₦airaland Forum

just thinking about the 3$bn

The $3b NNPC loan demonstrates that the driving variables of local PMS pricing is the USD exchange rate.

The question is this, if you have local refinaries operational and allocate crude oil to those refinaries, will prices of local PMS fall? The answer is no.

Why? Because crude is priced in $ thus the cost of the "local" crude will also go up if Naira falls as $ rises.

The ONLY way the cost of that local PMS will fall is if you SUBSIDIZE the cost of crude oil.

You can argue that local crude can be priced in Naira, but that's still a subsidy, the crude can be sold in $, you are selling in Naira, thus SUBSIDY

The way to look at this is to agree that a local subsidy is NOT bad if it's subsidizing local production and consumption to grow the economy.

In summary as long as the naira is weak, the "expensive" $ priced crude will be subsidized.

OPEC quota or not.

So real questions is how to afford this local subsidy.

That's a topic for another day

The major issues is that Nigeria has over depended on the dollar such that the naira has become it's victim. We shouldn't be talking about domestic transactions in dollars, it's a crime. Let's build refinery and refine our crude for local consumptions and sale at affordable rates to our citizens then the exported ones can be manipulated with the usual dollar forex wahala. Dubai is not considering value of dollar before selling crude to it's citizens.

I like how you say Dubai doesn't consider the value of dollar before selling crude to its citizens.

Phantom233:
The major issues is that Nigeria has over depended on the dollar such that the naira has become it's victim. We shouldn't be talking about domestic transactions in dollars, it's a crime. Let's build refinery and refine our crude for local consumptions and sale at affordable rates to our citizens then the exported ones can be manipulated with the usual dollar forex wahala. Dubai is not considering value of dollar before selling crude to it's citizens.