January 21, 2012 / Gary K. Butch
A comment in response to the Advertorial published in newspapers by the Oil Marketers Association; republished by Proshare as a matter of public information to a wider public - Subsidy Facts & Our Stand – Oil Marketers Association
“This is more than disingenuous”. It mentions the cost of the PMS to import the fuel to Nigeria but it doesn't mention the price these importers pay for the crude leaving Nigeria for overseas refineries.
The cost to the importer, based on the price of the crude under the 450,000 bbl/day is less than 41 Naira a litre delivered back to Nigeria .
Moreover, the profit made on the refined output of the Nigerian crude from which this PMS (and diesel and kerosene also delivered to Nigeria at a profit) is equivalent, at today's netback for the remainder of the refined barrel not imported to Nigeria, at around US$46 per barrel (or 7,400 Naira a litre) - not one kobo of which is paid to NNPC or the Treasury. So, there is no subsidy at all. The 65 Naira price already included a profit of 24 Naira a litre.
This 24 Naira is a subsidy to the importers not the Nigerians. In addition, the unreturned profit for the refined product not imported to Nigeria equals 445,000 barrels times USD$46 or USD$20,930,000 a day.
This is why Nigerian importers are rich beyond everyone's dreams and why most Nigerians are poor and without basic services. What a farce!
About the Author
Gary Busch is a Director and Senior Associate with Scribe Strategies & Advisors (UK). He has been Chairman and CEO of International Bulk Trade, Transport Logistics, Transport Africa and the North Pacific Lines. These companies have owned, chartered and operated marine dry cargo vessels and cargo aircraft worldwide.
He set up the transport and logistics systems for the Russian aluminium industry and operated transport and port facilities within Russia and for Russian exports. His airline companies were the national cargo airlines of two African countries.
He was a Professor and Head of Department at the University of Hawaii and has been a visiting professor at several universities. He was the head of research in international affairs for a major U.S. trade union and Assistant General Secretary of an international union body. He has been a consultant on international political developments for several major international corporations, think-tanks and private intelligence companies, with a speciality in African politics.
He speaks and reads 12 languages and has written six books and published 58 specialist studies. His articles have appeared in the Economist Intelligence Unit, Wall Street Journal, WPROST (a leading Polish weekly news magazine), Pravda and several other major international news journals. He was the host and executive producer of three 39-week series on Public Broadcasting and has been a frequent contributor to television documentary series. He is the editor and publisher of the web-based news journal of international relations www.ocnus.net and the distance-learning educational website www.worldtrade.ac. He can be reached by mail on firstname.lastname@example.org
While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the author/analyst or the publishers/Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute the author’s best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This information is published with the consent of the author(s) for circulation in/to our online investment community in accordance with the terms of usage. Further enquiries should be directed to the author.