The Process of getting PMS from Crude

1. Extract crude oil
2. Transport crude oil to refinery
3. Refine to PMS and other byproducts
4. Take PMS from refinery
5. Market

Step 1 to 5 are same if the refinery is in Lagos State or Malta

Dangote Refinery will save $ cash , yes but where?

1. Crude oil extraction? No, same cost wherever it's refined, crude oil is priced in $ not Naira. If Dangote pays Naira, Nigeria loses $ revenue. This is the highest cost.

2. Take Crude to Refinery? Yes, Instead of taking crude to "Malta", it will be taken to Lagos.

3. Refine? same cost, if refinery is in Lagos or "Malta"

4. Take PMS from refinery? Yes instead of transferring from "Malta", it's from Lagos. still a cost, but lower.

5. Market? no same cost where ever it's refined

Thus what Dangote Refinery saves is the Transportation associated cost, previously paid in $ to bring crude from "Malta" to Lagos


Nigeria still pays for insurance, interest etc. These are still related costs. Or are the ships insured locally or produced locally?

When you say Dangote Refinery reduces $ demand, i agree but not to the extent you claim. Remember Dangote is paying in Naira meaning it's a net off of FX loss from Naira purchase and lower demand for FX

The real benefit Dangote Refinery brings is that those associated byproducts that we left in ''Malta" will now be captured by Dangote locally.

Thus Nigeria will earn MORE by exporting those byproducts, so net net , the Dangote Refinery earns Nigeria more FX.

The Dangote Refinery is the biggest game changer in Nigeria since NLNG, but your PMS bill will not substantially drop, unless the Federation subsidizes crude oil and $ exchange rate.

Kalu Aja

So in essence, Dangote and FG are the winners. Citizens have nothing there to gain or celebrate.

One would have thought that those saves from TFare and landing costs + import duties will reduce the cost of PMS at least.

Sighs

Tinubu will still tax it
Petroleum Consumption Bill (PCB)

Watch

We already know Mr Analyst.

The crude sold in Naira means less crude in normal exchange for forex or dollar and thus lower forex inflow. But once Dangote starts refining beyond local consumption capacity, which may reduce very drastically if smuggling stops, it means the refined crude will earn more forex than it usually would have in govt hand as raw crude oil because value has been added and it sells for higher. It is still a win on the long run as long govt doesnt make petrol artificially lower than in neighbouring countries.
Heard the FEC is the one dictating final prices and that points to an arrangement where FG bills dangote for crude lower than intl rates just to allow it come out as refined crude product lower than market rates while preserving Dangote flat profit margin. Dangote is now acting a lot like public refineries should under FG on a level playing field.

Crimecity:
So in essence, Dangote and FG are the winners. Citizens have nothing there to gain or celebrate.

One would have thought that those saves from TFare and landing costs + import duties will reduce the cost of PMS at least.

Sighs

The Cabals are well integrated into the FG. That's why they outlive and dominate every govt that comes and goes.

In essence will there be an effect on the exchange rate?

Nawa o

The country is in comatose

Hahahahaha

No more landing cost again this is what marketers are shouting always.

Dey play . As if Dangote is not a business man.

I tell people until Dangote sale for at least #400 there is nothing there to celebrate about his refinery.

You also talked about the byproducts left in malt as if they don’t pay fg for them.

Ok

Tax

Crimecity:

Thus what Dangote Refinery saves is the Transportation associated cost, previously paid in $ to bring crude from "Malta" to Lagos

Kalu Aja

I disagree

Asides the transportation cost, there are also clearing costs at the ports and other fringe costs in offloading the products into NNPC from outside the country.

Moreso, the crude can be bought in Naira (not Dollar) thereby reducing the pressure of acquiring dollar for external trade between Marketers and the external Refineries who do not trade in Naira. Dangote refinery buys in Naira and also sells in Naira

Forget the paper talks with big grammars, and let's face the reality. With the recent script of fuel hike played by NNPCL and FG the Dangote refinery is a tool for siphoning Nigerians to pay for the humongous loans borrowed by the FG to finance their lavish lifestyles. Why would pump rise just increase overnight, and yet NNPC peg their pump price @ 800-850 after loading from the Dangote refinery.
APC as made it their modules operandi to loot by making the president the Petroleum Minister, and using Kyari (NNPCL GMD) as a cover.
APC + NNPCL GMD are the worst thing that happened to Nigerians . It's only a corrupt government that will retain the NNPCL GMD, sell crude to local refinery in local currency and still sell in US Dollars. Above, all the answer is a NO as long as the NNPCL is the sole distributor and PBAT is the Petroleum Minister. And any president that failed to privatize NNPCL is worse than ABACHA

I done went and changed all my dollars to naira. dollar go soon drop. i change all my dollars. 20 dollars

Somehow flawed analysis
At what percentage FX loss will selling crude oil in Naira to Dangote refinery cost Nigeria, compared to importing refined fuel in USD? I'm sure it is minimal.

Besides, there are other crude oil products that are being imported that will now be supplied by DR. Also, most of Dangote refinery export earnings which will be in USD will be domiciled in Nigeria, making it available in the FX market.

Useless country called Nigeria. There plan is to make the price of fuel 1400 so that dongote will say that his own price is 1300. Then the masses will think that dangote has helped Nigerians for deducting 100# for The people. Very useless country with some senseless foolish people. Thank God I'm still buying fuel at The rate of #175 with the help of my APC membership

Chaaaiiii

Crimecity:
So in essence, Dangote and FG are the winners. Citizens have nothing there to gain or celebrate.

One would have thought that those saves from TFare and landing costs + import duties will reduce the cost of PMS at least.

Sighs

The difference is only about N50 per litre

At least someone doing some level of intelligent analysis, not all those wishing that Dangotte will just start selling to them almost free

Wait for behind the scene.

We fervently hope it deos

This Twitter economist with his bright Grammar way of analysing economic issues.
I don't take any of this online people seriously after the almost zero performance by Dr Bosun,the Minister In charge of the Digital Economy.
It's very easy to criticize and recommend theoretical solutions to Nigeria's problem online as seen by these online critics,but theory is miles apart from practical solutions.
Back to the issue,this Twitter economist has found his way to Nairaland and is postulating that Refining Crude oil locally shouldn't bring down the price of PMS Locally.
I totally disagree,I saw a chat where pms is sold in Libya for 51 naira and in Iran for 61 naira,if every country was following this idea of buying crude at International prices then no county should sell pms less than 1$.
The truth we must tell ourselves as Nigerians is why should we price our local crude In usd, there's an agreement between IOCs and the NNPCL.
I don't understand why the crude allocated for local refining should be traded in Usd, it's an anomaly that must be stopped.
Dangote can sell his pms to Nigerians at a cheap price if we pressure the Government to sell the local crude allocation in Naira.
Every transaction involved in extracting, transporting, refining and transporting the refined crude must be done in Naira.
Shipping, insurance and transporting must be calculated in Naira.
That's the only way we can ever enjoy cheap fuel prices.
God bless Nigeria.

Is Dangote cement cheap

Is Dangote sugar cheap

Is Dangote spaghetti cheap

Mumu Nigerians

This question has been on my mind since yesterday when I first read the good news from Dangote refinery.
But I fear it may never happen going by our history in Nigeria- prices of things that go up never get to come down. So Nigerians should just buckle up and be ready for the worst days under Tinubu.
In any case, it will favour me and my family! 🤪🤪

Revolution

Time will tell

Sonofgod1990:
Useless country called Nigeria. There plan is to make the price of fuel 1400 so that dongote will say that his own price is 1300. Then the masses will think that dangote has helped Nigerians for deducting 100# for The people. Very useless country with some senseless foolish people. Thank God I'm still buying fuel at The rate of #175 with the help of my APC membership

Must you insult the country?
Why not focus on insulting the leaders and leave the poor country alone?

It is just unthinkable idiocy for people to have a mindet that a sole monopoly like Dangote will better the lot of the comman man as far as Petroleum products affordability is concerned.

All this to me nah oversabi.

Latest in 2 weeks time, we will all know the price and effect on fx