Unigrad:

Are you a staff of oil company?

.

Not at all.

What about individuals owing the oil wells of the nation?

They employ people to bring out the oil, and they use equipment to bring out the oil...and all that costs money.

If you are suggesting they sell oil at a lower price...so that you can have cheap fuel, they would lose money, and while that may make me happy, it would lead to many of their workers losing their jobs, or migrating abroad for skilled jobs.

acorntree:


I was an adult then, I can still remember how MTN were riping off Nigerians with their per minute billing which was later conquered by Glo per second billing. I totally agreed with on this, privitisation and deregulation will solve this problem. Because some people are really benefiting from these subsidy, especially the marketers and NNPC, if not why is it taking ages to remove the subsidy

That's the beauty of free markets.

Nigeria will continue to wallow in stark poverty until THE PEOPLE learn that free market policies are superior to socialist policies. It's really that simple, but hey I understand the pain of development. It's necessary and unavoidable. There's nothing new to this, it's the same way it was done in all those developed countries we love to visit and migrate to.

Lots of people even think Sweden is socialist when it's actually more capitalist and free market oriented than the USA. I think every Nigerian should watch this video and learn.


https://www.youtube.com/watch?v=jq3vVbdgMuQ

Have a good day

Raheeqilmaktoom:


1. It's literally a drain pipe, govt pays subsidy every year in trillions of naira and the populace still end up not having access to that subsidized oil. The opportunity cost of subsidy is investments in other sectors of the economy and social well being of the people, we end up not having a robust economy and oil at rates that are almost prohibitive plus the scarcity.

2. Payment govt makes to offset difference in price between cost of buying and selling of oil in the country.

3. Removing govt inefficient control will automatically resolve in more investments (provided issues like security are taken care of), private sector people will pour in money in the sector (because it's going to bring more money) unlike this case of playing the ostrich.

This country is being run like a charity leading more scarcity of resources.

1. Who made fuel subsidy a drain pipe?

2. Good. So what percentage of the subsidy has been removed so far and how much is left to be removed?

3. That's not what I asked. This is what I asked...Who is going to increase investments in upstream and downstream? Is lack of money the reason for the lack of investments?

Kobonaire234:


Erm....the money budgeted for the refineries is not enough , let's be frank.(Plus it is part of the corruption too).

Also, even if we used the money and it magically got the refineries to work...so long as you are selling something that costs N500 at N170 or lower, where is the profit going to come from to keep the refineries running well enough?

how will it cost 500leven with ocal refineries in nigeria

njelrapheal:
how will it cost 500leven with ocal refineries in nigeria

Oga, it is expensive to refine fuel here.

Once subsidy goes, the market would set their price. NNPC themselves put the price of unsubsidised fuel at N500.

At least, it would cost N300.

Now go and ask the person that sold you bread, why bread cost that much.

JASONjnr:


The market is where the prices is hiked....They have their association and they're the filling station owners...

Just like in the case of dollar price....the parallel market is different from the CBN rate....and you can't easily have access to the CBN price...

Although, Buhari using the DSS is actually doing enough to cut down the hike...Of not, before 2023, we should be hoping to buy a litre of fuel for 500 bucks.

You have clearly shown zero understanding of how fuel import and subsidy work. NNPC/and ministry of petroleum are firmly in control. You cant get into this industry without their approval.

Unigrad:

Are you a staff of oil company?
What about individuals owing the oil wells of the nation?

Individuals own oil wells in the USA. I remember when my wife starting working for an oil company in Texas, she was amazed at how individuals own small oil wells. You would go out to work with farmers who OWNED one or two oil wells on their ranch, in California there were even schools that owned oil wells.

Government ownership of the crude oil and energy sector generally has destroyed Nigeria. If individuals owned everything all this mess won't even happen. Same in universities, primary & secondary schools, electricity, airports and seaports, forex...once government owns and controls it, the result is ALWAYS scarcity, corruption and stagnation.

Tufiakwa for socialism.

Kobonaire234:


Oga, it is expensive to refine fuel here.

Once subsidy goes, the market would set their price. NNPC themselves put the price of unsubsidised fuel at N500.

At least, it would cost N300.

Now go and ask the person that sold you bread, why bread cost that much.

I wonder where people get the notion that fuel MUST be cheap in Nigeria if it's refined locally?

Poverty has fried peoples brains. Most of these people are probably university graduates and they don't understand concepts like world prices, commodity markets and all.

Hmmmm, only God can save this country, the people certainly have lost any cognitive ability to do it by themselves.

Kobonaire234:


No, but it won't cost less than 300 naira either.

Niger produces refined fuel at home, and for export, and it cost them N350 at the pump. Ghana does the same for over N600 per liter at the pump.

It costs money to refine fuel. Keep in mind that the components and materials and equipment in the refinery is not made in Nigeria...it is made abroad.

q
What are these components that are imported.

Kobonaire234:


aHEM, ahem, ahem

Here be the potted history of the subsidy by Professor Kobonaire...gce, bsc, mhd, krd, wwph...

1.Subsides were brought in because of the 1973 Yom Kippur war, which led to a spike in international oil prices, which meant higher pump prices for Nigerians.

2.The idea was that government...very roughly speaking...would pay part of the cost of fuel...to cushion the effect.

(1973 was a bad year. That was the time when there were long fuel queues in the USA....and when fuel cost a lot worldwide).

3.Unfortunately, over the years that has meant that government sets the price of fuel below what it costs to produce and pays the difference.

4.That means that the sector cannot make money to keep itself running well....which is why we have bad refineries.

5.Also subsidy means free cash...meaning corruption and stealing.

How is international oilpricea meant to affect locally produced petrol.please explain further

njelrapheal:

How is international oilpricea meant to affect locally produced petrol.please explain further

Cost of the crude is basically almost the same worldwide. Nigerian crude oil price , probably not as high as the world average, is very close to it, assuming that we are selling to local refineries.

SO when oil prices rise up, the price of crude rises, and with it the price of petrol...

I guess you would probably say that Nigerian crude oil people should cut their prices..for domestic refining...but that would lead them to operate at a loss, and a lot of people losing jobs as a result.

Kobonaire234:



You say that because you want cheap fuel. Like Buhari, like you Nigerians.




Considering that we have 5 refineries plus Dangote coming up, this question is now redundant.

Plus local refining won't give you cheap fuel. Fuel would be at least N300. Refienries have to make a profit.

300 is a fair price for today. If the refineries worked.we would have broken even and be refining at a low cost bar materials for refining. Also the abundance should force it down. Other countries have higher pump.price cos they have to import the oil before refining

njelrapheal:
q
What are these components that are imported.

LOL....so you expect Nigeria to make refinery components?

Please, you should not make me laugh.

njelrapheal:

300 is a fair price for today

.

So, you have accepted some deregulation ....

If the refineries worked.we would have broken even and be refining at a low cost bar materials for refining.

Let me tell you a secret...the fuel we use in Nigeria...we send crude to some of Europe's environmentally unfriendly refineries...to refine that crude...which we bring back in at N510 per liter. If we were refining it properly...it would cost more than that.

Refining fuel costs a lot of money.

Also the abundance should force it down. Other countries have higher pump.price cos they have to import the oil before refining

There are many oil producers with prices higher than that of Nigeria.USA , a cost of one liter costs N432

Kobonaire234:


Simple...in our neighbors who do refine, fuel costs N400-600 naira.

Keep in mind that petrol costs are not just refining costs....taxes, transport costs, etc are all in it. Keep in mind that a refinery needs to be properly maintained, not that we would just build it and let it work sans maintenance....all that adds up.

Any government paying subsidy is paying for all that...not just refining.

Oga, you won't run a business where government lowers your prices to help the poor, would you?

Our neighbours dont have this oil . Also cost of transport would be greatly reduced since these refineries are closer to the wells. Govenment can grant tax inventives to these lines of business in the interim seelling price could take care of maintenence. Of cos the govenment cannot determine the price by then

njelrapheal:


Our neighbours dont have this oil .

Niger, Chad, Cameroon, Ghana, and even Benin would like to have words with you.

Also cost of transport would be greatly reduced since these refineries are closer to the wells.

LOL...transport cost is transport from refinery to end user...not refinery to well.

Hembelembe!!!

Plus transport is done using expensive diesel trucks...diesel is very expensive.

Govenment can grant tax inventives to these lines of business in the interim seelling price could take care of maintenence. Of cos the govenment cannot determine the price by then

Tax incentives are great, but it does not mean cheap price.

njelrapheal:
q
What are these components that are imported.

This is not a reasonable question. We should be asking what components are NOT imported.

And no one here has claimed to be a petroleum engineer or such.

Refining crude oil into kero, petrol and diesel involves some sort of cost. That's all. The world price of petrol right now, at this moment, is at least ₦‎230 to ₦‎350 and there's no way it can cost less in Nigeria. That's all anyone needs to know. Ghana, Cameroun & Niger Republic are crude oil producers and they sell to their people at world prices and we know those countries are poorer than Nigeria

Nigerians don't want to pay full price for ANYTHING, that's OK as long as they realize the implications of their choice, which is a stagnating economy and everlasting poverty for 99.999% of the population. Enjoy your cheap economy and stop complaining.

Nigeria used to have perennial scarcity in telecoms and cement. Banking was the same, ALL banks were owned by government and there was lots of corruption. I remember when I was growing up when bank managers were gods because they could give out loans that wouldn't be paid back. Those problems in telecoms, cement and banking were solved with privatization & price deregulation.

If Nigerians can't learn from the experience in banking, telecoms and cement then they're real Zombies in a Zoo. The lessons are clear. Privatize and deregulate EVERYTHING possible and where not possible like airports, Universities and seaports, give them to the State Governments. The Niger Bridges, give one to Delta State and the other to Anambra State.

It's really that simple, there's nothing to argue about, do it and watch an economic miracle unfold.

Kobonaire234:


To build one of those type of refineries now would cost us one third of our foreign reserves.

Lagos tax revenue for 2021 was around 740 billion naira, which is about 1.7bn dollars. A new refinery of the kind we have wrecked would cost about 5-10 billion dollars.(Dangote's initial cost of his refinery was 9bn. dollars. He needed to borrow more money to get it up and running)

Plus tax revenue is used for other things. Lagosians won't like it if you spent their tax for a refinery.


Finally, it is not building a refinery, it is keeping it well working...and to pay for that, subsidy has to go so that fuel sells at a profit.

lagos state tax alone would be used fo get other refeniries working and then other IGR can be used to get the other running. 10billion dols in 5 years is an easy feat.

njelrapheal:
lagos state tax alone would be used fo get other refeniries working and then other IGR can be used to get the other running. 10billion dols in 5 years is an easy feat.

You are being very unrealistic.

Oga, for the last time, things, including petrol, cost money.

Kobonaire234:


You are being very unrealistic.

Oga, for the last time, things, including petrol, cost money.

No Nigerian wants to hear this. All they want to hear is FREE....awoooof....cheap, CHEAP, cheeep, freeee government money.

Even getting Nigerians to pay RENT....house rent....is a problem

Kobonaire234:


Plus transport is done using expensive diesel trucks...diesel is very expensive.

I wonder if Nigerians KNOW the reason their fuel is still transported in trucks

Kobonaire234:


Cost of the crude is basically almost the same worldwide. Nigerian crude oil price , probably not as high as the world average, is very close to it, assuming that we are selling to local refineries.

SO when oil prices rise up, the price of crude rises, and with it the price of petrol...

I guess you would probably say that Nigerian crude oil people should cut their prices..for domestic refining...but that would lead them to operate at a loss, and a lot of people losing jobs as a result.

Local sale to refineries eliminates so many other cost. FX AND ALL..it would be a cheaper sale for both parties..

Kobonaire234:


LOL....so you expect Nigeria to make refinery components?

Please, you should not make me laugh.

We have most raw materials.for it..what is holding us back..sim is now 100. Even when we import.most.stuff in the telecomms.ind.

Kobonaire234:
.

So, you have accepted some deregulation ....



Let me tell you a secret...the fuel we use in Nigeria...we send crude to some of Europe's environmentally unfriendly refineries...to refine that crude...which we bring back in at N510 per liter. If we were refining it properly...it would cost more than that.

Refining fuel costs a lot of money.



There are many oil producers with prices higher than that of Nigeria.USA , a cost of one liter costs N432

i would not cost that much to refine. U make it look like its so expensive to refine so it can land at 510 when u urself said the average prive at other markets nnpc buys is at 250

njelrapheal:
i would not cost that much to refine. U make it look like its so expensive to refine so it can land at 510 when u urself said the average prive at other markets nnpc buys is at 250

Oga, please, you are making me laugh.

Good evening.

Kobonaire234:


Niger, Chad, Cameroon, Ghana, and even Benin would like to have words with you.


LOL...transport cost is transport from refinery to end user...not refinery to well.

Hembelembe!!!

Plus transport is done using expensive diesel trucks...diesel is very expensive.




Tax incentives are great, but it does not mean cheap price.

/h
The s e countries dont have it like we do hence they still need import. Who says u have to use deisel.. besides by then diesel costs would drop too because they ate locally refined.

IbeOkehie:


This is not a reasonable question. We should be asking what components are NOT imported.

And no one here has claimed to be a petroleum engineer or such.

Refining crude oil into kero, petrol and diesel involves some sort of cost. That's all. The world price of petrol right now, at this moment, is at least ₦‎230 to ₦‎350 and there's no way it can cost less in Nigeria. That's all anyone needs to know. Ghana, Cameroun & Niger Republic are crude oil producers and they sell to their people at world prices and we know those countries are poorer than Nigeria

Nigerians don't want to pay full price for ANYTHING, that's OK as long as they realize the implications of their choice, which is a stagnating economy and everlasting poverty for 99.999% of the population. Enjoy your cheap economy and stop complaining.

Nigeria used to have perennial scarcity in telecoms and cement. Banking was the same, ALL banks were owned by government and there was lots of corruption. I remember when I was growing up when bank managers were gods because they could give out loans that wouldn't be paid back. Those problems in telecoms, cement and banking were solved with privatization & deregulation.

[b]If Nigerians can't learn from the experience in banking, telecoms and cement then they're real Zombies in a Zoo. [/b]The lessons are clear. Privatize and deregulate EVERYTHING possible and where not possible like airports, Universities and seaports, give them to the State Governments. The Niger Bridges, give one to Delta State and the other to Anambra State.

It's really that simple, there's nothing to argue about, do it and watch an economic miracle unfold.

2 3 0 is a fair price if u ask me. J sound a bit harsh. I also want subsidy dropped

njelrapheal:

We have most raw materials.for it..what is holding us back..sim is now 100. Even when we import.most.stuff in the telecomms.ind.

Simcards are cheap because the industry they service is privatized and prices are deregulated.

Do the same in any industry in Nigeria or any country in the world and the effects will be the same.

The crude oil & natural gas industry in Nigeria is government owned and controlled and the prices are regulated.

There's nothing more to the story. That's REALLY all there is to it. So you either support privatization & deregulation OR you support government ownership and control and regulation of prices.

All the other details don't matter. When NITEL was the sole phone company in Nigeria, owned by government, it only managed to provide 900,00 phone lines, including their MOBITEL subsidiary.

When telecoms was privatized and deregulated, Nigerians were provided with over 20 million phone lines within 10 to 15 years. Nobody cares how it was done, it was just done by private investors in search of profit.

I remember how scarce CEMENT used to be when I was growing up. I remember grown men running from pillar to post speculating about where somebody saw cement last week or when the next ship was going to land in Lagos with cement.

So these arguments are pointless. Either do free markets or continue with socialist market policies. It's a clear choice and the inevitable results are also known. You get what you pay for, that's an unbreakable rule of life. Nigerians want cheap petrol? Fine, government should set the price at ₦‎40 and be done with it. That will be wonderful, Nigerians will be happy. I don't know what they're waiting for, we own the crude oil and it's our right to have cheap fuel abi? Just do it.

njelrapheal:

2 3 0 is a fair price if u ask me. J sound a bit harsh. I also want subsidy dropped

Whatever man! There's nothing like FAIR price. There's only PRICE, the price in the market at any given time. Anything else is just so much talk.

Kobonaire234:


You are being very unrealistic.

Oga, for the last time, things, including petrol, cost money.

How am I being unrealistic.you make it look lik e its g oing to ost the world to get a refinery working

Kobonaire234:


Yes because when you sell at 180 after bringing it in at 510, sharp practices result.

What you have just outlined is one of those sharp practices.

Add the fact that subsidy is free money. Opportunity to.steal.

That's why it has to go. Or we raise our tax to gdp ratio.from 8% to 50% to pay for the thing

Deal with corrupt people not subsidy. Treat the disease not it's symptom. Sharp practices by who? The government, their friends and families? Hmm!

ADAMUdaCOWBOY:

Deal with corrupt people not subsidy. Treat the disease not it's symptom. Sharp practices by who? The government, their friends and families? Hmm!

Subsidy is what is fueling the corruption.

When you bring in fuel at N510 and sell it at N180, there will be sharp practices.

Plus, the cost of the subsidy rises...and takes a larger percentage of our budget. Dealing with the corrupt won't solve that problem

(I have not even mentioned the massive smuggling of cheap fuel done by the great and the small across all our borders.).

ADAMUdaCOWBOY:

Deal with corrupt people not subsidy. Treat the disease not it's symptom. Sharp practices by who? The government, their friends and families? Hmm!

Who do you think smuggles cheap fuel from Nigeria to Cameroun and Benin Republic and sells it at ₦‎430?

https://www.google.com/search?q=nigeria+fuel+smuggling&rlz=1C1SQJL_enUS816US816&oq=nigeria+fuel+smuggling+&aqs=chrome..69i57j0i22i30j0i390l5.7012j0j4&sourceid=chrome&ie=UTF-8

ORDINARY NIGERIANS, that's who does it.

Same way ORDINARY Nigerians pay bribes or offer sex to enter university, pay bribe to get forex at CBN.

Same ordinary Nigerians offer bribes to police at checkpoints.

Abeg make I hear word!

CheapHomes1:


1. Who made fuel subsidy a drain pipe?

2. Good. So what percentage of the subsidy has been removed so far and how much is left to be removed?

3. That's not what I asked. This is what I asked...Who is going to increase investments in upstream and downstream? Is lack of money the reason for the lack of investments?

1. What's the name of something you keep on paying year on year which keeps on increasing and whose value does not show while at the same time stoping you from making inroads in other things?

2. None, according to public sources.

3. PIA was meant to spur investments by especially the private sector (the driver's of the economy), waiting for govt to do something in Nigeria is going to take you forever.

E.g the dangote refinery, at a cost of $25b, I doubt if it will ever be done by a Nigerian govt. Don't forget that in just around 2012 when the idea was first mooted, cost was placed around $12b, it ballooned to the current value requiring model thinking in financing and partnerships. No business will invest money and be told to produce and sell below the ideal market price.

Give the private sector the room to invest their money, regulate, collect taxes and royalties.