Removal Of Subsidy: Analysis by Prof. Tam David West

[emezico]

Former Minister of Petroleum Resources Prof. Tam David-West, made a concrete analysis about cost of crude oil in and how much it should be sold to Nigerians.

See below:

- One barrel of crude oil= 42 gallons= 159 litre

- Our four refineries (at full capacity) = 445,000 barrels per day.

- Actual refineries capacity (due to ageing equipment)= 30% i.e 133,000 barrels per day.

- 133,000 barrels per day = 21.2 million litres per day.

- Local consumption (F.O.S.) = 12 million litres per day.

- It means that even our moribond refineries can actually meet our local consumption of petroleum.

- The cost structure of crude oil (i.e Qua Iboe Crude Oil) per barrel.

* Findings/development : $3.5

* Production cost : $1.5

* Refining cost : $12.6

* Pipeline/transportation : $1.5

* Distr/bridging fund margin : $15.69

* Total production cost : $34.8 per barrel.

- True cost of petroleum per litre in Nigeria at 160N to 1$

* Cost per barrel = $34.8

* 1 ltr cost = $34/159 ltrs = $0.219

* Naira equiv. = 0.219 *160 = N35.02k

* Add tax N5 + N35.02 = N40.02k

- Let FGN refute the above composition & if not they shld tell us how we came about N65.

- Locally refined products cannot be sold at international price.

- We do not need FGN subsidy as there was none in the first place.

- What is lacking is the will to enforce law on corruption.