Icheoku does not know about you but this math does not add up; except of course, Nigerians are being asked to just believe and the miracle will just work itself out? Only in the dreamland of Gulliver's Travelers' Island of Lilliputians would this pan out and pan out as promised - simplistic fantasy. This feat, if achieved, will make Nigeria the cheapest place on planet earth to purchase gasoline; and not even in Saudi Arabia, the oil well of the world, would gasoline then be retailed so low. Venezuela, another country whose citizens enjoy heavily subsidized gasoline, will be jealous with envy. So can someone in the know, who has a clue on how the government plans to achieve this, please shine more light on this abracadabra proposition, to enable Nigerians have a clearer understanding of what they are expecting in the new year when the subsidy finally goes south.
For the purposes of this oped, we will peg global oil price at $40 dollars per barrel (42 gallons of crude oil). Now an optimally functioning refinery, with modern catalytic converter/breaker, can abstract 12 gallons of diesel fuel and 19 gallons of gasoline (PMS) and other byproducts such as bitumen, kerosene, 4 gallons of aviation fuel etc from just one barrel of crude oil. So at N340 per gallon, plus or minus N280 for diesel fuel, etc how profitable would operating a refinery in Nigeria be? If the government plans to import the refined products, who will bear the extra cost incurred in order to sell at N340 per gallon (N85 per liter multiply by four). Running and operating a refinery is cost intensive including overhead cost (salaries, allowances and benefits of staff both local and expatriate), cost of crude oil, cost of power or its generation, cost of transportation of both crude and refined products, logistics, turnkey and turnaround maintenance; and of course necessary addictive to refining out the derivatives.