₦airaland Forum

dealslip:
It is so sad that the average Nigerian youth didn't pick any message from that long interview except the 500 naira a dollar dialogue. That guy revealed alot of info on how to make it, yet all the commentators were lamenting on the price of dollars. Dangote isn't even the Minister of Finance or CBN governor. Please feed yourself with positive gists abeg.

Chiefpriest1:
Reasonable inference...makes alot of sense. Though your last two paragraphs actually neutralize the initial line of thought.

You are a critical thinker

femtoj2:
"We are building a refinery and our refinery will make more money if there is subsidy" A Business man would always want to do business that would make him seems successful even if it means doing it at the expense of poor masses. Please let us all read between the lines when rich or powerful men talks. They sometimes takes advantage of our ignorance on issues they think they Know more about. All our economist has lately said " removing this subsidy is the only way forward for our present economy Situation". Dangote knows that with his refinery here in Nigeria,+subsidy he would be making more money to himself at the expense of the poor Nigerians. With my little understanding of demand and Supply, i Know that if demand for dollar by (FUEL) importer reduces by buying from local refinery , it would force the price of Dollar down.But as it is now, I no go Skool. Rich Man don talk finish.

400billionman:
Dangote is trying to secure the future of his oil refinery project..
[b] Please I do not subscribe to this topic, exactly on the first day of November 2014, Dangote promised to reduce the price of cement to N1,000 per bag, he did reduce it to N1,200(Ex depot price) for only 6 weeks and and around 15th November 2014, Forbes announced their new list of billionaires and our beloved Africa richest man nosedived from a net worth of $25bn to about $14bn owing to crash of the value of naira against the dollar. Dangote forgot his promise immediately and by 15th of December 2014, he raised the price of cement to an all high of N1,750. Till today, Ex depot price for cement is N1,820. Now tell me why Nigerians were hoodwinked into believing his promises and he dissapointed them.
I will show you guys a thread of someone on Nairaland who refuted all his promises to crash the price of cement to N1,000 in 2014.
https://www.nairaland.com/1981256/new-cement-price-marketing-strategy
Now, UNICEM and LARFARGE, dangote biggest competitor in the cement market are about to merge their operations to become one entity by the 15th of June, 2015. It is now time again for our beloved Africa richest man to start granting interviews to hoodwink us again. Most of us do not know how these markets operate. He is only in a panic mode out of the impending competition a merger between LARFARGE and UNICEM will generate to his market supremcy in the Nigerian cement sector. Oil subsidy removal cannot and will not in anyway reduce the value of Naira to dollar. He may have other reservations as to when operations of his mega oil refinery starts in 2017. The Nigerian government is currently under cash constraints and must not listen to this advice, because as far as he is concerned, everything is profit motivated..
Kindly locate what he said On refinery.. see below.[/b]
" On refinery.
[size=14] We are building a refinery and our refinery will make more money if there is subsidy.. " [/size]
Most of us read but do not connect the puzzle..

MAURI:
Mr Dangote, with all due respect there is a whole load of crap!!



Why didn’t the useless brown-envelope journalists present ask him for details and break down of how he came about that projected 1USD to N500



This is like comparing apples with pears! Is Senegal an oil producing country on the same scale as Nigeria?



Exactly, isn’t the above bolded contradictory to what Mr Dangote stated earlier.
Now your point it clear. You want to run a refinery locally and at the same time receive subsidy from the government. Cool.

I would expect before committing to such huge capital intensive investment, there would have been a sound business case / plan. And not one that will only be viable by the grace of subsidy from the government.

People, most Nigerian journalists don’t have a clue on the subject matters they interview people on. And their preparation is zero!


Nigeria survived before the multi-billion dollars fraud called oil subsidy.

Ok, how did we come to the situation of oil subsidy? Nigeria has one of the largest deposits of crude oil in the world. When we had operational refineries, there was not need for subsidies on oil cos the oil products were refined locally and did not attract additional costs associated with transportation back and forth outside of Nigeria for refining.

Then came the refinery breakdown, and we started exporting our raw crude abroad to be refined. This new development has as consequence, that the price of the locally consumed products in Nigeria will attract additional cost i.e. cost of transportation to and from refinery locations abroad and including the cost of refining. (For those familiar with international transportation processes) These products are transported at CIF (costs, insurance & freight)

Due to the high costs that oil products will attract locally in Nigeria as a result of this new export / import, abroad refining situation and it’s imminent inflationary result on the Nigerian economy. The Nigerian government, decided to take measures by subsiding the price of the projected locally consumed finished oil products in Nigeria with part of the revenue generated from that part which is sold to the rest of the world at prevailing global market price. We all know by now all the constructions of awarding licences to marketers and paying subsidies for products not imported into Nigeria etc.

The situation described above, has negative impact on our local currency, the Naira. In that the costs associated with export / import and refining of crude abroad are paid in USD. Meaning to acquire the USD (forex) needed to fund this process, Nigeria has to sell Naira to the market, and by so doing flooding the exchange market with more Naira in exchange for USD. Simple law of demand and supply. Putting more pressure on the Naira. And Mr Dangote is claiming that removal of subsidy may lead to the Naira selling at N500 to 1 USD

If Nigeria succeeds in building and maintaining operation refineries to capacity, why would the Nigerian government still need to pay subsidy on locally refined and consumed oil products considering that the cost of production will drop? And what should the rate of subsidy be then?

Yes, we know that price of crude where the large part of the Nigerian govt revenue comes from had dropped drastically, that is a different discussion.

I do agree with Mr Dangote though on the issue of taxes and vat.

Requesting people to invest in Nigeria, is on the face of it very patriotic. It is only an ethical / moral call to be expected from a successful made-in Nigeria businessman by global standards, except you want to exhibit same behaviour as those bastard Indians and Lebanese that are partly responsible for crippling Nigeria’s economy (Another discussion). But on a closer look, Mr Dangote has monopoly on the importation of cement and sugar into Nigeria, the largest economy in sub-sahara Africa.

No doubt Mr Dangote is a successful businessman, a patriotic Nigerian too, employer of substantial labour in Nigeria. This observation notwithstanding, when you make such questionable public claim on a controversial issue as oil subsidy and it’s likely impact on the exchange rate of the Naira and the Nigerian economy at large without detailed information, there are bound to be questions. On the other hand, it could be poor journalism, cos most Nigerian journalists are half-baked.

denko:
On refinery
We are building a refinery and our refinery will make more
money if there is subsidy. We have changed the size of
the refinery three times because we are looking at the
maximum we can do that has ever been done. We started
with about 400,000, then we shifted to 500,000. Now, we
took it to 650,000 barrels per day. That’s the biggest ever
single line thresh of refinery. It’s a huge plant and it
comes with a lot of challenges, but at the end of the day,
it will save us a substantial amount of money. Presently,
about 38% of our foreign exchange goes to petroleum
products, so I think that will totally eliminate it and
eliminate all the imports. We will also be able to export
and we won’t do it all by ourselves. Other refineries will
produce. Even if other refineries are not working, we’ll be
able to satisfy 100% local demand and we’ll be able to
export massively. Five to ten people can make Nigeria a
great economy. We have to encourage Nigerians to invest
at home.

mickey45:
Neutralize? Perhaps I'd have to continue (verbiage held me back before)

Had we encountered increased dollar inflows (through increase in sales or price of Crude) stopping subsidies (if we follow the same line of thought) might not neccessarily spike d rate.

Furthermore, increased Real Sector lending means some hitherto imported items will be sourced locally (which is what the GEJ-led import substitution drive was aimed at) lessening the need for dollars to import them plus we might even get to export some which wld further increase dollar inflow.

But, with the CBN's continued drive (owing to the anti-keynesian leanings of its 2 recent Governors even though they have their "plausible" reasons) to muzzle inflation and keep it at single digit, (not with real growth but rather through cash hoarding)

The increased money in circulation occasioned by the re-entry of "unsubsidied" naira will only make the CBN further tighten its credit crunching noose on the already ailing marginal companies around, sending some off the streets and forcing nigerians to have to import those products which hitherto were available.
Of course this translates into increased demand for the Dollar.

Like I opined earlier, individual companies need only increase their prices if it were a completely free market.

But public Outcry + political armtwisting and blackmailing will force the government to issue "decrees" on prices and since some essential raw materials have to be imported, the profit is reduced as production costs get increased.

Hence his (Dangote) fear of subsidy removal, is not for subsidy's sake but rather because of its often unseen ripple effects.

Like you said though, his lamentation is for his profit and hardly out of any altruistic motive.

BTW, me thinks he's just trying to influence public opinion, all these can be nipped in the bud if we plan adequately and act accordingly.

But with such a move goes the competitive edge (cut throat monopoly) that he and others like him (Otedola n co) have had on our lives

No thanks to our collective (money craze induced) irresponsibility and putting square pegs in round holes.

GEJ would have had two "sides of the same coin" views to form "balanced" opinions from if Iweala and Soludo had been in his cabinet at the concurrently.

I wait to see who PMB lays his "Job creation" responsibilities. Though I'll like to see Soludo or Basil in those roles.
As for NNPC... I pray God grants him wisdom there.

Do thanks for the onservation (I'm a scholar like I think you to be too)

chinae:
What is Dangote saying? I don't know Wat is subsidy too and am not a fan of dully.

Statistics shows that Nigeria spend #1.2billion per day on subsidy ib a country of 170million estimate.
Ask: the country pays more than 10 million for one citizen a day, Hw much fuel i dey use for house? if subsidy only is above a million.

This guy is part of the cauci in d caucus

chinae:
Prof. In your village theory if you divide Liter by number of person , the SI unit will be in Naira?
who shld go and dust his slate?

DMerciful:
U're just dull man....40million liter per day divide by 170million persons will give you 40/170 litre per person per day. For every one litre, the fg pays N47, now do the maths....

ahsekeena:
Yahoo boys in da house...how una see this news





I pray this doesn't happen oo

oluwaahmed:
D president CANNOT afford 2 remove subsidy witout our refineries workin properly, dis will lead 2 untold hardship on d majority of Nigerians, esp fixed income earners. Subsidy in d 1st place is a system put in place by govt 2 hlp reduce d cost of importin & landin of fuel on our shores. If d refineries wer workin der won't be anyneed 4 subsidy. Tink of subsidee like dis: a trader goin 2 buy clothes @ aba 4 d pple of phc, he will put his T-fare & oda exp 2 d price of d clothes he is 2 sell in phc. Howeva subsidy is wen d govt pays d trader d cost of goin 2 aba 2 get d clothes so dat d clothes are cheap and can be affordable 2 phc pple. If d govt remove d subsidy witout bringin up tailors & clothes in phc, it's d people dat will now pay 4 d cost of d shirts wch will make d price tripple. In d real sense removal of fuel subsidy witout operatin refineries will be Dooms day 4 ngrn. Dnt allow d govt 2 deceive u dat d mkt forces will make it competitive & cheap & available.dese petroleum importers determine d market forces tru deir cartel/unio(ipman). D avrg citizens will lose 4rm all angles & 9ja will be thrown into a great depression.