IS THERE REALLY A SUBSIDY? a few random takes from those who should know!

1) One barrel of Crude oil = 42gallons or 159 litres

2) Our Refineries (i.e 4) Installed(combined) capacity = 445,000 barrels per day

3) Actual refineries capacity due to ageing equipment = 30% i.e. 133,500 barrels per day

4) .133,500 barrels = 21.2 million litres

5) Local required consumption (F.O.S) =12millions litres

6) It means that even our MORIBUND refineries can actually meet our local consumption need of petroleum.

7) The cost structure of crude oil (i.e. Qua Iboe Crude Oil) production;
– Findings / development – $3.5 – Production cost – $1.5
– Refining Cost – $12.6
– Pipeline/ transportation – $1.5
– Distr/bridging fund Margin -$15.69

8) True cost of one litre of petroleum anywhere in Nigeria; – Total sum cost = $34.8
– 1ltr cost = $34.8/159 litres = $0.219
– Naira equiv. 0.219xN160= N35.02k
– Add Tax N5 + N35.02 = N40.02

9) Let FGN refute the above composition and if not, they should tell us how they came about N65/litre.

10) Locally refined products cannot be sold at International price.

11) We really do not need FGN SUBSIDY as there was NONE in the first place.

12) What is LACKING, is the WILL to enforce LAW ON CORRUPTION.

**We still stand a chance as a COUNTRY.
Analysis done by Professor Tam David West, former
Petroleum Minister




Question: Sir, what is your view on the subsidy question?

Gen. Buhari (rtd.):
I don’t understand what the Nigerian economists and members of Government mean by their definition? That they are subsidizing Nigerian crude oil. Who is subsidizing who?
The Nigerian oil industry was developed with Nigerian capital. Most of the expertise is Nigerians, if you go into the field.
It is Nigerian capital, Nigerian oil. What I understand Nigeria should charge Nigerians is the cost of getting oil from the well and then the cost of transportation to the refinery, cost of refining and its cost at the pump.
If anybody says he is subsidizing anything, he is a fraud. So when these people talk about subsidy… who is subsidizing who?
But there is so much fraud as I said before so I don’t talk about it. But the day I have to talk about it, I will ask the Petroleum Economists to come and tell me who is subsidizing Nigerians? Nigerian Oil? Whose oil is it?

We have four refineries with the capacity of four hundred and eighty thousand (480,000) barrels per day. That is if they are functioning at full capacity, because of corruption, they have virtually allowed those refineries to become so inefficient that I don’t think they produce up to half their capacity. Now instead of taking the balance of what we have outside to be refined outside as we used to ,when there was a Turn Around Maintenance (TAM) when I was in Petroleum, hardly Nigerians know. Because we negotiate with oil companies, we say ok Nigerians use two hundred thousand (200,000) barrels a day, take two hundred thousand (200,000) barrels a day, you refine it, you bring the refined product back to us, you sell the rest of the thing we don’t need. And then you call it subsidy. It is Nigerian crude. Who asked them to take commission for what they have refined?

Then our refineries, we built three (3) more refineries. It used to be one in Port Harcourt. We built another one in Port Harcourt, One Hundred and Fifty Thousand (150,000) capacity with the old one of Two Hundred and Fifty Thousand (250,000) capacity, Warri One Hundred Thousand (100,000) capacity, and Kaduna One Hundred Thousand (100,000) capacity. Is there supposed to be any cut? Now if you are taking Two Hundred and Fifty Thousand (250,000) barrels to be refined outside. All you have to do is to fill the fee for this refining and you bring your own oil inside it, and the people are saying that they are subsidizing. Who are they subsidizing? I don’t understand it and I need the Petroleum economist to explain to me this question of subsidy. It is sheer fraud and corruption!

Here is the original post.


One response to “IS THERE REALLY A SUBSIDY? a few random takes from those who should know!

  1. Pingback: HISTORY: Major-General Babaginda Address to the Nation – August 27, 1985 « yomzie·

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