Brief On Fuel Subsidy [Presentation Document]

The Attached Document Was Presented By Minister of Finance and Coordinating Minister Dr Okonjo-Iweala to make a case for Oil Subsidy.


icon

Brief On Fuel Subsidy
by Dr. Ngozi Okonjo-Iweala
Coordinating Minister for the Economy /
Honourable Minister of Finance
DECEMBER 6th, 2011
Download, Read and Post Your Comments


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Brief On Fuel Subsidy by Dr. Ngozi Okonjo-Iweala

Download, Read and Post Your Comments



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Brief On Fuel Subsidy [Document Download]
Dr. Ngozi Okonjo-Iweala posted on 12-28-2011, 03:20:06 AM

The Attached Document Was Presented By Minister of Finance and Coordinating Minister Dr Okonjo-Iweala to make a case for Oil Subsidy.




*icon


Brief On Fuel Subsidy
by Dr. Ngozi Okonjo-Iweala
Coordinating Minister for the Economy /
Honourable Minister of Finance
DECEMBER 6th, 2011
Download, Read and Post Your Comments





*icon


Brief On Fuel Subsidy by Dr. Ngozi Okonjo-Iweala


Download, Read and Post Your Comments



Read full article
Re: Brief On Fuel Subsidy [Presentation Document]
Emj posted on 12-28-2011, 03:20:06 AM

The Attached Document Was Presented By Minister of Finance and Coordinating Minister Dr Okonjo-Iweala to make a case for Oil Subsidy.




icon


Brief On Fuel Subsidy
by Dr. Ngozi Okonjo-Iweala
Coordinating Minister for the Economy /
Honourable Minister of Finance
DECEMBER 6th, 2011
Download, Read and Post Your Comments









icon


Brief On Fuel Subsidy by Dr. Ngozi Okonjo-Iweala


Download, Read and Post Your Comments



..Read the full article
Re: Brief On Fuel Subsidy [Presentation Document]
Anonimi posted on 12-28-2011, 03:58:39 AM
QUOTE:
- Subsidy does not get to the poor. The middle and upper classes are the
real beneficiaries


As it was with NITEL so is now with fuel marketers and their government collaborators.
Out with hazy, fuzzy, fuel subisidy mirage.
In with petroleum downstream deregulation!!!
Initial high prices will reduce as competition increases and new investors come into the sector.
Re: Brief On Fuel Subsidy [Presentation Document]
Mutti posted on 12-28-2011, 06:47:59 AM
Tell me who is fooling who?

First off the bat, that document could have been better formated. a foretatse I suppose of how the money saved from subsidy will be handled - shoddily.

Next this group of eminent persons to monitor use of of subsidy savings - the usual culprit I suppose who are simply famous for being famous rather anything of significance achieved.

Moving bacon from one group of fat cats to another group is hardly a smart policy choice. Investments to date in infrastructure of any kind has yeilded nothing but an overpriced pile rubble and outdated equipment with no technical know how to use much less improve on imported technology.

How well have monies spen been accounted for and how well have the truly poor been represented by the so called civil society and representatives pf women and youth groups. I guess a chance at the pork barrel for some lucky blighters is close at hand and some new billionnaires are imminent.

Any way it swings, Mme Iweala cannot be touched she is already an icon of international repute. The rest of us will manufacture some new coping strategies for dealing with the impact of increased fuel prices, continued infrastructural decay and abyssmal public services
Re: Brief On Fuel Subsidy [Presentation Document]
Consigliere posted on 12-28-2011, 06:55:20 AM
I'm afraid I can't see any documents here though!
Re: Brief On Fuel Subsidy [Presentation Document]
Hellofadude posted on 12-28-2011, 07:14:27 AM
If the Minister of Finance wants to communicate with villagers, she should by more creative and show imagination instead of this lazy attitude of asking us to comment on presentation that contains only facts and figures. No flesh, no meat no coherent line of reasoning.. Just boring facts and figures!

Is she not clever enough to articulate her thoughts in prose via a coherent article like most people??

What are we supposed to glean from this article?? Is this vanity or what???

fuey!!
Re: Brief On Fuel Subsidy [Presentation Document]
Picato posted on 12-28-2011, 08:06:25 AM
QUOTE:
If the Minister of Finance wants to communicate with villagers, she should by more creative and show imagination instead of this lazy attitude of asking us to comment on presentation that contains only facts and figures. No flesh, no meat no coherent line of reasoning.. Just boring facts and figures!

Is she not clever enough to articulate her thoughts in prose via a coherent article like most people??

What are we supposed to glean from this article?? Is this vanity or what???

fuey!!


She is working for the World Bank and not for Nigeria. Who do you think you are? You are infra dig.
Re: Brief On Fuel Subsidy [Presentation Document]
John igoli posted on 12-28-2011, 08:11:25 AM
Under this situation, you expect a government to say ''Until we are able to refine enough petrol locally for our consumption, we will have to park our cars. No more importation of petrol.'' The Head of state will then begin to lead by exampleand his ministers and aides will follow and Nigerians will happily follow. Then the heat will be on our petroleum engineers, the NNPC and all who are supposed to ensure that petrol is produced and made available in Nigeria. No body can determine the ultimate price of petrol as long as we continue to import it. Therefore the issue of subsidy or price of petrol will never end. Instead of all this lengthy explanation, why can't our leaders lend us their one month allowance and salaries and build a refinary with it. They can recoup their money or investment as soon as the products hit the market..alas I am dreaming...
Re: Brief On Fuel Subsidy [Presentation Document]
Gwobezentashi posted on 12-28-2011, 09:09:52 AM
Bullcrap! Ngozi and her Washington people don take Dollo hostage finish. Meanwhile Diezani know wetin dem dey take 445,000 barrels per day do. Chop and clean mouth and dem want raise price for the small man on the street. Governors want collect dem share put for pocket. Ole buruku all of dem.

See the gospel truth here? Babu subsidy walahi. Government just dey round trip nigerians.

QUOTE:
the real cost of nigeria petrol- by dr. Izielen agbon

december 15, 2011

by dr. Izielen agbon

on december 10, 2011, if you stopped at the mobil filling station on old aba road in port harcourt , you would be able to buy a litre of petrol for 65 naira or $1.66 per gallon at an exchange rate of $1/n157 and 4 litres per gallon. This is the official price. The government claims that this price would have been subsidized at n73/litre and that the true price of a litre of petrol in port harcourt is n138/litre or $3.52 per gallon.

They are therefore determined to remove their subsidy and sell the gallon at $3.52. But, on december 10, 2011, if you stopped at the mobil gas station on e83rd st and flatlands avenue in brooklyn, new york, usa, you would be a able to buy a gallon of petrol for $3.52/gallon. Both gallons of petrol would have been refined from nigerian crude oil. The only difference would be that the gallon in new york was refined in a us north east refinery from nigerian crude exported from the qua iboe crude terminal in nigeria while the port harcourt gallon was either refined in port harcourt or imported. The idea that a gallon of petrol from nigerian crude oil cost the same in new york as in port harcourt runs against basic economic logic. Hence, nigerians suspect that there is something irrational and fishy about such pricing. What they would like to know is the exact cost of 1 litre of petrol in nigeria .

We will answer this question in the simplest economic terms despite the attempts of the nigerian government to muddle up the issue. What is the true cost of a litre of petrol in nigeria ? The nigerian government has earmarked 445000 barrel per day throughput for meeting domestic refinery products demands. These volumes are not for export. They are public goods reserved for internal consumption. We will limit our analysis to this volume of crude oil. At the refinery gate in port harcourt, the cost of a barrel of qua iboe crude oil is made up of the finding /development cost ($3.5/bbl) and a production/storage /transportation cost of $1.50 per barrel.

Thus, at $5 per barrel, we can get nigerian qua iboe crude to the refining gates at port harcourt and warri. One barrel is 42 gallons or 168 litres. The price of 1 barrel of petrol at the depot gate is the sum of the cost of crude oil, the refining cost and the pipeline transportation cost. Refining costs are at $12.6 per barrel and pipeline distribution cost are $1.50 per barrel. The distribution margins (retailers, transporters, dealers, bridging funds, administrative charges etc) are n15.49/litre or $16.58 per barrel. The true cost of 1 litre of petrol at the mobil filling station in port harcourt or anywhere else in nigeria is therefore ($5 +$12.6+$1.5+$16.6) or $35.7 per barrel . This is equal to n33.36 per litre compared to the official price of n65 per litre. Prof. Tam david west is right. There is no petrol subsidy in nigeria . Rather the current official prices are too high. Let us continue with some basic energy economics.

The government claims we are currently operating our refineries at 38.2% efficiency. When we refine a barrel of crude oil, we get more than just petrol. If we refine 1 barrel (42 gallons) of crude oil, we will get 45 gallons of petroleum products. The 45 gallons of petroleum products consist of 4 gallons of lpg, 19.5 gallons of gasoline, 10 gallons of diesel, 4 gallons of jet fuel/kerosene, 2.5 gallons of fuel oil and 5 gallons of bottoms. Thus, at 38.2% of refining capacity, we have about 170000 bbls of throughput refined for about 13.26 million litres of petrol, 6.8 million litres of diesel and 2.72 million litres of kerosene/jet fuel. This is not enough to meet internal national demand. So, we send the remaining of our non-export crude oil volume (275000 barrels per day) to be refined abroad and import the petroleum product back into the country. We will just pay for shipping and refining. The nigerian government exchanges the 275000 barrels per day with commodity traders (90000 barrels per day to duke oil, 60000 barrels per day to trafigura (puma energy), 60000 barrels per day to societe ivoirienne de raffinage (sir) in abidjan, ivory coast and 65000 barrels per days to unknown sources) in a swap deal. The landing cost of a litre of petrol is n123.32 and the distribution margins are n15.49 according to the government. The cost of a litre is therefore (n123.32+n15.49) or n138.81 . This is equivalent to $3.54 per gallon or $148.54 per barrel. In technical terms, one barrel of nigerian crude oil has a volume yield of 6.6% of ago, 20.7% of gasoline, 9.5% of kerosene/jet fuel, 30.6% of diesel, 32.6% of fuel oil / bottoms when it is refined.

Using a netback calculation method, we can easily calculate the true cost of a litre of imported petrol from swapped oil. The gross product revenue of a refined barrel of crude oil is the sum of the volume of each refined product multiplied by its price. Domestic prices are $174.48/barrel for ago, $69.55/barrel for gasoline (pms or petrol), $172.22/barrel for diesel oil, $53.5/barrel for kerosene and $129.68/barrel for fuel oil. Let us substitute the government imported pms price of $148.54 per barrel for the domestic price of petrol/gasoline. Our gross product revenue per swapped barrel would be (174.48*0.066 +148.54*0.207+172.22*0.306+ 53.5*0.095+129.68*0.326) or $142.32 per barrel. We have to remove the international cost of a barrel of nigerian crude oil ($107 per barrel) from this to get the net cost of imported swapped petroleum products to nigerian consumers. The net cost of swapped petroleum products would therefore be $142.32 -$107 or $35.32 per barrel of swapped crude oil. This comes out to be a net of $36.86 per barrel of petrol or n34.45 per litre.

This is the true cost of a litre of imported swapped petrol and not the landing cost of n138 per litre claimed by the government. The pro-subsidy nigerian government pretends the price of swapped crude oil is $0 per barrel (n0 per litre) while the resulting petroleum products is $148.54 per barrel (n138 per litre). The government therefore argues that the \"subsidy\" is n138.81-n65 or n73.81 per litre. But, if landing cost of the petroleum products is at international price ($148.54 per barrel), then the take-off price of the swapped crude oil should be at international price ($107 per barrel). This is basic economic logic outside the ideological prisms of the world bank. The traders/petroleum products importers and the nigerian government are charging nigerians for the crude oil while they are getting it free.

So let us conclude this basic economic exercise. If the true price of 38.2% of our petrol supply from our local refinery is n33.36/litre and the remaining 61.8% has a true price of n34.45 per litre, then the average true price is (0.382*33.36+0.618*34.45) or n34.03 per litre. The official price is n65 per litre and the true price with government figures is about n34 per litre (even with our moribund refineries).

There is therefore no petrol subsidy. Rather, there is a high sales tax of 91.2% at current prices of n65 per litre. The labor leaders meeting the president should go with their economists. They should send economists and political scientists as representatives to the senate committee investigating the petroleum subsidy issue. There are many expert economists and political scientists in asuu who will gladly represent the view of the majority. The labor leaders should not let anyone get away with the economic fallacy that the swapped oil is free while its refined products must be sold at international prices in the nigerian domestic market.

The government should explain at what price the swapped crude oil was sold and where the money accruing from these sales have been kept. We have done this simple economic analysis of the nigerian petroleum products market to show that there is no petrol subsidy what so ever. In the end, this debate on petrol subsidy and the attempt of the government to transfer wealth from the nigerian masses to a petrol cabal will be decided in the streets. Nigerian workers, farmers, students, market women, youths, unemployed, ngo and civil society as a whole should prepare for a long harmattan season of protracted struggle. They should not just embark on 3 days strike/protests after which the government reduces the hiked petroleum prices by a few nairas. They must embark upon in a sustainable struggle that will lead to fundamental changes. Let us remove our entire political subsidy from the government and end this petroleum products subsidy debate once and for all. It is time to bring the arab spring south.

Izielen agbon izielen agbon writes from dallas, texas. izielenagbon@yahoo.com

he is former hod, , petroleum eng dept, former asuu chairman university of ibadan, trained many operators in nation's energy industry with pratical experience on our practices and policy focus in the last 20yrs


http://saharareporters.com/article/real-cost-nigeria-petrol-dr-izielen-agbon
Re: Brief On Fuel Subsidy [Presentation Document]
Mutti posted on 12-28-2011, 09:16:08 AM
Shay? . I saw only after the fact that she was the poster! Her futile attempt at consultation and social dialogue I presume. Where are the scenarios upon which her policy decisions are premised? What are the possible socio-economic impacts, which sectors will most affected, what is the cascade effect of that on livelihoods and living standards? A hurriedly put together powerpoint for the benefit of Mr. Bean President should suffice for the rest of us. After all they have said it quite openly and prove it time and again that we are satisfied with very little due to our inability to digest and understand complex policy issues.

If you ask me attempts at analysis in that document (if you can call it that) is supeficial and presumptious. No verifiable figures used, just suppositions. By the way, what is the position of the Ministry of Petroleum Resources? Does the Minitry of Mines and Power or whatever they are called these days have anything to say. The Minister of Trade and Industry has been strangely quiet but they want comments from the general public who have no, absolutely no information to work with.

Well they see us like so. Epa!

QUOTE:
If the Minister of Finance wants to communicate with villagers, she should by more creative and show imagination instead of this lazy attitude of asking us to comment on presentation that contains only facts and figures. No flesh, no meat no coherent line of reasoning.. Just boring facts and figures!

Is she not clever enough to articulate her thoughts in prose via a coherent article like most people??

What are we supposed to glean from this article?? Is this vanity or what???

fuey!!
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