By Adebayo Adeolu
Nigeria is an oil producing country and this simply means, among her natural resources, she produces crude oil. A country that has crude oil as one of its natural minerals often builds a refinery to refine the crude oil to produce end products of petroleum such as petrol, diesel, kerosene and jet A1 used for aircraft.
What are the reasons for the building of refineries? Products that come from refining is for the benefit of the people of that country both for their domestic use and also international trade as an export product. Nigeria had in the past exported raw crude oil to other countries around the world and this become our trading partners. We also sometimes export refined products like petrol, diesel and kerosene etc when they have enough and extra that the quota given to their daily products can allow or accommodate.
Nigeria is a member of OPEC, an organization formed to protect the interest of oil producing countries which includes the stability of oil price around the world. The organization often agrees among its members to fix international oil price and also gives a production quota to members on the daily production output any country that is within the group can produce for export daily. These rules are safeguards to guarantee stability of price of crude oil on the international market. This means that crude oil is sold internationally at an agreed fixed price often determined by OPEC.
The domestic price of refined products around countries of the world is often different at the pump. This means the price in America, Britain, France and Germany etc are all different. This is the domestic market and this is the mistake Nigeria is making by ignoring the repairs and overhaul of her three refineries. The Dangote refinery is on board and ready to produce while the other refineries are going through a maintenance repair. It is the duty and responsibility of Nigeria, through the President and petroleum minister through the NNPC, to provide Dangote Refinery with crude oil for domestic use.
This was recently settled after an earlier dispute where Aliko Dangote, the owner of the refinery, had that NNPCL refused to sell him crude oil. The subsidy matter on petroleum products in Nigeria, when you have functional refineries, is not to pay cash or money to anybody or organization fronting as a marketer selling petroleum products. You don’t give anyone money in the name of subsidies or subsidizing a product that is simply a case of corruption.
If you want to bring down the price of petrol, diesel or kerosene in Nigeria that is domestic price and has nothing to do with OPEC or the international market price. This is what was done by Gaddaffi in Libya and also Saudi Arabia and many oil producing countries where they have good leaders who know how to govern their countries.
Nigeria is among the oil producing countries of the world. Now when it comes to subsidies to be introduced to lower the price of petroleum products, which has its ripple effect on economic growth and development – meaning it brings down costs of goods and services, cost of living and cost of doing business.
Nigeria has to discount the price of crude oil being supplied to the local refineries. You don’t sell crude oil to government owned refineries or private owned refineries at the international market price. When the crude oil is pumped out from the soil which is onshore or when it’s at sea offshore, you now discount the crude which is lower than the international market price of crude oil.
This means you sell at lesser price for domestic production. This lesser price is the subsidy given by the country that owns the minerals. That is what the sovereign leader who is the President elect to govern Nigeria has the power to do this. What President Tinubu has just done is saying sell crude oil to Dangote Refinery in Naira. What he has to do additionally is to discount the crude oil price for domestic use after its pumped out from source.
The price cost at the source and the difference margin for international price is the subsidy removal, meaning you might just add a dollar to the price from source so that it’s not given totally free. This is what you call subsidy when you have subsidized the price for domestic use. Then the government comes to an agreement with the domestic private refinery to sell at a discount price for the people of Nigeria. This automatically brings down the price of petrol by 50 percent and other petroleum products . This is what you call subsidy and you don’t pay any money to anyone or organization or company. This is how to bring down the cost of petrol, diesel kerosene and Jet A1 and other products like engine oil, grease and other petroleum products.
Anybody who wants to succeed as a good leader in Nigeria must do this for the benefit of the people and country.
