So people have said that Dangote will buy crude oil from the government at international price, but since he'll be refining it at our backyard here ("Lekki), am I right to assume there'll be no extraneous expenses such as shipping/landing costs, at least as it pertains to distribution in Nigeria (because I'm guessing he'll sell to neighboring countries)

So if there are no too much extra expenses, does this mean that that fuel price would be generally cheaper?


Somebody enlighten me. Mods, please move this to FP for a well-rounded discussion. Thanks.

Has he made price of cement cheaper? monopoly kills the economy

He can't sell fuel cheaper than government price to avoid conflict of price influx. There are rules governing the petroleum industry and his price will be government fixed price. Also note that wen he generates fuel, he is only going to distribute, not opening a Sanford filling stations to sell his fuel.

But he'll have so much fuel after refining. I hear he'll be able to produce our most of our daily need, if not all. If he produces so much, would NNPC still wade in and disturb him? If they fix price for him, would it work? Abi they'll now be paying him subsidy? Don't forget Dangote used about $3b from banks to build this place, they have to pay him back.

goliver:
He can't sell fuel cheaper than government price to avoid conflict of price influx. There are rules governing the petroleum industry and his price will be government fixed price. Also note that wen he generates fuel, he is only going to distribute, not opening a Sanford filling stations to sell his fuel.

Saladin1:

There is not guarantee that fuel will be cheaper but it will be available and there will no longer be subsidy on fuel. This will be better than the current situation where government pay so much on subsidy and we still buy at exorbitant rates

When the price of N143 was fixed as petrol price, crude oil price was in the $40 range. Then there was no longer a subsidy

Now that crude oil price is in the $60's range, landing price at the port is now N171!

So, the price of petrol is heavily influenced by the prevailing international price of crude oil. To even go further, the price of petrol is further dependent on the available petrol global refining capacity and the international depend for petrol. There was a time was petrol refining capaciry was tight and demand very high. Though the price of crude oil then was $60/barrel, refiners were making profits as much as $30/barrel!

Dangote said he can save Otedola about 23 or 26naira per litre of diesel. I don't know how much he can save them per litre of petrol.

Anyway, at the present landing price of 171, let cut away 26naira as possible savings from Dangote refining, the price will be 145naira from the refinery. This is already higher than the pump price and we have not included transport cost and profit margins. And the international price of crude oil will still rise.

So the subsidy will still be substantial

I was hoping it will reduce the pressure on forex.

Maybe $1 = N1 like baba promised

no, price will not be cheaper, petrol will only be more available since we are not shipping it in.

process and distribute, only FG can influence price

Total deregulation as proposed by GEJ remains the solution.
If Dangote cement reduced the price of cement,? Same is expected from Dangote fuel.

Lol

I have a video where dangote said fuel will be 15 naira per litre. Download channels documentary on dangote refinery

modik:
Total deregulation as proposed by GEJ remains the solution.
If Dangote cement reduced the price of cement,? Same is expected from Dangote fuel.

Lol

Exactly. So many Nigerians refuse to learn, even when there are obvious precedents to draw from. Dangote's entire fortune is built on government-supported monopolies, so why should anyone expect his refinery to be any different?

The common fantasy of a Dangote or someone else swooping in to provide Nigerians with limitless refined petrol below its international market price is nothing but a pipe dream: it may well be that the cheapest way of supplying such fuel will continue to be by importing it from countries with established refining industries, and that Dangote's refinery will be unable to compete with such suppliers unless they are slapped with huge tariffs that end up raising the domestic price above what it ought to have been.

The simple, efficient, guaranteed, permanent cure for Nigeria's fuel problems is simply to completely deregulate the sector, allow prices to be freely set by market forces, and remove government involvement by completely selling off the refineries and other such assets. Getting the outrageously delayed Petroleum Industry Bill into law will be a good start (but still only a start) in this direction.

omohayek:

Exactly. So many Nigerians refuse to learn, even when there are obvious precedents to draw from. Dangote's entire fortune is built on government-supported monopolies, so why should anyone expect his refinery to be any different?

The common fantasy of a Dangote or someone else swooping in to provide Nigerians with limitless refined petrol below its international market price is nothing but a pipe dream: it may well be that the cheapest way of supplying such fuel will continue to be by importing it from countries with established refining industries, and that Dangote's refinery will be unable to compete with such suppliers unless they are slapped with huge tariffs that end up raising the domestic price above what it ought to have been.

The simple, efficient, guaranteed, permanent cure for Nigeria's fuel problems is simply to completely deregulate the sector, allow prices to be freely set by market forces, and remove government involvement by completely selling off the refineries and other such assets. Getting the outrageously delayed Petroleum Industry Bill into law will be a good start (but still only a start) in this direction.

Spot on.

I doubt if this Government, irrespective of their position pre coming to power, has the political will and discipline to walk their talk now in this regard.

Talk is cheap.

It might not be cheaper.

Dangote will still buy crude oil at the international price from the government.

It can only be cheaper if the government sells crude oil to the refinery at a discount.

omohayek:

Exactly. So many Nigerians refuse to learn, even when there are obvious precedents to draw from. Dangote's entire fortune is built on government-supported monopolies, so why should anyone expect his refinery to be any different?

The common fantasy of a Dangote or someone else swooping in to provide Nigerians with limitless refined petrol below its international market price is nothing but a pipe dream: it may well be that the cheapest way of supplying such fuel will continue to be by importing it from countries with established refining industries, and that Dangote's refinery will be unable to compete with such suppliers unless they are slapped with huge tariffs that end up raising the domestic price above what it ought to have been.

The simple, efficient, guaranteed, permanent cure for Nigeria's fuel problems is simply to completely deregulate the sector, allow prices to be freely set by market forces, and remove government involvement by completely selling off the refineries and other such assets. Getting the outrageously delayed Petroleum Industry Bill into law will be a good start (but still only a start) in this direction.

Must we sell all our assets to greedy businessmen that give nothing back to the society? Saudi's Aramco is the most valuable company in the whole of Asia it's worth over $2 trillion and yet, it's 100% government owned. It's high time we the people really hold our leaders accountable.


Thank God you mentioned Dangote cement. Today Nigerians buy cement at almost double the price in the international market. Yet, Dangote for instance gets his raw materials at almost free. He pays #25 per ton for limestone and the likes. A quick look at his financial statements from 2010 - 2015 shows he made almost #1trillion in profit and paid less than #12billion in tax.

For key industries we must not allow private individuals like Dangote to have a field day. Cos the end result will be disastrous.

Johnrake69:


Must we sell all our assets to greedy businessmen that give nothing back to the society? Saudi's Aramco is the most valuable company in the whole of Asia it's worth over $2 trillion and yet, it's 100% government owned. It's high time we the people really hold our leaders accountable.


Thank God you mentioned Dangote cement. Today Nigerians buy cement at almost double the price in the international market. Yet, Dangote for instance gets his raw materials at almost free. He pays #25 per ton for limestone and the likes. A quick look at his financial statements from 2010 - 2015 shows he made almost #1trillion in profit and paid less than #12billion in tax.

For key industries we must not allow private individuals like Dangote to have a field day. Cos the end result will be disastrous.

There was a year that the profit after tax was more than 50% of revenue.

That means if he slashed the ex factory price by half, he'll still make a profit after tax.