Fuel 'Subsidy':The Nitty Gritty

by Prof. Tam David West:

The federal government has finally removed fuel subsidy. Petroleum Products Pricing Regulatory Agency (PPPRA) made the announcement on Sunday. In a statement the agency said a litre of petrol, Premium Motor Spirit (PMS) will now sell for N141.

1) One barrel of Crude oil = 42 gallons 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 daily

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

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. 0.219 x N160 = 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.