Wednesday, January 04, 2012

The Facts on the Cost of Petrol in Nigeria

One barrel is 42 gallons or 168 litres. The price of 1 barrel of petrol at the Depot gate is the sum of the cost of crude oil, the refining cost and the pipeline transportation cost. Refining costs are at $12.6 per barrel and pipeline distribution cost are $1.50 per barrel. The Distribution Margins (Retailers, Transporters, Dealers, Bridging Funds, Administrative charges etc) are N15.49/litre or $16.58 per barrel. The true cost of 1 litre of petrol at the Mobil filling station in Port Harcourt or anywhere else in Nigeria is therefore ($5 +$12.6+$1.5+$16.6) or $35.7 per barrel . This is equal to N33.36 per litre compared to the official price of N65 per litre. Prof. Tam David West is right. There is no petrol subsidy in Nigeria . Rather the current official prices are too high. Let us continue with some basic energy economics.

The government claims we are currently operating our refineries at 38.2% efficiency. When we refine a barrel of crude oil, we get more than just petrol. If we refine 1 barrel (42 gallons) of crude oil, we will get 45 gallons of petroleum products. The 45 gallons of petroleum products consist of 4 gallons of LPG, 19.5 gallons of Gasoline, 10 gallons of Diesel, 4 gallons of Jet Fuel/Kerosene, 2.5 gallons of Fuel Oil and 5 gallons of Bottoms. Thus, at 38.2% of refining capacity, we have about 170000 bbls of throughput refined for about 13.26 million litres of petrol, 6.8 million litres of diesel and 2.72 million litres of kerosene/jet fuel.

~ The Real Cost Of Nigeria Petrol- By Dr. Izielen Agbon

1) One barrel of Crude oil = 42gallons or 168 litres
2) Our Refineries (i.e 4) Installed (combined) capacity = 445,000 barrels per day
3) Actual refineries capacity due to ageing equipment = 30% i.e. 133,500 barrels per day
4) 133,500 barrels = 21.2 million litres
5) Local required consumption (F.O.S) =12millions litres
6) It means that even our MORIBOND refineries can actually meet our local consumption need of petroleum.
7) The cost structure of crude oil (i.e.Qua Iboe Crude Oil) production;
- Findings / development - $3.5
- Production cost - $1.5
- Refining Cost - $12.6
- Pipeline/transportation - $1.5
- Distr/bridging fund Margin -$15.69

- Total sum cost = $34.
8) - 1ltr cost = $34.8/159 litres = $0.219
- Naira equiv. 0.219xN160= N35.02k
- Add Tax N5 + N35.02 = N40.02
9) Let FGN refute the above composition and if not, they should tell us how they came about N65/litre.
10) Locally refined products cannot be sold at International price.
11) We really do not need FGN SUBSIDY as there was NONE in the first place.

~ Lekoile

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