Merely, the Price of Gasoline Subsidy in a Layman’s Language

1. Nigeria has crude oil in abundance however it isn’t the crude oil you utilize in powering your generator and different machineries.

The crude oil must be transformed to some usable merchandise.

This course of changing the crude oil is named “refining” and the merchandise that might be gotten from refining crude oil are petrol, kerosene, diesel e.t.c

2. Nigeria has 4 authorities owned refineries however none of those refinery is useful. So, authorities must promote this crude oil to overseas consumers who then course of the crude oil and promote it again to us in Nigeria. Which means that the price of manufacturing when it will get to Nigeria will embrace:

* value of the product as purchased from the overseas vendor

* value of transporting it to Nigeria

* value of clearing at ports

* value of storage

* value of distribution inside Nigeria

For Instance:

A. The price of refined gasoline from overseas sellers is N130

B. The price of transporting the refined gasoline to Nigeria is N60

C. Price of clearing on the port is N10

D. Price of storage is N10

E. Price of distribution inside Nigeria is N15

F. Margin N55

(Margin = promoting value – value of products offered.)

Whole Price on imported Gasoline per litter is N280

*A+B+C is named touchdown value

*The N280 is pump value.

3. The Federal Authorities in their very own magnanimity now says this N280 goes to be troublesome for my individuals to pay contemplating the financial scenario of the nation, they now instruct the entrepreneurs to promote it to Nigerians at N180 per liter, that they (the federal government) can pay the entrepreneurs (importers) the N100 distinction in value.

4. The federal government now shortly ran to China to borrow cash in order that they’ll pay this N100 distinction in value per liter of gasoline.

5. This N100 distinction in value that the federal government is paying per liter of gasoline is named “subsidy”.

Which means as a marketer, in case you import 1 million liters of petrol, authorities can pay you N100m.

Be aware: (The Federal Authorities spends as much as N400b monthly on this gasoline subsidy)

6. A few of this entrepreneurs, out of greed will purchase the gasoline at a sponsored fee and nonetheless not promote to Nigerians. They may slightly export it to neighboring nations in order to make double revenue.

6. Now, Authorities says they’ll not proceed to borrow to pay for this subsidy. The cash is an excessive amount of. It can’t not be sustained past June 2023.

Which means that the entrepreneurs will decide the value themselves based mostly on the touchdown value per liter.

Who’s at fault please.?