Sanusi Lamido Sanusi writes on Nasir Ahmad el-Rufai

I have one request to make and Allah is my helper. Any attack on Nasir el Rufai or on Nuhu Ribadu is an attack on me. Nasir is to my mind is one of the greatest and most patriotic Nigerians to have served in public office and he is by far the best FCT minister we have ever had. Like all of us he is not perfect.

In my AIT interview I said I agreed with 90% of what he said a day before our interview and the two bits I didn’t agree with I stated: I don’t agree that there is no subsidy and I believe Nasir was quoting contributions from trusted experts which have been flying around recently including Prof Tam David West.

And we have debated this issue of accounting and economic concepts in this forum. I also do not agree that it is easy in the short-term to have massive fiscal retrenchment without a huge political backlash-indeed the fuel subsidy is one such case and retrenchment for instance would also bring people out.

But Nasir is one person for whom I have always had the highest level of personal respect. His integrity is beyond reproach-of course, people will say anything but after years of trying no one is yet able to show any evidence backing up allegations. Intellectually, I am yet to know anyone who can match him and this has been the case since the 1970s. Femi Fani-Kayode has written in Nasir’s defence but these are not Nasir’s words and if you knew Femi well you would not be surprised or bothered by his peculiar choice of language. I have seen Femi transit from a rabid ethnic chauvinist and christian fanatic who thought Obasanjo was a stooge of the backward Muslim north, to a minister in Obasanjo’s cabinet preaching national unity, and now to some freelance activist and public commentator.

This is just a stage he is going through but I like to think he means well. When AIT requested me to speak they never said it was to respond to Nasir and when we started and they played their clip we told them we didn’t want to personalise this. Nasir and I were friends and brothers as teenagers. We have remained friends and brothers and will remain
friends after office.

We don’t have to agree 100%. He also understands that so long as I am in government I have 100% loyalty to the president. If I feel I cannot be loyal I should step down. This does not mean supporting every policy but it means standing up to play my part in doing what is good for the economy.
I, therefore, request please that no one defending me should attack his person. And only those who don’t know Nasir will even think I am his intellectual match- he is just exceptional in his brilliance.

PS: Femi Fani-Kayode’s response to this piece is here

Further Reference to this Article

The Real Cost Of Nigeria Petrol

On December 10, 2011, if you stopped at the Mobil filling station on Old Aba Road in Port Harcourt , you would be able to buy a litre of petrol for 65 naira or $1.66 per gallon at an exchange rate of $1/N157 and 4 litres per gallon. This is the official price. The government claims that this price would have been subsidized at N73/litre and that the true price of a litre of petrol in Port Harcourt is N138/litre or $3.52 per gallon.

They are therefore determined to remove their subsidy and sell the gallon at $3.52. But, On December 10, 2011, if you stopped at the Mobil Gas station on E83rd St and Flatlands Avenue in Brooklyn, New York, USA, you would be a able to buy a gallon of petrol for $3.52/gallon. Both gallons of petrol would have been refined from Nigerian crude oil. The only difference would be that the gallon in New York was refined in a US North East refinery from Nigerian crude exported from the Qua Iboe Crude Terminal in Nigeria while the Port Harcourt gallon was either refined in Port Harcourt or imported. The idea that a gallon of petrol from Nigerian crude oil cost the same in New York as in Port Harcourt runs against basic economic logic. Hence, Nigerians suspect that there is something irrational and fishy about such pricing. What they would like to know is the exact cost of 1 litre of petrol in Nigeria .

We will answer this question in the simplest economic terms despite the attempts of the Nigerian government to muddle up the issue. What is the true cost of a litre of petrol in Nigeria ? The Nigerian government has earmarked 445000 barrel per day throughput for meeting domestic refinery products demands. These volumes are not for export. They are public goods reserved for internal consumption. We will limit our analysis to this volume of crude oil. At the refinery gate in Port Harcourt, the cost of a barrel of Qua Iboe crude oil is made up of the finding /development cost ($3.5/bbl) and a production/storage /transportation cost of $1.50 per barrel.

Thus, at $5 per barrel, we can get Nigerian Qua Iboe crude to the refining gates at Port Harcourt and Warri. 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.

This is not enough to meet internal national demand. So, we send the remaining of our non-export crude oil volume (275000 barrels per day) to be refined abroad and import the petroleum product back into the country. We will just pay for shipping and refining. The Nigerian government exchanges the 275000 barrels per day with commodity traders (90000 barrels per day to Duke Oil, 60000 barrels per day to Trafigura (Puma Energy), 60000 barrels per day to Societe Ivoirienne de Raffinage (SIR) in Abidjan, Ivory Coast and 65000 barrels per days to unknown sources) in a swap deal. The landing cost of a litre of petrol is N123.32 and the distribution margins are N15.49 according to the government. The cost of a litre is therefore (N123.32+N15.49) or N138.81 . This is equivalent to $3.54 per gallon or $148.54 per barrel. In technical terms, one barrel of Nigerian crude oil has a volume yield of 6.6% of AGO, 20.7% of Gasoline, 9.5% of Kerosene/Jet fuel, 30.6% of Diesel, 32.6% of Fuel oil / Bottoms when it is refined.

Using a netback calculation method, we can easily calculate the true cost of a litre of imported petrol from swapped oil. The gross product revenue of a refined barrel of crude oil is the sum of the volume of each refined product multiplied by its price. Domestic prices are $174.48/barrel for AGO, $69.55/barrel for Gasoline (PMS or petrol), $172.22/barrel for Diesel Oil, $53.5/barrel for Kerosene and $129.68/barrel for Fuel Oil. Let us substitute the government imported PMS price of $148.54 per barrel for the domestic price of petrol/gasoline. Our gross product revenue per swapped barrel would be (174.48*0.066 +148.54*0.207+172.22*0.306+ 53.5*0.095+129.68*0.326) or $142.32 per barrel. We have to remove the international cost of a barrel of Nigerian crude oil ($107 per barrel) from this to get the net cost of imported swapped petroleum products to Nigerian consumers. The net cost of swapped petroleum products would therefore be $142.32 -$107 or $35.32 per barrel of swapped crude oil. This comes out to be a net of $36.86 per barrel of petrol or N34.45 per litre.

This is the true cost of a litre of imported swapped petrol and not the landing cost of N138 per litre claimed by the government. The pro-subsidy Nigerian government pretends the price of swapped crude oil is $0 per barrel (N0 per litre) while the resulting petroleum products is $148.54 per barrel (N138 per litre). The government therefore argues that the “subsidy” is N138.81-N65 or N73.81 per litre. But, if landing cost of the petroleum products is at international price ($148.54 per barrel), then the take-off price of the swapped crude oil should be at international price ($107 per barrel). This is basic economic logic outside the ideological prisms of the World Bank. The traders/petroleum products importers and the Nigerian government are charging Nigerians for the crude oil while they are getting it free.

So let us conclude this basic economic exercise. If the true price of 38.2% of our petrol supply from our local refinery is N33.36/litre and the remaining 61.8% has a true price of N34.45 per litre, then the average true price is (0.382*33.36+0.618*34.45) or N34.03 per litre. The official price is N65 per litre and the true price with government figures is about N34 per litre (even with our moribund refineries).

There is therefore no petrol subsidy. Rather, there is a high sales tax of 91.2% at current prices of N65 per litre. The labor leaders meeting the President should go with their economists. They should send economists and political scientists as representatives to the Senate Committee investigating the petroleum subsidy issue. There are many expert economists and political scientists in ASUU who will gladly represent the view of the majority. The labor leaders should not let anyone get away with the economic fallacy that the swapped oil is free while its refined products must be sold at international prices in the Nigerian domestic market.

The government should explain at what price the swapped crude oil was sold and where the money accruing from these sales have been kept. We have done this simple economic analysis of the Nigerian petroleum products market to show that there is no petrol subsidy what so ever. In the end, this debate on petrol subsidy and the attempt of the government to transfer wealth from the Nigerian masses to a petrol cabal will be decided in the streets. Nigerian workers, farmers, students, market women, youths, unemployed, NGO and civil society as a whole should prepare for a long harmattan season of protracted struggle. They should not just embark on 3 days strike/protests after which the government reduces the hiked petroleum prices by a few Nairas. They must embark upon in a sustainable struggle that will lead to fundamental changes. Let us remove our entire political subsidy from the government and end this petroleum products subsidy debate once and for all. It is time to bring the Arab Spring south.

Police Attack on Protesters at Eagle Square

On the third day of the #occupyNigeria protest occupation at Eagle Square Abuja, at around 1:30am, as the protesters were about to sleep, we were attacked by hoodlums holding clubs and bats. They rushed into the camp and started beating us, they throw many people over the ditch and chased us out of the camp. All the while the police officers stationed directly opposite our camp watched as we were beaten mercilessly and did nothing.

We rallied and organized ourselves and returned to the camp. We managed to apprehend one of the hoodlums who attacked us. As we were asking him questions, the police officers came with their guns pointed at us and asked us to hand him over. We agreed, trusting that the police would investigate. The policemen took him to their camp opposite
ours, where one of the protesters overheard the hoodlum saying he was a police officer. The hoodlum was gently escorted to an unmarked vehicle (we have been seeing numerous vehicles we believe to be the SSS) and drove away. We protested and screamed at the police that the man was a criminal, but no attention was paid to us.

NOTE: In the video, after the protesters were attacked and ran we can here the hoodlums saying they should load our equipments in a police vehicle (showing that either they were sent by the police or they are police officers in civilian clothing). One of the attackers looks at the laptop while holding the stick he used to beat us, he’s illiterate face is captured by the webcam.

Watch the Attack on #occupyNigeria

#occupyNigeria Demands Strategy

- Protesters Pled
It follows the demand (1) and (2) in the “Collective Declaration”. It is non-negociable and without this we will not listen or debate with the Government.

- Reinstatement of Fuel Subsidy
The demand (6), simply returns fuel to N65.00. In the event of this, #occupyNigeria would send a team of negociators (experts) to discuss the adoption and implementation of the remaining demands. In show of good faith, we shall reduce the pressure on government by protesters.

- Independent Investigation (Demand 3 and 5)
We, the protesters alone side government representatives and observers from the international community, shall set up a team “Intercontinental Transparent Expert Team” (ITE-Team) sponsored by the Government to investigate budgets and implementation and the petroleum industry in Nigeria.

- Subsequent Demands
To draw up a strategic political, social and economic plan to crackdown on religious/ethnic crisis and the Boko Harm. A crackdown on Government corruption, the publishing of the ITE-Team report, follow up action on the compensation of harassed, arrested, injured and killed protesters. The absolute enforcement of Subsidy-Reversal and judicial proceedings of fraudulent filling stations during subsidy removal. Prosecution of the Cabal and their corporates in Government. Strategic Plan of Action for Subsidy Removal and Development Implementation in a 10year timeline. Detailed reduction of Government spending and excesses.

NOTE: This Strategy contains references to the “Collective Declaration on Fuel Subsidy”.

DOWNLOAD the Collective Declaration on Fuel Subsidy

This is merely a draft and we welcome editions from all Nigerians. It’s a collective declaration and needs collective contribution.