise and loss by corrupt and decadent leaders! In the interim, I will recommend that you wait for the second part of the article, where many of your questions may be answered (or not) before you resume your attack!

please read

Please read and comprehend this article. The way you see Nigeria and the argument for oil subsidy will never be the same again! Let us arm ourselves with critical knowledge and information so that we the people can rid ourselves of all these political leeches that are feeding fat off our backs.

If we do not have knowledge of our country and its activities, then what do we have?? Many of us are doomed to a life of slavery both home and abroad because of the actions or activities of our leaders - who have been exposed to be nothing more than blood sucking leeches.

Let the revolution begin today, but let it start with a revolution of the mind!

Please read, , in the name of God and for the sake of our fatherland, please read and assimilate:

https://www.nairaland.com/nigeria/topic-806581.0.html#msg9585697

When it was time to vote there were many objective and factual analysis of each of the candidates by those who had the presence of mind and conscience to do the work required! I find myself wondering where these 'learned' friends of yours were?? Did they even expend a modicum of objectivity or supple intellect in reaching their disastrous decisions? It is useless to cry after spilling milk, this is why the onus is always on voters (particularly the educated elites) to perform due diligence, remove sentiments and vote their conscience!!

Here is an excellent analysis that I posted on April 1, 2011 before the election: >

https://www.nairaland.com/nigeria/topic-636746.0.html

If you read the analysis with the benefit of hindsight now, it becomes obvious how saliently accurate the analysis was. It is unfortunate that in my beloved country parochial sentiments and ethnocentric values always trumps common sense and sound judgement! Just my two cents,

In response to Mr president and his ill-advised and ill-informed antics, I humbly ask interested parties to read this: >

https://www.nairaland.com/nigeria/topic-806581.0.html

Let us educate and arm ourselves with information about our fatherland and its current state so that we will no longer be railroaded and bamboozled by reprobate, decadent and greedy political leaders!

- For those of us who want to have complete insight and an astute understanding of the state of affair in Nigeria's oil industry. Please read and assimilate.

I have no need to distort facts. You are right as my database came up with two Iluyomades in the army. I guess the one that fought in Ore was Captain Iluyomade with 4th Brigade of 2nd Division under Murtala Muhammed. Yet, he was a memeber of military police unit.

Again, there was no “Yoruba Army” that fought in Ore as to warrant the crap said about Afonja in respect to Ore saga. The 2nd Division of Nigeria was mostly populated by the Yoruba peeps that had also vehemently deduced they were in awkward position to muster a fight against the northern soldiers in Yoruba land.

Yet both 3MCDO and 2nd Division of Nigerian army were filled to the unit's strenght by Yoruba and southern Nigerian minority ethnic groups. You can not simply eat your cake and have it.

- Dede1


What utter nonsense??
There were indeed two Iluyomades in the army and they were brothers! The victory achieved in Ore battle was spear-headed and valiantly fought by (the then) captain R.O Iluyomade of the newly deployed 2nd Division of the Nigerian Army. The other Iluyomade (the elder) was a military police officer who was posted to Ibadan and was not in the war front.

Dede1,

I understand your prejudiced igbo sentiments and I also know that you are pro-biafra and all that ethnocentric nonsense! However you could at least endeavour to project supple intellect and common sense in your proclaimations - most of which are made without the benefit of facts or any truth-telling attributes! I have seen and read your posts in several threads related to the Nigerian Civil War and I have yet to see or hear you take a position of objectivity or demure to superior knowledge even when confronted with cold hard facts!!

It is certainly your right to hold whatever sentiments suits your skewered mentality however such inalienable rights should not be confused with the reality and facts of history. You cannot revisit history and skewer it to your prejudiced sentiments - that only makes you a wannabe historical revisionist just like I suspect many of your sources are!

Your illustrations, recounts and facts about 'Ore battle' are flat out wrong!! It is foolhardy and imbecilic for anyone to suggest that the advancement of the Biafrian rebels was mysteriously stopped and reversed because some Biafrian officer had a change of heart or because they were sabotaged by Col. Banjo who presumably had a bout of cowardice! This is a preposterous notion which has no merits! - a suggestion that is perhaps best described as asinine!!

THE BIAFRIAN ADVANCE WAS STOPPED COLD AT 'ORE' BECAUSE THE REBEL ARMY CAME ACROSS AND WERE CONFRONTED BY FIERCE RESISTANCE AND SUPERIOR FIREPOWER!! FROM THAT POINT ON, THE FEDERAL TROOPS STARTED PUSHING BACK ALL THE WAY UNTIL ENUGU WAS CAPTURED!

If you persist in this ignorant line of reasoning, I will be willing to provide you with cold hard facts AND dates! - because quite simply, the people who took biafran bullets in their body, who dug the battle trenches and fought with every ounce of courage in their body are still alive! And as a scion and an offspring of one of these very distinguished and great Nigerians, I WILL NOT SIT HERE AND ALLOW YOU TO DENIGRATE OR INSULT THEIR LEGACY AND SELFLESS SERVICE!!

If you say 'Iluyomade' was green and did not fight in Ore, , was it then your own father that did the fighting? Perhaps you should go back to your ancestral home and let them tell you the truth about the war and inform you about how defeat was handed over to them! THE WAR WAS FOUGHT AND THE WAR WAS WON! END OF STORY!!!! Let us move on.

PART 1: NIGERIAN OIL INDUSTRY AND FUEL SUBSIDY: THE FACTS, THE MYTHS AND THE HIDDEN TRUTH!

Written by Olumide Iluyomade




BACKGROUND HISTORY:

The Federal Republic of Nigeria is a nation whose name is synonymous with oil riches! Shortly after independence in 1960, the young democratic nation was soon confronted with divisive and unsavoury political wrangling which led to an unsolicited military intervention and political assassinations! A violent vortex of political unrest, sectional violence and further military agitation and politicization was to follow, which ultimately culminated in a civil war in 1967!

In the early formative years, Nigeria was not known for oil production, much rather the nation had a vibrant and fecund agrarian economy. Commercially viable crude oil deposit was first discovered by Shell-British Petroleum Company at Oloibiri (now in Bayelsa State) shortly before independence in 1956. Initially, a 50-50 sharing arrangement between the company and the colonial government of Nigeria was implemented. By the early 1960’s Mobil, Texaco and Gulf Oil had purchased concessions and Shell-British petroleum was no longer the exclusive oil exploration company.

By 1970, in the aftermath of the civil war, the nation as a whole was in the process of recovering from the devastating effect of war and the blossoming Nigerian oil industry had not been spared the negative impact either! Oil production had dropped to a mere 33% of its production peak of 420,000Bpd in 1966. The incumbent military leadership was in dire need of revenue and new sources of income to pay outstanding debts and forge a viable nation state. It was under this circumstance that Nigeria was to discover her true potentials as an oil producing nation.

A few years later, the tides of the nation would turn dramatically culminating in the oil boom of the 70s, Nigeria experienced her first and most critical economic boom! Billions of dollars generated by the production of crude oil flowed into the national confers. The fossil-fuel rich Niger delta region which had been a primary bone of contention in the acrimonious negotiation leading to the civil war was to become the nation’s primary source of revenue! Nigeria had become an important and critical producer of the most valuable energy resource in the world! Thus the nation’s influence and wealth grew exponentially.

Nigeria soon joined OPEC and embraced regional initiatives. Critical national infrastructures were constructed and strategic oil Refineries were built to reduce dependency and to yield greater income! The military government which was in control of the federal government, realizing the great potentials and the wealth trapped underneath the ground, especially with regards to revenue generation, actively and aggressively sought out the best opportunities and means of exerting exclusive control over the valuable resource! The federal government persisted in garnering control over oil revenues by implementing the following laws and policies:

In May 1971, the Federal Government of Nigeria (FGN), then under the leadership of General Yakubu Gowon, consolidated its involvement in the nation’s oil industry through the creation of Nigerian National Oil Corporation (NNOC).
1972: FGN declared that all properties not currently owned by a foreign corporation or entity, legally and automatically became properties of the federal government, thus effectively nationalizing regional assets and gaining jurisdiction and control over the sale and allocation of concession to foreign investments.
1974: FGN decreed a mandatory participation in all oil industry projects that accrued 55% equity share to the federal government.
1975: FGN enacted Decree #6 which increased the federal share of the revenue from oil to 80%, with only 20% going to the states!
1976: First notable exploration and development venture undertaken by NNOC to uncover commercially viable deposits of petroleum off-shore
1978: FGN promulgated the Land Use Act which vested control over all land in the office and jurisdiction of each respective State governor.
1979: Declaration of 1979 federal constitution of Nigeria. Section 40(3) of the constitution declared all natural resources – fossil oil, minerals and natural gas; found within the sovereign boundaries of Nigeria as the exclusive and legal property of the federal government of Nigeria.
1979: In an effort to further increase its control over the oil industry, the FGN merged and restructured the functions and responsibilities of NNOC with the Federal Ministry of Petroleum’s area of oversight, thus creating the Nigerian National Petroleum Corporation (NNPC). Through its proxy in NNPC, the federal government’s involvement and equity share in all petroleum ventures was henceforth established by law to be 60%.

As oil production revenue rose, federal government subvention to states and parastatals increased significantly, getting to the point where the states and agencies felt no pressure to generate their own income or even maintain a semblance of self-sustenance! With the concentration of funds and resources in the hands of the central government, hardly any efforts were made by the state governments to engage any economic activity to help maintain and accomplish self-reliance! It was to be the beginning of an unfortunate saga!

It was also during the oil boom of the 1970s that the political economy of petroleum in Nigeria became characterised by endemic patronage and corruption by the political elites. It was to be the beginning of a federal government policy drive that entailed brazen insensitivity to the needs of the nation as a whole, especially with regards to the economic inclusion and environmental concerns of the communities wherein the resources were extracted! This period would also highlight the completion of a federal objective to takeover all oil revenue and centralize income!

Having never reconciled the differences, bitterness and grievances of the various ethnic factions that constituted the nation after the civil war, allegations of sectional favouritism in the allocation of funds and resources were soon common place and rife. A general mien of discontent persisted within the political elites! Nigeria’s income centralization when coupled with her colourful diversity and a bludgeoning population was a recipe for disaster! The temporal demise of the military from politics in 1979 would ensure and bring about another morbid struggle for political dominance and control! The federal government and federal offices became the epicentre of acute political wrangling, power struggle and economic subjugation!

In ignoring the nature of her federal constitution and depending exclusively on the sale of crude oil for income generation, Nigeria’s military leadership and the subsequent national governments had unwittingly created a dangerous situation which spelt doom for the previous ideal of autonomous regional governance and self-reliance! The mandate of federalism with which the nation had been bequeathed, had now been clearly subverted!

Beyond that, the dangers and disadvantages of having a monolithic and singular source of income had been made evident by the erratic swinging pendulum of commodity prices!  It had now become obvious that a stable and consistent economic growth could only be attained through the development of a broad and versatile economic base! In other to achieve this, the current oil revenue would have to be purposed tacitly to more focused, astute and strategic objectives! It goes without saying that this noble objective was never accomplished!

Today, Nigeria is home to 160 million citizens making it the most populous nation in Africa! Nigeria is also the 7th most populous nation in the world along with being the most populous black nation in the world!! In spite of having fabulous economic potentials, ebbing human resources and a territory riveted with natural resources, Nigeria has not fared so well, economically! Over the years, the socio-economic prospects of her citizens have dwindled, even as the earnings and income generated from oil continued to sky-rocket!

Nigeria is the Cinderella nation that never quite made it to the king’s dinner, having been betrayed, ambushed, violated and despoiled by her own keepers and guards! The moribund nation has had the great misfortune of being saddled with 32 straight years of utterly corrupt, depraved and inept leadership!  The consequence of which is the total annihilation of any form of advancement or development hitherto achieved! The social retrogression and the prevalent social decadence currently experienced is a lasting testament to this undeniable truth! Virtually every aspect of the nation’s socio-economic well being and national virtue has been completely eroded and thoroughly devastated!

INDUSTRY OVERVIEW:

To fully understand the magnitude and scope of problems and dysfunction experienced in the Nigerian oil industry today, it is imperative that a detailed and comprehensive overview of the industry be carried out. In so doing, a lot more light will be shed on several confusing and unknown facts. Also, the opportunity to review, identify and expose areas of inadequacies and recurring shortfalls will be thus assured!

REFINERIES:
Today in Nigeria, the federal government owns all the refineries in the nation and they were all constructed or installed between 1965 and 1989. The refineries are as follows:  
Port Harcourt Refinery 1 – (PHRC I) This is the smallest and oldest of the refineries. A former Shell-British Petroleum complex and investment which was nationalised under General Obasanjo’s administration. Built in 1965 as a simple topping and distillation refinery with a capacity of 60,000Bpd! With no overhaul or upgrade since then, it is essentially obsolete and decommissioned! NNPC website suggests that refinery’s facility is probably used for oil storage with some pump station components.

Port Harcourt Refinery 2 – (PHRC II) The new Port Harcourt refinery which also happens to be the youngest and biggest of the nation’s refineries was conceived as an export refinery with a capacity of 150,000Bpd. It was completed in 1989 by General Babangida’s administration. The Eleme Petrochemical plant was built adjacent to the refinery in 1995. It was designed to produce Olefin, Polypropylene and Polyethylene. Today, due to a history of poor management and maintenance, the current output in the refinery is a low fraction of its installed capacity. Even at that, it is perhaps still the most functional of the nation’s refineries. Like the refinery, the petrochemical facility has been plagued by unresolved technical and maintenance issues and has never been able to function at more than 40% of its installed capacity. It now lays dormant!

Warri Refinery – (WRPC) This refinery was built in 1978 when (the then) Brigadier Buhari headed the Petroleum Ministry. With an installed capacity of 125,000Bpd, the complex had an additional petrochemical processing capability added to it in 1986 for downstream petroleum products such as Polypropylene and Carbon Black. However, with an unresolved history of corrosion even in its younger days and frequent shut-down due to neglect, lack of maintenance and pipeline sabotage, the facility often manages to output at no more than 30% of its installed capacity but that is on an infrequent and haphazard basis! WRPC also has an integrated design capability that generates 125MW of electricity if running at capacity. Hence the energy needs of the refinery could be met while the excess energy produced (upwards of 70%) could supply the nation’s power grid. In more recent years, however, most operations have ceased and the facility has typically become unproductive and comatose!

Kaduna Refinery – (KRPC) Built and championed by General Buhari as head of NNPC in 1979, under the administration of General Obasanjo, this politically motivated project is perhaps one of the most convoluted, ill-conceived projects ever built by the federal government of Nigeria! Located over 600km from its feedstock supply in Escravos, Delta State and designed to process both Nigerian Bonny light and imported crude oil (Arab Light), Kaduna refinery has never performed at full capacity! With an installed capacity of 110,000Bpd, the refinery was also designed to feed a base-Oil manufacturing plant, an asphalt plant and a LAB plant. However, having never had an assurance of unimpeded flow of feedstock except in the first 10 years of its installation, KPRC has been plagued by all kinds of problems including a frequent sabotage of the supply pipelines, technical breakdowns, pilferage, poor management and maintenance which has resulted in a major fire outbreak on at least two occasions – 1997 and 2002! In its best operating years, between 1999 and 2002, KRPC’s output was estimated to have been around 30%-40% of capacity. In 2003, due to political unrest, communal discontent and rebel actions, the pipeline from Escravos was sabotaged and blown apart! The refinery is currently said to be barely operational and is capable of being operated at less than 10% capacity, however this can only be done sporadically - if and when there is crude feedstock supply!

In the last 20 years, Nigerian citizens have had to deal variously with a myriad of unmitigated issues! Chief among such problems is the perennial fuel supply problems which range from scarcity of fuel to outright non-availability of some products! With a total installed capacity of 445,000 barrels per day (bpd), the nation’s four refineries despite their capacity, have been consistently and variously mismanaged, pilfered, sabotaged, politicized, neglected and denied much needed maintenance! It is no wonder that they have been unable to perform to expectation and deliver the domestic needs of the nation!

OIL EXPLORATION & PRODUCTION:
By law, all petroleum exploration and production carried out by foreign Multi-National Corporations in Nigeria are performed as a Joint Venture (JV) with Nigerian National Petroleum Corporation (NNPC), which is a proxy of the federal government of Nigeria. NNPC has the sole responsibility for upstream and downstream developments and is also charged with the responsibilities of regulating and supervising the oil industry on behalf of the federal government.

In 1988, NNPC was commercialised and its operational departments were split into eleven (11) subsidiaries. The ensuing business model covered the entire spectrum of the oil and gas industry. The subsidiaries are as follows:

1) Nigerian Petroleum Development Company (NPDC): A wholly owned subsidiary of NNPC with responsibility for Petroleum Exploration and Production activities.
2) National Petroleum Investment Management Services (NAPIMS): A subsidiary mandated to enhance the benefits accruing to the federation from its investments in the upstream petroleum industry through effective cost control and supervision of JV and PSC operations.
3) Nigerian Gas Company (NGC): Wholly owned subsidiary charged with the responsibility of developing a domestic gas industry to fully serve Nigeria’s energy needs. It is also responsible for laying an integrated natural gas pipeline and network for both domestic and regional export market.
4) Products and Pipelines Marketing Company (PPMC): This subsidiary is essentially mandated to ensure the security of supply of petroleum products to the domestic market. It does this by transporting crude oil to the refineries and moving petroleum products to the domestic market through various different means.
5) Nigerian Liquefied Natural Gas Limited (NLNG): This is a joint venture between NNPC (49%), Shell Gas B.V (26%), Total LNG Nigeria ltd (15%) and Eni International (10%). NLNG operates six liquefaction units (LNG trains) producing 22 million metric tons of LNG per year. NLNG operates a liquefied natural gas plant on Bonny Island.
6) Integrated Data Service Limited (IDSL): IDSL was set up to offer services in the upstream sector of the oil and gas industry. These services include; Seismic Data Acquisition, Seismic Data Processing, Reservoir Engineering Services and Data Storage & Management Services.
7) National Engineering and Technical Company Limited (NETCO): This wholly owned subsidiary provides both basic and detailed engineering in the oil and gas industry. Company handles procurement, construction supervision, project management, quality assurance, quality control, environmental services and training.
8 ) Hydrocarbons Services Nigeria (HYSON): An NNPC/VITOL joint venture which was envision to be an international petroleum trading company with particular emphasis on the West African and the Central African sub-regions.
9) Warri Refinery and Petrochemical Co. Limited (WRPC): More detailed description given earlier.
10) Kaduna Refinery and Petrochemical Co. Limited (KRPC): More detailed description given earlier.
11) Port-Harcourt Refinery Company (PHRC): More detailed description given earlier.

The Joint Operating Agreement (JOA) is the basic and standard agreement between NNPC and the numerous operators (IOCs). The agreement sets the guidelines and modalities for running the operation according to the law and constitution of Nigeria. As such, Oil corporations operating in Nigeria generally appropriate only 40% of the revenue or crude volume, while the federal government through its proxy in NNPC accrues about 60% of the revenue or crude oil. Six Joint Ventures involving International Oil Companies (IOCs) are currently operated and they are as follows:

1) Shell Petroleum Development Company Nigeria Limited (SPDC): The biggest Joint Venture in Nigeria producing 899,000Bpd as of 1997. JOA provides for a rather complex appropriation – NNPC (55%), Shell (30%), Elf (10%) and Agip (5%)
2) Chevron Nigeria Limited (CNL): Largely operating around the shores of Warri at an estimated production rate of 400,000Bpd. The JOA provides for NNPC (60%) and Chevron (40%)
3) Mobil Producing Nigeria Unlimited (MPNU): With an estimated production rate of 632,000Bpd (1997), MPNU is the second largest joint venture. The JOA is NNPC (60%) and Mobil (40%).
4) Nigerian Agip Oil Company Limited (NAOC): A joint venture owned by NNPC (60%) and operated by Agip (20%) and Conoco-Philips (20%). 1997 output was 150,000Bpd!
5) Elf Petroleum Nigerian Limited (EPNL): An off-shore and on-shore joint venture between NNPC (60%) and Elf (40%). Output was 125,000Bpd in 1997.
6) Texaco Overseas Petroleum Company of Nigeria Unlimited (TOPCON): A joint venture operated by Texaco (20%) and Chevron (20%) and owned by NNPC (60%). Production output is 60,000Bpd from five off-shore fields.

DATA & PERFORMANCE:
According to the Oil and Gas Journal, Nigeria has an estimated 37.2 billion barrels of proven oil reserves as of January 2011. In 2010, total oil production in Nigeria was slightly over 2.46 million Bpd making Nigeria the largest oil producer in Africa. The instability in the Niger delta has caused significant amounts of shut-in production. The US EIA estimates that Nigeria’s total production capacity may be close to 2.9 million Bpd however, due to incessant disruptions and instability often occasioned by attacks on oil infrastructure, daily crude oil production could sometimes hover as low as 1.7 – 2.1 million Bpd.

In 2010, Nigeria exported approximately 2.2 million Bpd of total oil output and 1.8 million Bpd of crude oil. Over 40% of Nigeria’s oil output is exported to the US, thus making Nigeria the fourth largest foreign oil supplier to the United States. Nigeria’s light, sweet crude is a preferred feedstock and is thus priced higher in the commodity market because of its low sulphur content. A barrel of Saudi Heavy crude (2.8% sulphur, 27API gravity) is intrinsically worth less than a barrel of Nigerian Bonny Light (0.14% sulphur, 34 API gravity), because the former will yield less high-value gasoline, diesel and jet fuel than the Nigerian variant. Consequently, any disruptions to Nigeria’s oil production impacts trading patterns and refinery operations in N. America, often affecting world oil market prices!

Considerable attention has been drawn to the environmental damage caused by oil spills in the Niger Delta. According to the Nigerian National Oil Spill Detection and Response Agency (NOSDRA), approximately 2400 oil spills were recorded between 2006 and 2010, most of which resulted from sabotage, bunkering and poor infrastructure. The annual volume of oil spilled in Nigeria has been estimated be about 260,000 barrels per year for the past 50 years!

It is also no secret that Nigeria has an even more abundant supply of natural gas than oil! According to the ‘BP Statistical Review of World Energy’, Nigeria has an estimated and proven natural gas reserve of 187 trillion cubic feet (Tcf), which makes the nation the ninth largest natural gas reserve holder in the world and the largest in Africa! In 2009, Nigeria produced about 820 billion cubic feet (Bcf) of marketed natural gas and consumed another 255 billion cubic feet (Bcf), mostly for the generation of electricity. Nevertheless, according to National Ocean and Atmospheric Administration (NOAA), Nigeria flared 536 billion cubic feet (Bcf) in the same period!

Because many of Nigeria’s oil fields lack the infrastructure to channel and market associated natural gas, it is often flared away – an action with grievous environmental consequences! In 2011, an NNPC report claims that flaring costs Nigeria roughly $2.5 billion per annum in lost revenue! The government of Nigeria has maintained a policy that is targeted at ending natural gas flaring, however progress is limited, largely due to uncommitted and unserious implementation of policy and an unfocused and feeble regulatory culture.

POWER & ENERGY CORRELATION:
With regards to energy, available data from US Energy Agency (IEA), shows Nigeria has an electrification rate of 50% for the entire country. Approximately 76 million people do not have access to electricity in Nigeria! The current and the most critical challenge and pending issue is the need for the Nigerian government to produce enough electricity to meet its economic needs and the pent up local demand! Nigeria has vast resources in the form of petroleum, natural gas, coal and renewable energy that could be used for domestic generation of electricity. However, the country is lacking a proper Power and Energy policy to harness the resources and develop the electricity infrastructure.

The Nigerian government recognizing the need to address its power inadequacies, developed and introduced a ‘Gas Master Plan’ that promotes the installation of new gas-fired power plants to help reduce gas flaring and provide much needed electricity generation. However, the implementation of this Gas Master Plan has been fraught with graft and corrupt practices! Also, the plan has not been integrated, merged and reconciled with a viable National Power and Energy policy. As is usual, Nigerian government keeps coming up with various frenzied plans that merely address the symptom and not the root cause! This includes a recent announcement to create up to 40,000MW of electricity by the year 2020 (compared to the current 5900MW installed capacity), however the underlying issue and the primary need for a comprehensive and viable Power and Energy policy remains unresolved and keeps getting ignored and sidetracked!


SUBSIDY AND THE STATUS QUO:

Nigerian citizens have always insisted on and clamoured for the right to enjoy certain basic benefits from the nation’s oil wealth - a privilege which the government which had often failed to act in the best interest of the people, sees as burdensome! The revolving and perennial problems of corruption and putrid leadership when added to the latent and insidious problems created by the actions or the inactions of such corrupt governments over the years had left citizens with much despondency and considerable disenfranchisement in the face of extreme social deprivation!

Therefore the people, who have never known or had the benefit of a good social infrastructure or a social safety net to rely on, as is done in other countries, have maintained a subconscious resolve to make the benefit of cheap oil a worthy cause! It has hence become a natural imperative for the embattled citizens to fight and resist any and every attempt to deny or rob them of the only benefit which they could perceive and enjoy as Nigerian citizens. To truly understand the anger, frustration and absolute mistrust that the citizens have for their government in this regard, a revision of the history of oil prices in the last 30 years is in order.

In 1986, the military administration of General Ibrahim Babangida declared that due to the devaluation of the Naira, the domestic price of fuel had become unreasonably cheap and was therefore burdensome to the federal government’s purse! The price of petroleum products was thus raised from 23 kobo per litre through a negotiation process, eventually settling at 70 kobo per litre! Chief Ernest Shonekan, the brief successor to the Babangida regime, cried out in dismay at the fiscal state of affairs upon taking over. The price of fuel was identified as one of the primary budgetary burdens based on the fact that the currency had further been acutely devalued. In 1993, the price of gasoline (petrol) was therefore increased to N5/litre!

Shortly after General Abacha grabbed power from the tethering administration of Ernest Shonekan, he would reduce the price of petroleum products slightly to gain public support. With gasoline (petrol) now priced at N3.25/litre, fuel price adjustment had become a tool in the hands of the government for manipulating the support and mood of the people! Just over a year later in 1994, the government announced a sharp increase in the price of petroleum products. PMS (petrol) would now cost a fearsome N11 per litre! Upon the death of Abacha and the ascension of General Abdulsalami, the price was once again reviewed and increased to N25/litre! An outcry by the public and resistance from the labour congress forced the administration to reduce the price to a ‘paltry’ N20/litre in January of1999.

As democracy was ushered in, the newly ‘rebranded’ President – General (rtd) Olusegun Obasanjo, soon found enough reason to want to ‘remove the subsidy’ on oil product prices! Obasanjo would become the president who increased and inflated the price of petroleum products three times within a period of 8 years! Alongside some other economic indices, this action would bring about a hyper-inflationary trend that remains unresolved even today! Phrases such as ‘subsidy removal’; ‘eliminate waste’; ‘to free government funds’ and ‘encourage foreign and local investment in upstream sector’ were thrown around with reckless abandon! Does that sound familiar??

In the space of 8 years, the price of petrol went from N20/L to N30/L in 1999 but was reduced to N22/L because of public resistance in 2000. In 2002 prices went to N26/L, however, in 2003 it was increased to N40/L but reviewed back to N34/L because of another stiff resistance from the public. In 2006 however, the price was revised up to N40/L again and finally as a parting gift in 2007, the reprobate president would foist a criminal and sudden increase to N75/litre on the citizens! For his part, the feeble and morbid President Yar’dua who succeeded Obasanjo, showed some compassion and reduced the official price of petrol to N65/litre!

After a mere 18 months in Aso Rock, the incumbent president, Goodluck Ebele Jonathan declared that the Federal Government of Nigeria could no longer afford to keep paying for the subsidy of oil products (by this stage diesel had already been surreptitiously deregulated!). It was disclosed that the FGN was expending an inordinate amount of money, a sum that totalled a whopping N1.3 trillion for the fiscal year of 2010! The president further alleged that the status quo and current arrangement was a painful and debilitating burden on the federal budget and thus is unsustainable! He further iterated that the FGN had made a decision to do away with all subsidies and deregulate the domestic petroleum product market –hence opening fuel supply and prices up to capitalistic endeavours and free market forces! Deja vu!!

In 2010, Nigerian domestic market consumed approximately 280,000Bpd according to official NNPC figures. Under the current dispensation, upwards of 92% of Nigeria’s domestic demand for finished petroleum products  is imported by ‘independent marketers’ through the implementation of contract and license based arrangements with NNPC. The hand-picked importers (cabal??) are allocated a proportion of the domestic demand which is expressed in weight/volume, upon which the allotted quantity of petroleum product is imported to the nation. The difference in the cost accrued for importation in comparison to the official domestic price of N65/litre (PMS), along with an agreed profit margin for the marketer, is thus calculated and paid out  - called a reimbursement, , these essentially is what is being referred to today as a ‘Subsidy’!

This ‘Fuel Subsidy’ cost has increased dramatically over the years, especially as world crude oil price has risen! Other factors that may have contributed significantly to the rising cost are the devaluation of the Naira and the increasing cost of transportation. However, the primary component of the cost that has caused the greatest uproar is the inordinate ‘Depot’ (dock and jetty) charges which is best described as very high and unnecessary ‘demurrage charges’ at the port!

According to information derived from the website of Petroleum Products Pricing Regulatory Agency (PPPRA) - the agency charged with the control and regulation of domestic fuel consumption, Petroleum Product Pricing templates are being used – a formatted and standardized formula for calculating the final landed cost of petroleum products. It is indicated that as of July 2011 the landed cost of PMS (petrol) was calculated to be N142.40/litre! This suggests that N77.40 will have to be ‘subsidized’ by the FGN in other to sell that fuel for N65/litres! A closer study of the underlying component of the cost reveals that ‘Depot’ related costs are separately charged to federal government account, which amounts to almost N50/litre –this ‘fuzzy’ charge is said to be the cost of port demurrage alone without adding the landed cost of the imported fuel! In essence, the actual and total cost of a litre of PMS fuel (Petrol) to the FGN was a whopping N191.91/litre!!!

In 2006, Nigeria spent N261.1 billion (US$2.03 billion) on ‘fuel subsidy’. In 2007, this figure rose to N278.9 billion (US$2.3 billion). By 2008, the amount expended nearly tripled to N633.2 billion (US$5.37 billion)!! The drastic increase in cost was partly attributed to a depreciation of currency and the very high global prices of oil products. However, there was also the incessant issue of massive graft and fraud which was opportune by the unfortunate and sordid chain of events that led up to the death of the former president! Once this precedence had been set in 2008, the stage was primed for inordinate fraud and for annual increases in the cost to the FGN that would eventually culminate in the whopping cost estimate for the fiscal year 2011!

It comes as no surprise however, to note that despite the exponential increase in the cost of importing and ‘subsidizing’ fuel for domestic consumption, there has only been a marginal increase in the total volume of domestic fuel consumption over the last few years! (2006 -2010). In 2006, the official figure for domestic consumption acquired from PPMC indicated a consumption rate of 237,000Bpd. For 2010, PPMC data reflects domestic consumption rate of 280,000Bpd for the year. Most of PPMC data is however based on the figures for Domestic Supply Obligation (DSO), however, it is a well known fact that the actual figures for the import of petroleum products may not necessarily equate to this figure!

An unspoken and often overlooked but critical factor to consider is that NNPC is mandated to set apart a certain amount of crude oil to fulfil the allocation for Domestic Supply Obligation (DSO). This particular allocation of crude oil is supposed to be supplied to the local refinery companies at a hugely discounted and commiserate local price! In the past years such discounted prices have been as low as US$18 per barrel however, it is nearly impossible to verify the current discounted price! The entire premise surrounding this DSO debacle is deliberately hushed and remains a well kept secret!

In the original bureaucratic process, the standard arrangement was for NNPC to allocate the approved DSO to the local refinery companies through its subsidiary - Products and Pipelines Marketing Company (PPMC), for refining and then re-distributed for domestic consumption! However, since all the refineries have been rendered impotent and are incapacitated - being unable to meet domestic obligations, the allotted crude supply (DSO) is re-diverted by NNPC through a shady and dark process that is not remotely transparent! This arrangement involves the issuance of ‘oil lifting rights’ to private marketers, lobbyists and powerful brokers (Oil Cartel??), who act on behalf of NNPC and sell the crude supply at astronomical profits in the international export market!! In this way, much of the nation’s wealth is siphoned into private confers through illicit back-deals and corrupt practices! For the year 2010, the DSO crude supply amounted to 280,000Bpd which the FGN had heavily discounted, however the profit accrued from the sale remains unaccounted for and goes into private pockets without any return to the people!

According to data available from Transparency for Nigeria, a NGO and watchdog, Nigerian domestic consumption and demand for the key petroleum products in Nigeria is as follows:
PMS: Premium Motor Spirit (popularly known as Petrol) – 30 to 34 million litres per day
AGO: Automotive Gas Oil (popularly known as Diesel) – 12 million litres per day
DPK: Dual Purpose Kerosene (popularly known as kerosene) – 8 million litres per day
ATK: Aviation Turbine Kerosene (Known as Aviation fuel) – 2 million litres per day
LPG: Liquefied Petroleum Gas (known as cooking gas or propane) – 192,000kg per day (15,360 cylinders of 12.5kg each)

SUMMATION & VERDICT:


In conclusion, one must wonder what has been done to mitigate and resolve this cyclical problem of ‘fuel subsidy’ that seems to have been a bone of contention for every administration for the past 26 years! It is also interesting to note that the beginning of this perennial problem was set at the onset of the devaluation of Naira in 1986 when the Babangida administration adopted and implemented the Structural Adjustment Program (SAP). It was apparently not so long after this moment that the nation’s refineries started experiencing operational and maintenance issues!  It goes without saying that the nation’s journey from that moment on, especially with regards to Energy and Power, became a quick downward spiral!

In more recent years however, there was a glimmer of hope – not because of improvement in the leadership profile or improvement in management skill of the government, but rather because of a fortunate and fantastic global phenomenon that inordinately increased and multiplied the nation’s earnings through a steady and consistent stream of high crude oil prices! A Bloomberg report revealed that Nigeria has earned $196 billion in the past 4 years alone (2006 – 2010)! As a matter of fact, it is important to point out that Nigeria’s earnings in the last 10 years has exceeded the total earnings of the nation for a period of 29 years dating from 1970 – 1999!!

The question must therefore be asked of our government and leadership, what has been done with all the money earned recently in the face of the nations numerous problems, chief among them, the perennial issue of domestic fuel supply?? Why are the refineries still in a state of disrepair and neglect even after more than 20 years of epileptic performance and under-performance?? Knowing the strategic importance of the refineries and the importance of reducing governmental deficits and pay-outs, especially with regards to the ‘fuel subsidy issue’, should the government not have made the overhaul and re-alignment of these refineries a national priority??

With the amount of money earned and with a recent high in our foreign reserve that exceeded the $56 billion mark, can it be said that the funds to overhaul, build, expand, restructure and realign the nation’s critical infrastructure to adequately accommodate the domestic needs, was unavailable?? What did the government do with the $23 billion that was recently depleted from the Excess Crude Account (ECA) in a short period of less than two years?? Why should the people be asked again to pay more for gasoline when similar and previous promises to prudently expend the funds realized on improved infrastructure have never been fulfilled?? What happened to Babangida’s (DIFFRI) program, Abacha’s (PTF) program and Obasanjo’s (Vision 2020) promises?? Most importantly, what did the Goodluck Jonathan administration do with the funds in the Excess Crude Account (ECA)??  It has been suggested and estimated by several professionals and experts that the US$23 billion that was only recently squandered could have been sufficient to finance and resolve all of Nigeria's immediate infrastructural problems which include Refineries, Power Plants and good Inter-State Highways!

A sincere, cogent and prudent assessment of these questions will reveal the answer, the true nature and intent of Nigerian leaders and government! For us to find a true and lasting solution to the domestic energy needs and the fuel supply problems in Nigeria, we will have to effect and mobilize a critical overhaul of current practises, restructure our institutions and get rid of gaping loopholes and the inherent culture of corruption and graft that is prevalent in the oil industry and the national government as a whole! For true and effectual results to be realized, the government must steadfastly implement a total reform of its rules, policies and practices while maintaining a high degree of common sense measures in delivering and attaining the worthy aspiration of the people for Power and Energy sufficiency, independence and affordability! The details of this noble objective will be fleshed out and examined in the second part of this article.

1 more week to countdown!

@Jungle007
(I like this your name sha! …Naija don get im own James bond!)
For the 969SF (square feet) of floor for instance, you will now require:

For 4 inch thickness:
- 38 Bags of Cement, make it 40 Bags
- 5700kg of Sand, make it 6 tons of Sand
- 11400kg of Crushed Stone, make it 12 tons of crushed stone ( 3/4 inch size)
- 266 gallons of Water

How much could you really save?? Let us find out and calculate:

Originally, for 4 inch thickness and for pure 1:3:3 formula, You were going to use the following:
53 Bags of Cement X N1800.00 = N95,400.00
8 tons of Sand X N2400.00/ton = N19,200.00
8 tons of Crushed Stone X N4200/ton = N33,600.00
370 Gallons of Water X N0.00 = N0.00 (I assume you have a well or borehole)
TOTAL MATERIAL COST (1:3:3 Mix) = N148,200.00

On the other hand, if we use the 1:3:6 formula as a filler, then we will use:
40 bags of Cement X N1800.00 = N72,000.00
6 tons of Sand X N2400.00/ton = N14,400.00
12 tons of Crushed Stone X N4200/ton = N50,400.00
266 Gallons of Water (once again uncharged)
TOTAL MATERIAL COST (1:3:6 ) = N136,800.00

CONCLUSION:
The savings amount to a total of N11,400.00!!
It is also important to remember that you only apply the 1:3:6 mix for ¾ of the floor thickness (first 3 inches), the last ¼ thickness must be finished in 1:3:3 mix! These further reduces the savings to something in the neighbourhood of N8,800.00 only! The savings achieved by using less cement is quickly chewed up by the higher cost of crushed stone aggregates!

When one considers the slower construction speed and aggravation caused by the use of two different mixes for one job – N8,800.00 is hardly worth the effort and the aggravation! And you will probably also have the added bonus of happier construction workers too!
My advice?? - Stick with the 1:3:3 mix formula and live longer!

@Jungle007,

You can save money without compromising safety on your first floor by using a method I am going to give you. However you must make sure that your contractor/foreman adheres to the instruction so as not to compromise safety. THESE INSTRUCTION IS FOR SLAB FLOOR ONLY! DO NOT USE FOR DECKING!!

1) From foundation, build up wall without constructing german floor
2) Once walls are up and above floor level you may even build to lintel if you want!
3) Fill floor voids with laterite or whatever filler sand of choice to within 4 inches of floor design level
4) Use concrete mix formula 1:3:6 for the first 2-3 inches of slab (evenly poured)
5) Use concrete mix formula 1:3:3 for the final or top 1-1.5 inches
6) Make sure all concrete pouring is done the same day per section
   ** (Remember that the advantage of building up your wall first is that you can pour slabs in sections (one room at a time!)
7) Total floor thickness should be a minimum of 4 inches.

If you use the above method, the 1:3:6 formula is called 'Lean Concrete' - it is characterized by a large ratio of aggregates and it is used for concrete filler roles and NOT for structural duties! The large aggregates ratio helps maintain a very strong compressive strength but weaken in the area of tensile strength, however since tensile strength is not the objective of a slab or german floor, you will not be needing or missing it!

@Jungle007,
I will start from the least – which is 3 inches. I advise against 3 inch!(it is tricky and requires the right conditions!) The least recommended thickness is 4 inches otherwise you run a very high risk of cracking the floor under load or pressure unless you use wire mesh reinforcement or something. However, since it is your project and I do not know what you want to use it for, I will go ahead and give it to you. In achieving a 3000psi concrete mix strength, I have calculated the following figures for your enquiry:

For 3 inch thickness on 969SF (square feet) you will need:
- 40 Bags Cement
- 6 tons (6000kg) of Sand
- 6 tons (6000kg) of Crushed Stone (popularly called granite)
- 280 gallons of Water

For 4 inch thickness on 969SF (square feet) you will need:
- 53 Bags of Cement
- 8 tons (8000kg) of Sand
- 8 tons (8000kg) of Crushed Stone (popularly called granite)
- 370 gallons of Water

For 6 inch thickness on 2207SF (square feet) you will need:
- 180 Bags of Cement
- 27 tons of Sand
- 27 tons of Aggregate or Crushed Stone
- 1260 Gallons of Water

I will also go ahead and recommend that you should always purchase 10% more cement and material than you need for any project. This is the standard margin that takes care of unexpected shortcomings, loss and inaccuracies that may arise. I wish you the best of luck in your project.

@Payless & @Sagewood,

You guys can agree to disagree, and there is nothing wrong with that, personal insults are unnecessary! Both of you had your points, but let us move on!!

You both probably have a lot more in common than your few differences would suggest - and that is the beauty of life!! Who knows, you may both end up building homes on the same street and blowing american grammar to the same crooked contractor

@Am Alone and @Brabus started this thread at loggerheads with one another, a few pages later they became allies, and now they are both partners in crime! (That was a joke ooooo!) I no wan fight ooh!!

We are all in this fight against the vagaries of life. Let us learn to be assets to one another. God bless.

And by the way, just in case you are wondering, the $200 bathroom sets ( I used them on several occasions in rental homes) are all doing fine! Short of someone smashing them with sledge hammers, they will stay functional for many many years (many are already 5yrs old). Sometimes we confuse luxury with quality. The absence of luxury does not necessarily mean the absence of quality! If the N5000 toilet does not break or refuse to flush - then by all means buy it! We always forget that life is in stages. If I buy N5000 toilet today becos that is all I can afford. What is stopping me from replacing it with N350,000 toilet bowl in 4 years time when I can afford it

At the end of the day, most things used in houses are all components - what is important is that you build a house!! Components can be replaced, upgraded, changed, renovated or even demolished, according to the wimps and economic status of the home owner. We shouldn't let that distract us or cause us so much aggravation!

God bless you all.

Guys, guys ,  get over this argument!
It is pointless and does not serve any purpose except to run each other down!
I think both of you have a point and the point has been made. Let us not derail this thread.
US market has both cheap and expensive but so does the Nigerian Market!
At the end of the day, it all depends on what you see and come across in your hunt for suitable items!
There are no absolutes in any of these!!!!

During the property boom, I purchased bathroom sets from Homedepot for as little as $200!! (These included Bath tub, Toilet bowl set and Sink with Pedestal!!)
In the same period I also purchased sets for another house that was in excess of $2500! - It all depends on what you are trying to achieve.

I have seen very poor, poor quality of products in Naija (, I repeat, I mean terribly poor product!!), however I have also seen fantastic bathroom sets that is fit for a king for sale in Naija stores too!! No one person can claim to have been to every store and seen every item for sale.

Sometimes Naija deals are good, some other times the quality you get for the price is pathetic. That is why you have to shine your eyes well well and do what is in your own best interest. China can make great stuff and the same china can give you your worst nightmare - depends on what you allow!

By the grace of God, when I start my own home some products will come from Nigeria and some other products will come from the US. We cannot allow that simple fact to cause us to drag each other in the mud?? Life is full of choices. One man's meat is another one's bone - that is why variety is the spice of life!

God bless

@Spyder,

You have forgotten something that is important - Dangote's biggest cement manufacturing factory are in Kogi state and Benue states respectively!

Actually, Obajana Cement factory in Kogi and Gboko cement factory in Benue are the two largest producers in the country today! Gboko is less than 120km from Enugu!

You also have to remember that much of Ibeto's cement comes from P/H, not Lagos.

It is called location, location, location,

Here is a website that lists building material prices

However I am not sure how much of this prices are still current and up to date??

If anyone knows, let us know what has changed and what hasn't. I know that cement is now N1800 - N2000 per bag.

http://www.nigeriapropertiesonline.com/price_quotes.php

I have a question for you @Kuntash or anyone else that can answer it.
Pls how much is the Granite dust? Was it supplied with a 10 ton truck too?
Also @Brabus, you seem to be familiar with the type of gravel that I pictured previously (you called it 'washed gravel').
Would you know how much it is sold for?? Is it per ton or per truck??
Thank you.

Well , this is what I know that is called 'Gravel'.

What you have pictured above is simply a pile of 'dirt'!

Maybe we just have a variance in our terminologies. I rest my case!

@Brabus, perhaps you should take the time to read my earlier comments. I did not accuse anyone of compromising standards in his construction nor did I take sides. I simply advised ‘@Am Alone’ to be more restrained in criticizing others cos we all have different ways to achieve the same solution. I also took the pains to explain to him where he wrongly assumed @Spyder was doing shoddy work. Of course, , you chose to overlook that!

@Am Alone, Now becos both you and @Brabus will not get off your high-horses on this gravel/granite issue, I will definitely have to clarify the issue:

Terminology is the number one problem in Nigerian construction industry. What you guys are referring to as granite is really what is called ‘Crushed Stone’. Period!! Quarries blast suitable rocks from natural formations which may be either metamorphic or igneous in nature. Geologically speaking, true granites are igneous, much rarer and could be coluorful too, being often polished and used for things like kitchen counter tops, grave headstones, tombstones and other high value building components (similar to marble). Marble is metamorphic while granite is igneous in formation.

The difference between gravel and your 'granite' (crushed stone) is not in quality or strength! The difference is as thus: Gravels are acquired by the natural processes of weathering and erosion over time and then gathered for use in construction, whereas crushed stones are artificially quarried and then crushed by mechanical means! Generally becos of the slow nature of the natural process, gravels tend to be rounded and smoother whereas crushed stones are generally angular and jagged in shape!

In terms of composition, gravel stones may be igneous or metamorphic also – it all depends on where it was sourced or collected from. Gravels are therefore from Rock formations just like your ‘granites’(crushed stones). Sometimes gravel may consist of a variety or different types of stone that may have been collected from different locations however this is generally not be discernable to the untrained eye. Most crushed stones used for construction in Nigeria are of the quartz-based variety – hence the reason why they are mostly grey in color. Gravel is the specific names given to these naturally occurring rocks when and where the size does not exceed 2.5 inches.

In use as concrete aggregates, neither crushed stones nor gravels have any real advantage over the other. The tensile strength of the concrete mainly depends on the quality of the mix and the rocks just serve as solid ‘fillers’! Either one of them has the compressive strength to add value and strength to a good quality mix. Heck! ….sometimes they are even of the same natural composition! However, in other uses that have aesthetic value, then the use of crushed stones could be mandatory becos of the consistency that could be achieved in size and colour! For example, most people do not realize that Terrazzo floor is simply specialized concrete with a high content of crushed stones of specific sizes which is polished to bring out its beauty and internal formation!

The reason why crushed stones (granite) may be more expensive than gravels is pretty obvious – first there is the question of ‘perception’ that has been inculcated into the consumer’s mind. Secondly, it should only be natural that ‘crushed stones’ are more expensive considering the amount of human and mechanical input required to produce it. Thirdly, Lagos may have an abundance of sand but the fact remains that Lagos is a coastal city with a flat topography that relies on importation of crushed stones from further inland. Fourthly, crushed stones are co-products and byproducts of an organized industry, hence there is the possibility of delivering huge volumes while maintaining consistency in size and quality – this is the main reason why big construction companies use crushed stones for their projects. A single major project may require 3.5 million tons of crushed stone!  Tell me where you are going to locate that amount of Gravel in a consistent fashion??

Fifthly, big construction companies do not buy crushed stone! What they do is to quarry their needs from nearby and suitable rock formations. The only thing it costs them is the cost of mining and transportation to point of use by their fleet of dump trucks. Why should a construction company use gravels that are harvested from 200km away when they can quarry a nearby formation and save cost! 

Sixth, local folks use cheap labour to harvest naturally occurring gravel and thereby make a living for themselves without using any equipment outside of shovels and diggers! You cannot compare this to the quarry industry’s expensive overhead!

Finally (7th), you must understand that cost is an index of location. In Lagos, crushed stones may be more expensive yet there are other parts of the country where crushed stone is cheaper than natural gravel. It all depend on location and what is readily available. In some parts of Ondo state, nobody even offers you gravel becos crushed stone is just that cheap and yet in other parts of the same state, everyone uses gravels becos there are simply no quarries close enough! There are places where sand is more expensive than crushed stone!! It is all about location,

And yes!  They are all simply called aggregates!

Just my 2 cents!

If there is anybody here who wants to build his decking or foundation based on the 3000psi formula and you want to know how much cement bags you will need, I will be willing to do that calculation for you. I will only need some basic information from you:

1) How many square feet is your total floor? (Pls measure the rooms and add everything together to get a total square footage)
Note: I will not use meters, I only use feet!

2) How thick do you want your slab (floor) or your Decking to be?  (4 inches, 6 inches, 12 inches??)

Once I have this critical information, I can give you a pretty accurate estimate of how much cement, aggregate, sand and water you will need based on the 3000psi formula.

Peace.

As a person who earned degrees in Real Estate, building technology and project management, I will like to chip in my 2 cents knowledge. There are several misconceptions and mis-informations going on in the building and real estate industry in Nigeria and I will like to seize this opportunity to lay them to rest and correct erroneous impressions and myths!

@Am Alone,
It would be nice if you restrained yourself from criticizing others when they do things different from you. I thought this was resolved 15 pages ago!! You must remember that there is no one way of doing things and in the school of thoughts, there is no graduate! Your house is nice and I think you are doing a great job however, please respect how other people choose to construct their house, even if you disagree!

It is indeed true that many buildings in Nigeria are over-engineered, although there are yet many more that are under-built or poorly built! Sometimes failed buildings and structures are not necessarily a product of poor materials or cheap materials, sometimes it is equally a product of poor construction practices or poor design or poor workmanship or even grand theft and conspiracy by site workers to steal  vital building materials and components on site and cover-up the fact.

Also you need to understand what others are trying to say before you embark on a campaign of smear and criticism. When @Spyder880 said he used one bag of cement for 12 headpans each of sand and stone, you should know that does not equate to a 1:12:12 ratio!! And this is why it is dangerous to criticize without knowledge!
You indicated that industry practice in Nigeria dictates a mix ratio of 1:2:4 – I think that will give you strong concrete but there is a lot more to concrete than that. Spyder880’s mix may or may not be actually stronger than yours based on certain facts which you have failed to take into account before harshly criticizing him.

When you are given ratios, the first thing to ask is what the value of the ratio is based on. Is it based on volume OR weight OR measure?? If you have a bag of cement that is 50kg, then it should be instantly obvious that a head-pan of whatever cannot be equated to (1) bag of cement hence the reason why your deduction of 1:12:12 is so wrong!

Generally, building industry standards uses measure as the value of their ratios, therefore what you want to know is how many head-pans fill or equate to a bag of cement. If it takes 3 head-pans to fill a bag of cement (and I am assuming here!), then it means that Spyder880’s concrete mix ratio is 1:4:4 which is not so far from the 1:2:4 you have been advocating for!

Finally, there are many aspects to concrete technology which you cannot rely on uneducated bricklayers and artisans to feed you with! Many of these artisans do things becos they have been taught that way and they have thus adopted it as industry standards – and many times they are right! However becos they do not know “Why” but they only know “How”, when circumstances require something different or a bit of ingenuity, they simply resort to what they know and thus end up giving wrong or ‘expensive’ advise!

If you want to know, Concrete mix quality is actually measured in pounds pressure per square inch (psi). A 3000psi concrete mix is considered very strong and adequate for most residential construction needs which includes German floors, structural spans and roof decks! I actually doubt that most construction projects in Naija achieve 3000psi. The recommended mix ratio for achieving 3000psi is 1:3:3. To achieve 3000psi, it is important not to overlook the most important and unspoken aspect of that ratio – water! Water is the single most important element of a successful concrete mix. How much or how little water is used is critical to achieving superior mix quality. The general industry recommendation is use 7 gallons of water for every 50kg bag in the mix. Too much water will degrade the tensile strength of the concrete and too little will compromise the chemical reaction, fluidity and ability to set and take form.

It really doesn’t matter whether one uses granite or cobble stones or gravel – they are all simply called aggregates! The only important thing about aggregates is the size. Sizing in aggregates refers to the average size of the individual stone elements – it may be sorted by quarries as  ½ inch, ¾ inch or 1 inch using screens. In mixing concrete, you may have pellets, pebbles, cobbles, gravels, stones or even boulders depending on what you are trying to achieve!  Smaller aggregates sizes are used in situations where a smooth finish is paramount. Generally, the bigger the screen size, the tougher it is going to be to get a smooth finish.

@Lukkie, Thank you for the heads-up