₦airaland Forum

silibaba:
Wetin suppose concern Nigeria and strait of homo if we actually have a good president like Peter Obi?

There is crude oil in the south east and south south.

There is Dangote refinery

So wetin suppose concern us if US and Iran kill themselves?

Subsidy is gone says president Tinubu in his inaugural speech in May 2023

Basicend:
We have a heartless irresponsible govt and a super greedy Dangote.

Why does Nigerians have to incur the highest price percentage increase worldwide in fuel price since the start of the Iranian/US war till now?

So is now super greedy Dangote and susbidy is no longer free money to the rich?

nairalanda1:
It is cheap..that's 0.013 usd or 17 naira.

Do Iranians spend USD, naira or rials?

LabStores:
Whoever added straight of Hormuz to this post is very STUPID.
Nigeria absolutely has no business directly nor indirectly with what is happening thousands of kilometres away in the middle east.

OUR ONLY PROBLEM IS GREED AND EVIL PEOPLE AT THE ARMS OF AFFAIRS.

Go school, e no gree go.

nairalanda1:
It is cheap..that's 0.013 usd or 17 naira.

So Iranians now buy petrol in USD and NGN and not 18,000 rials?

Gboss247:
So Iranians now buy petrol in USD and NGN and not 18,000 rials?

Well, the number of zeros is not necessarily an indicator of value as you seem to think, y'know...

Those that voted for the thief causing pains to Nigerians eues don clear. We no get president for the country. A president can be in this country why things are worse everyday. No good roads, no pipe borne water, no electricity, poor masses they suffer am why the politifcians are looting.

Poland2050:
Those that voted for the thief causing pains to Nigerians eues don clear. We no get president for the country. A president can be in this country why things are worse everyday. No good roads, no pipe borne water, no electricity, poor masses they suffer am why the politifcians are looting.

So you want your leader to borrow money to.give you fuel at 500 naira per liter or to.even. print money to do the same thing.

Fuel subsidy was funded by massive borrowing and printing of money which created a massive debt that made it impossible to keep finding money for the thing. That's why it got scrapped.

adenigga:
https://dailytrust.com/breaking-petrol-hits-n1430-in-abuja-as-strait-of-hormuz-crisis-worsens

So na straight of hormuz make fuel cost for naija?
We deserve the suffering we defend.

Nigeria produces Crude Oil, We have the refinery (Dangote et.al) but na strait of Harmuz determine how we run our petroleum industry. What does this say about our government?

HacheNoire:
Who told you the lie?

Google is your friend!

So how much is a litre of fuel in Iran today?

Don't answer, let me help you.

Iran operates on a three-tier subsidized quota system. But let me just skip the first two and go straight to their non-subsidized rate, which is 100,000 rials per litre.

100,000 Iranian Rials is worth approximately ₦96.44.

Nigeria's fuel price of 1,400 naira (and still climbing) per litre is 1,351.7% more expensive than Iran's highest non-subsidized fuel tier. To look at it from the other direction, a litre of fuel in Iran is 93.1% cheaper than it is in Nigeria.

Iran is right in the middle of war right now and they still sell cheaper fuel than Nigeria, an oil producing state. Shame on all of you blaming Trump for your evil Islamic rulership problems.

HacheNoire:
Gradually, we are getting there!

Nothing is impossible if you believe!

By the time dumb Trump is done with the world, we should be at NGN5000/liter.

Good morning, we all know that Nigeria have crude oil in abundance and Dangote refinery is still working perfectly.

The crude oil from Nigeria should be given to Dangote and America/Iran issue will definitely not affect us. I bought fuel at Lugbe, Airport Rd #1450 this morning.

Flangelo12:
Go school, e no gree go.

Don't mistake me for your parents

LabStores:
Don't mistake me for your parents

You're not qualified to tie their shoelaces.

ObiaboAdoka:
Na straight of Hormuz the determine Nigeria PMS price now. What about the abundant crude oil we have in Nigeria?
Why can't we refine our crude oil in Nigeria. Dangote is here not to help the common man but to enrich himself and cronies.

ignorance is a disease, is it Nigeria government that determines Gold price, Btc prices, Gas price, Cocoa export price in Nigera?

Stupidity

Burob:
Go and inquire from Aliko Dangote, & Abdul Rabiu the reason why?

naptu2:
⚫️ Very very very many people have been given licenses to build refineries (even before Dangote) and they've all made all kinds of promises. I can remember the Oando Refinery was to be in Badagry, Captain Emmanuel Iheanacho's refinery was to be in Ojo, there was to be BUA refinery in Calabar, etc.

Some of these people got licenses as far back as when Obasanjo was president.

None of the refineries have been built (except for modular refineries, but we'll come back to that later).

⚫️ Some people say that there is nothing like business. Basically they don't think that running a business is anything difficult. For example, some people think that Dangote is not doing anything special because they can't point to what he invented.

Business is actually about risk taking, strategy, etc. When you create a business and it succeeds, people will beef you, but when it fails you'll carry the problem alone.

Al-Hassan Dantata became wealthy because he went into businesses that others didn't want to go into and he invested heavily. He took risks.

Dangote also does the same. People can't see the enormous risk in his refinery. If petrol subsidy returns tomorrow, the whole refinery could crash.

The money he is making is the reward for the risk that he is taking.

⚫️ At this point we need to answer the question, what is subsidy.

Subsidy is when government tells the producer to charge below the cost price with the promise that government will pay the difference.

The truth is that government is too broke to pay the difference and this is one of the reasons why all the refineries that got licenses were never built.

Why will you spend so much money, time and effort to build refinery only for government to tell you how much to charge and for government to owe you subsidy funds?

Dangote took the huge risk that government will remove subsidy and so he is the beneficiary of that risk. His refinery is first.

⚫️ Now that Dangote has taken the risk, other refineries might come on stream. At this point let's get back to modular refineries.

Modular refineries are relatively small refineries. They are easier to build, but most of them do not produce petrol (they priduce diesel and other products).

Many modular refineries have been built since the Goodluck Jonathan era (remember that Obasanjo removed subsidy of diesel).

One of the modular refineries that was commissioned a few weeks ago (Aradel Refinery) has promised that it will start producing petrol in 2027.

Will Aradel be able to break Dangote's price monopoly?

Ishilove:
Will Aradel be able to break Dangote's price monopoly?

What price monopoly does Dangote have when NNPC refineries have been producing fuel since APC announced it 11 year ago, and even stated that the one in PH is exporting fuel since December 2024?

How can Dangote have price monopoly when Tinubu continues to pay subsidy to import fuel from their Malta blending plants?

Dangote does not have monopoly in fuel sector.

Ishilove:
Will Aradel be able to break Dangote's price monopoly?

Glo could not launch at the same time as mtn. So they had to compete for market share. So they introduced per second billing.

Anyone coming after dangote is competing to take market from him. To take market from a competitor the best way is lower prices. How sustainable it is depends on your own business plan.

Also in a deregulated economy, price of fuel cannot be fixed but will depend on price of oil. If you have been following the news, price of oil is going to rise. As the mid-terms approach Iran is going to tighten the screws. Or maybe not since the mad bull in the China shop serves the brics interests

I spent 19k on Bolt here in Abuja few days ago. I was so annoyed, the driver kept saying it's due to fuel increase.

In Oslo we pay six bucks a gallon to sit in traffic next to a guy in a Tesla who still can't park.

Oil goes up, poor people get fscked, rich people buy another yacht.

Ishilove:
Will Aradel be able to break Dangote's price monopoly?

It's more complex than that.

Firstly, the reason why the price of petrol is high at the moment is not because of Dangote. The raw material for refineries is crude oil and the price of crude has gone through the roof because of events in the Middle East.

Secondly, the Aradel refinery is very small, minute compared to the Dangote Refinery.

Thirdly, it's not just about Aradel. Dangote, Aradel are just beacons to show what's possible. They show other investors (including people that have already gotten refinery licenses) what's possible and hopefully they will also build their refineries.

Competition makes it difficult for any single refinery to unilaterally increase prices because other refineries can undercut them.

Jangbajantis:
So how much is a litre of fuel in Iran today?

Don't answer, let me help you.

Iran operates on a three-tier subsidized quota system. But let me just skip the first two and go straight to their non-subsidized rate, which is 100,000 rials per litre.

100,000 Iranian Rials is worth approximately ₦96.44.

Nigeria's fuel price of 1,400 naira (and still climbing) per litre is 1,351.7% more expensive than Iran's highest non-subsidized fuel tier. To look at it from the other direction, a litre of fuel in Iran is 93.1% cheaper than it is in Nigeria.

Iran is right in the middle of war right now and they still sell cheaper fuel than Nigeria, an oil producing state. Shame on all of you blaming Trump for your evil Islamic rulership problems.

Iran also has debt that is larger than Nigeria's and is also losing 5.2 billion dollars to smuggling to Afghanistan and Pakistan of subsidised fuel.

On top of sanctions.

The government has wanted to remove subsides for years. IN 2019 they did a partial removal of subsides. THe result was riots on the streets of iran that nearly brought down the government.

They can make components of refineries at home, so that helps a bit with costs, but it is still a strain on their economy.

Even what you quoted, it shows that their government can only afford subsidy to some level. If you e xceed that level, you pay more.

Kaczynski:
In Oslo we pay six bucks a gallon to sit in traffic next to a guy in a Tesla who still can't park.

Oil goes up, poor people get fscked, rich people buy another yacht.

AM curious, you live in Oslo? Why haven't you bought a Tesla or BYD electric car?

naptu2:
It's more complex than that.

Firstly, the reason why the price of petrol is high at the moment is not because of Dangote. The raw material for refineries is crude oil and the price of crude has gone through the roof because of events in the Middle East.

Secondly, the Aradel refinery is very small, minute compared to the Dangote Refinery.

Thirdly, it's not just about Aradel. Dangote, Aradel are just beacons to show what's possible. They show other investors (including people that have already gotten refinery licenses) what's possible and hopefully they will also build their refineries.

Competition makes it difficult for any single refinery to unilaterally increase prices because other refineries can undercut them.

Ehen, this now my main confusion. We produce crude oil locally, and refine locally, so why do we have to sell at international rates? OPEC?

GloriousGbola

naptu2:
It's more complex than that.

Firstly, the reason why the price of petrol is high at the moment is not because of Dangote. The raw material for refineries is crude oil and the price of crude has gone through the roof because of events in the Middle East.

Secondly, the Aradel refinery is very small, minute compared to the Dangote Refinery.

Thirdly, it's not just about Aradel. Dangote, Aradel are just beacons to show what's possible. They show other investors (including people that have already gotten refinery licenses) what's possible and hopefully they will also build their refineries.

Competition makes it difficult for any single refinery to unilaterally increase prices because other refineries can undercut them.

@Ishilove

Another thing is that Dangote ALWAYS try to be dominant in any industry he plays in so to be the price maker. Dangote aims to produce more than 50% of the products in that market. For example, price of cement has been increasing without ANY input cost reason! Other cement manufacturers can't reduce their price because they can't engage in price war with him. He produces more than them, his cost of production is lower than their, if he wants, he can drive them out of the market by reducing his price below theirs.
He is using same template for petroleum products. The size of his refinery is to ensure no competitor can match his volume. The only difference this time is he has not succeeded in banning PMS imports.
So, if Nigeria bans import of PMS, no matter the number of local refineries we have, Dangote Refinery will determine the price we buy petroleum products.

Ishilove:
Ehen, this now my main confusion. We produce crude oil locally, and refine locally, so why do we have to sell at international rates? OPEC?

GloriousGbola

that is a subsidy.

oil is at $100 a barrel

if the federal govt is selling oil on the international market at $100 a barrel, and selling to refineries at $50 a barrel, then the government is running a subsidy where the govt pays $50 for every barrel sold to the refinery

that is what has been happening with petrol and is what is happening with energy

it is only sustainable when the govt is in an oil boom - and even then what is happening is money that could have been invested in infrastructures is spent on what is essentially consumption

Ishilove:
Ehen, this now my main confusion. We produce crude oil locally, and refine locally, so why do we have to sell at international rates? OPEC?

GloriousGbola

Because crude oil is not free.

Firstly it costs a lot of money to get it out of the ground and equipment must be bought and workers and companies must be paid. Remember, the market for the companies, workers and equipment is a global market (companies and workers go to where they get the best pay).

Secondly Dangote (or whatever company is refining the crude) also has to pay workers, buy equipment, etc.


Thirdly, the government depends on that money. The money that government spends on schools, hospitals, roads, etc comes from sale of crude.

The government is already doing its best to cushion the effects of price fluctuations through the naira for crude programme (where the refinery pays the naira equivalent of the cost of crude). This will help to reduce the impact of currency fluctuation on the price of petrol in Nigeria.

Fourthly, it is not easy to get crude out of the ground. Have you noticed that the Dangote Refinery has also had to buy crude from the US and other places? The supply from Nigeria is not enough to meet its needs. That crude that it buys from abroad is sold at international market prices.


Fifthly, if we sell crude to ourselves at less than market price, then the problem from subsidy will return, that is, people will immediately start smuggling it to Togo, Benin, Cameroon, etc.

:

Ishilove:
Ehen, this now my main confusion. We produce crude oil locally, and refine locally, so why do we have to sell at international rates? OPEC?

GloriousGbola

OPEC and the fact naira is a massive toilet paper with bunch of dead guys on it.

mfm04622:
@Ishilove

Another thing is that Dangote ALWAYS try to be dominant in any industry he plays in so to be the price maker. Dangote aims to produce more than 50% of the products in that market. For example, price of cement has been increasing without ANY input cost reason! Other cement manufacturers can't reduce their price because they can't engage in price war with him. He produces more than them, his cost of production is lower than their, if he wants, he can drive them out of the market by reducing his price below theirs.
He is using same template for petroleum products. The size of his refinery is to ensure no competitor can match his volume. The only difference this time is he has not succeeded in banning PMS imports.
So, if Nigeria bans import of PMS, no matter the number of local refineries we have, Dangote Refinery will determine the price we buy petroleum products.

Thats why we should have removed subsidy in 2012.

Had we removed subsidy in 2012, domestic refining would have made sense, economically, and thus anyone with a refinery licence would have been able to borrow money from the banks with ease, and the banks would give, knowing that they would get their money back.

Not removing subsidy led to a situation where the only person that banks felt comfortable lending to was dangote. Because if things went wrong, dangote's other businesses would generate income that would be able to pay back the debt of the banks. WOrst case scenairo, AMCON takes over dangote's other industries and pays them back.

That is why dangote is running a ;monopoly' Most nigerians created the condtions for that monopoly to happen.