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NUPENG say: Labour, Nigerians, arise against the Federal Government!

The National Union of Petroleum and Natural Gas Workers (NUPENG) said it is against the removal of Fuel Subsidy; NUPENG is asking Nigerians and Labour groups to stand up toe to toe against the Federal Government of Nigeria over the removal of fuel subsidy.
NUPENG President, Mr. Igwe Achese stated, “If the governors came out to say they are supporting deregulation or they are supporting fuel subsidy removal, it is clear they want the subsidy removed because they want to amass more money to themselves. But, the question we have asked the governors’ forum and which it has not answered, is, what happened to the other funds members have been collecting? What happened to the funds that have been mismanaged? We asked the forum and we have not got answers till now. Yet, some of the convicted former governors are moving freely in this country, under plea bargaining. The governors are asking for subsidy removal because they know what they will gain. We even gathered that at their last meeting, they were calculating the huge amount of money they will get. Some were talking about N600 billion, others N500 billion, if subsidy is removed. Labour will continue to resist subsidy removal and Nigerians will continue to resist it because it is not an issue for labour alone, it is a struggle for all Nigerians. I want to tell you that you will find it difficult to pay transport, you will find it difficult to fuel your car and if you take public transport, you cannot pay. How much is your salary? Will the removal of fuel subsidy increase your salary? That is the big question you must ask yourself. Let the government explain why subsidy was introduced to Nigerians. if government is coming up to say we are removing subsidy, first and foremost, it must be explained why subsidy was introduced and if government explains why subsidy was introduced and whether those issues have been addressed, Nigerians will ask the next question including me, because is not a NUPENG issue. When you talk about fuel subsidy, is not a NUPENG issue. It is a Nigerian issue because it is not just going to affect NUPENG but Nigerians as a whole. So, it should not be looked at as if it is a NUPENG problem.” What are you thinking?

3 Responses to “NUPENG say: Labour, Nigerians, arise against the Federal Government!”

    he price of petroleum products in Nigeria has been a source of contention and controversy. If our refineries were to be producing at 100 per cent capacity, the prices of their products would not have been an issue at all. Current emphasis should be on how to turnaround the refineries for optimum production. To ascertain the total cost of producing petroleum products locally, we need to add the total costs of all components involved in the supply of premium motor spirit (PMS) which is the most widely demanded and utilized petroleum product. The cost component involved are cost of exploration, developing, producing, refining, distributing and marketing. The amount of subsidy on the retail price is then determined by the difference between the actual cost and the retail price.

    The Petrol Process To purchase petrol in Nigeria, all one needs do is to drive to a fuel station. Fuel attendant pumps the requested quantity and payment is made in cash, electronically (through value card or top card).
    Fuel stations typically receive their supply from fuel tankers which have been loaded at a Nigerian National Petroleum Corporation (NNPC) or other fuel depots. The depots acquisition costs vary based on contractor, coverage, terrain, time, season, water depth, methods, commercial terms and special considerations. Typical costs range from 20 – 70,000 USD/KM2. Interpretation costs range typically from 2-8,000 USD/KM2. We will use 50,000 USD/KM2 as estimated cost of 3D seismic acquisition and interpretation. For a 10 KM2 field with 20 million barrels recovery; exploration costs can be estimated to be about: 0.025 USD/Bbl. This is equals to 0.02 N/litre.

    Development Costs
    Opportunity development costs depend on field location, size, development philosophy and concept. Development cost includes the capital costs of field facilities design, procurement, transportation, installation and commissioning. Cost of wells and pipelines to existing terminals are also included. It will typically vary from 2-5 USD/Bbl. The historical data for completed projects offshore are closer to 3 USD/Bbl. Onshore development costs are also significantly lower than offshore costs. This is equivalent to, 3.27 N/litre.

    Operation Costs (Opex)
    Therefore, actual crude oil production cost to the Nigerian JV can then be estimated as:
    (0.025 + 4.0 + 3.0) USD/Bbl = 7.025 USD/Bbl. (0.02 + 3.27 + 2.45) N/litre = 5.74 N/litre.
    Previous government (NNPQ estimates (1994 – ’98} yielded 5 USD/Bbl. The difference in theseestimates can be attributed to rising oil industry service costs due to international market dynamics, inflation and/or to estimate of basic differences.
    For typical refinery yield of 95 percent 5.74 N/litres translate to- 6.04 N/litre. This compensates for volume losses inherent in the crude oil refining process.
    Refining Costs
    Installed refining capacity in Nigeria stands at 445,000 barrels perday(BPD).
    This is made up of:
    1. Old Port Harcourt Refinery
    - 60,000 BPD
    2. New Port Harcourt
    Refinery-150,000 BPD
    3. Warri Refinery – 125,000
    BPD (upgraded from 100)
    4. Kaduna Refinery -110,000
    BPD (two trains, 60+50)
    Refining cost data from these refineries could not be obtained during the survey. Even when such data is available, they are very unreliable. Former President of Nigeria, Chief Olusegun Obasanjo, one said: “We have never got correct statistics from the NNPC. They will never be able to tell you the correct thing. We have that problem with the NNPC.”

    To estimate refining costs, we can rely on international industry data from similar refineries. Contemporary refining technology is of the Fluid Catalytic Cracking (FCC) process like most Nigerian refineries. This process requires fluidizing the solid catalyst and re-circulating it continuously from the reaction section of the cracker to the catalyst regeneration section and back to the reaction section.

    Actual refining costs may be lower in Nigeria since labour costs are significantly lower in Nigeria. $0.50 per gallon translates to $21/Bbl. We will capture refining costs as $21/Bbl. Thisisl7.17N/Iitre.

    Distribution Costs
    This is the cost margin allowed for road tankers that transport petrol from the depots to the fuel stations. It was put at 2.42 N/litre.

    Marketing Costs
    This is the cost margin allowed for oil marketing companies that operate retail fuel stations. It was 5.87 N/litre.

    Total Cost
    The total cost can then be determined as the summation of all relevant cost components previously estimated viz., exploration, development, production operations, refining, distribution and marketing.
    Total cost = (6.04 + 17.17 + 2.42 + 5.87} N/litre.
    = 31.50 N/litre
    Therefore, we can conclude that the average cost of the petrol dispensed at retail fuel stations in Nigeria is, 31.50 N/litre.

    Current Retail Price
    The current retail price as established by regulation has been N65/liter since 2005. This regulated price is split to cost components in fine with benchmarks such as depot price, transportation margin, dealer’s margin and marketing company’s margin.
    Subsidy can be determined as Actual Cost – Sale Price. Consequently, subsidy = (31.50 – 65) N/litre. =-33.50N/litre.

    We can confidently conclude that government makes a profit of 33.50 N/litre on petrol at the current price of N65.00/litre. This translates to a very high 106 per cent profit per litre.
    In addition, government benefits from royalties, taxes and fees which were not factored in this simplified analysis. When factored in, the actual cost of crude per barrel to government is significantly less and its profit correspondingly higher. The claim of subsidies on petroleum product is clearly incorrect if we can turn around our refineries for optimum production.

  2. Name says:

    Its nt just Nigerians standing up against d subsidy removal,we shud b able 2stand up as wel 2call dis govrt legitimacy 2question we must hold responsible 4dia failure 2 revamp d existing refinary & failing 2build more refinary.l think dea is absurd reason y d govrt ar ignoring dis aspect.Can anyone tell me wat form of business has ever wokd wit dis govrt? yet dey ar bein paid huge amount of salary 4doin noting dis has ben on 4many it Electricity business? is it Transportation? is it Nitel? wat els??

  3. Name says:

    Please if i may ask FG what happen to our present refinery? what happen to the proposed four refinery that president Jonathan promised to do? why are they disturbing Nigerians on their selfish interest?. I want the FG to come out and explain this for we Nigerians, so that we would know where we’re heading to.


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