₦airaland Forum

Perfectbeing:
Don't be emotional.. Cos Obi is surplus here does that mean that Government mine it from the ground free of charge?

Have you considered the cost of bringing out crude oil from the ground?

Perfectbeing:
Don't be emotional.. Cos Obi is surplus here does that mean that Government mine it from the ground free of charge?

Have you considered the cost of bringing out crude oil from the ground?

EcoBrick:
No more Osho free. La free fuel, la end. C'est fini.

Bobloco:
Instead of you to counter my submission with superior points, you resorted to insults which shows that you are the one displaying insanity all over this great forum

Ajagunakin:
People like you should be tied to a tree branch with a noose around your neck for typing nonsense like this on nairaland.

obi58:
Bros read what I wrote again this time with understanding.

I didn't say 30% should be given out for free. I said it should be sold in naira to refineries for domestic production. This will in turn insulate the economy and fuel prices from fx fluctuations and ensure stability of local prices. Selling it at local prices would still cover the cost of exploration but last last the oil is still Nigerian owned and the government has every right to determine how much is sold and how much is exported.

Perfectbeing:
You're still emotional about it.

Currently, brent oil is $75 per barrel (that's about N46k), so how much should FG sell crude to Dangote or any other local refinery?

Guy, other poor African nations are selling fuel over N600 and they've not died.
Nigerians won't die. Diesel has reduced from 800 to about 550, Gas has reduced from 13k to 6950.. That in a way is cushioning the effect of fuel subsidy removal..

Era of cheap fuel is dead in Nigeria and nothing will resurrect it.

obi58:
Yet again, I need you to get your head straight and start thinking out of the box. I repeat again. Dangote will buy crude oil from nnpc for sure. However, instead of buying in dollars, he should buy in naira. There is nothing emotional about that as I have cited already the economic benefits to the country of doing same.

No responsible government would proceed to inflict an almost 300% price rise without putting measures in place to mitigate the impact. That is the whole purpose of government.

Perfectbeing:
Haven't you been hearing the news since last year that Dangote would be buying in Naira and even selling refined fuel to outside countries in naira?

Buy in naira.... Sell in Dollars to foreign countries

What I'm saying is that whether Dangote buys oil in naira, dollar or shillings, fuel will not get cheap.

Let the right things be done first and then we will get to know the true domestic price of fuel. Not this stage managed affair based on inflated inaccurate subsidy information from the NNPC.

Dangote has bills to pay. He has workers to pay and has a refinery to maintain.

Obviously Dangote is not a charity but Government has a key role to play to ensure there is no exploitation of the local market and that there is a level playing field for competition in the downstream oil industry. Everything should be done to prevent his monopolistic tendencies and to break up any cartelization tendencies.

According to Mele Kyari, license will be given to more people to import fuel (not at a subsidized rate).

If refineries are working we shouldn't even be talking about importation because it is more expensive, drains our FX and generates inflation. So focus should be on granting licenses to SERIOUS investors to develop refineries either full scale or modular. Those who have previously been issued licenses and have not done anything serious should have their licenses immediately revoked.


Everyone including Dangote, NNPC and other importers will be given a level playing ground to import PMS and no one (not even NNPC) will have more than 30% stake in the market.. It's now free for all..

Dangote still import fuel? I don't think so! In fact fuel marketers and tank owners should be mandate to build their own refineries even if they have to collaborate or that their licenses revoked.

Perhaps with more supply and competition and if oil price comes down, PMS will reduce..
But anything subsidy or palliative is a no no for me.
FG cannot remove subsidy from oil and transfer to subsidy to transport or any other thing (that's not education, health and infrastructures), else it will be the same thing as transfer of subsidy..

There is nothing wrong with subsidy. I repeat there is nothing wrong with subsidy the only problem is corruption in the industry.

Also, gas price as reduced by about 50%, diesel has reduced by about 68%..

Don't you think the coincidence is a little suspicious? All these products that have been ridiculously high suddenly crashed around the period of fuel deregulation? All these are just stage managed their prices will soon go back up.

Perfectbeing:
The reason the Govt will still allow importation even with Dangote and other refineries is to prevent monopoly..

Your reasoning is ok here. It's not really the business of government how you get your fuel to supply provided you can source your dollars and remain competitive in the market. However it doesn't make sense to go import a product into the country which is in plentiful supply by domestic producers unless you can get it here and supply at a cheaper rate. It would however encourage Forex outflow which given our current balance of payments position we may not want to support.


Not everyone can build a refinery, so Govt want as many people as there can to be in the oil business..

Not exactly true. Liberalisation of the import licensing is a short term arrangement to break the monopoly of the nnpc pending the revitalisation of our refineries and the full takeoff of the Dangote project. It will help encourage competition short term but domestic production anyday anytime will be cheaper than importation especially on a product which we have comparative advantage over and which we are naturally endowed with. As such the medium to long term goal is to make Nigeria a refining hub and migrate as many of these major oil players from being just oil marketers/importers/tank farm owners to engaging in domestic refining which of course boost our reserves and improve our Balance of payments position. Dangote sourced for funding to build the largest refinery in Africa. Interested players can form consortiums with other interested parties to build refineries in addition to sourcing for alternative funding.


You talk about modular refineries.. Go and read about modular refineries. They don't make much gains.

Says who? You need to brush up on your reading on modular refineries. Modular refineries are smaller refineries that do not have the capacity to produce higher octane distillates like PMS but can produce heavier distillates like kerosene and diesel. This will encourage the capture into the legitimate oil sector of those into the informal oil bunkering and widen government's tax base in the industry. Nigeria has a market of over 200million talk less of neighbouring countries so the market is available for them to thrive whilst reducing our oil theft issues.

There are barrels of oil that a modular refineries must refine a day to even break even let alone make profits. That's why not everyone would venture into it even though the license is free..

So Government would give license to PMS importers at a non subsidized rate.. Even NNPC and Dangote will import fuel (everyone at the same rate). It's now left for you to find imported fuel at cheap price so you can sell. Cos if yours is too expensive, no one will buy from you..

I don't see any sense in what you wrote here sir. The whole point of giving out licenses is to stop price regulation so what do you mean at the same rate? Also what do you mean by saying Dangote will leave his refinery to import fuel. Really? Does that make sense? Nnpc owns 40% of the Dangote refinery for the express reason that they see it as a potentially profitable enterprise. Dangote will buy crude from nnpc to refine and sell not go and import fuel.

As long as there's no subsidy I don't see anything wrong with importing fuel..

The issue is that we are IMPORTING what we should be producing and EXPORTING. Basic Economics. Incentives should be given to marketers looking to set up their local refineries over those looking for import licenses because of the FX outflow importation causes.

Also, the only addition cost of importation over local refining is storage cost shipping cost, which is even less than N50 per litre. So don't you even think that imported fuel is very much expensive than locally refined fuel...

There are more fees than just the shipping fees and the profit margins of the importer from the country of importation. The Country fuel is imported from also charge taxes as well as our NPA and NIMASA fees. This is exclusive of the local transportation costs which have also gone up due to the increased price of diesel and road levies.

I suggest you watch Mele Kyari's interview with asleep

I suggest you Google Bala Zakka to watch his detailed analyses on the oil and gas industry and the subsidy scam. While at it you can also check our a YouTube channel called Refresh Nigeria. You will come across a rich compendium of materials on the subsidy discussion.

Mêle Kyari has been unable to give us an accurate figure on our daily fuel consumption as a nation. His last attempt at this was countered by the Nigerian customs a fellow organ of government. In 2021 when fuel was sold N165. The real cost of fuel then was N212. In September 2022, when fuel was N180 real cost of fuel excluding subsidy was N280. How did fuel now jump to N480 in 2023 when we have not had a doubling of the dollar rate? Kyari and NNPC's handling of the subsidy issue has left more questions than answers in an area where transparency is critically needed. So it's pointless listening to Kyari.




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