9jakohai:


Eventually, competition will bring prices down.

I'm more interested in the investment that would flow in, once price controls have been removed, though.

what is the essence of an investment that further impoverishes the general populace or one that the government does not provide an economy that can withstand the shock of a change in price of an essential commodity?



I asked my previous question because there seems to be this erroneous belief that once PMS is regulated & crude oil is refined locally, the price will come down to less than what we have today...


that line of thinking is very wrong.

if we refine all the PMS we need locally & the sector is fully deregulated, Nigerians won't buy fuel for less than N155-N180 p/l...

why?


the only MAJOR variable between importing PMS & refining locally is the shipping & associated costs which constitute just about 10% of the total cost...

so if you remove 10% from the present landing cost of N171, that's approx. N17.1 which translates to about N154... & that is before we calculate internal transport costs & profit for retailers...

http://money.cnn.com/2008/03/13/news/economy/gas_gallon/index.htm?postversion=2008031910


http://commodityhq.com/education/breaking-down-the-cost-of-a-gallon-of-gas/


for practical purposes, check the cost of fuel in countries like Russia, Canada & Norway to mention a few... they have major oil fields & refine their crude locally... yet they pay an equivalent average of N250 for a litre of fuel...


in essence, if the enabling environment for people to improve standard of living is not put in place, refining locally will only put more money in the pockets of government thieves...