The government claims that Nigerians consume 34 million litres of petrol per day. The government has also said publicly that N141 per litre is the unsubsidised pump price of petrol imported into Nigeria. (N131.70 kobo being the landing price and N9.30 kobo being profit.)
The daily fuel consumption is 34 million litres while the cost at pump is N141.00 and the number of days in a regular year is 365 days. Therefore, the total cost of all petrol imported yearly into Nigeria is 34m x 141 x 365 = N1.75tn
Nigerians have been paying N65 per litre for fuel, haven’t we? Therefore, cost borne by the consumers =34m x 65 x 365 days = N807bn
In 2011 alone, government claimed to have spent N1.3tn by October – the bill for the full year, assuming a constant rate of consumption is N1.56tn.
Consequently, the true cost of subsidy borne by the government is total cost of importation minus total borne by consumers, i.e. N1.75tn minus N807bn = N943bn.
The Federal Government cannot explain the difference between the amount actually disbursed for subsidy and the cost borne by Nigerians, which is N1.56tn minus N943bn = N617bn.
A government official has claimed that the shortfall of N617bn is what goes to subsidising our neighbours through smuggling. This is pathetic. But let us assume (assumption being the lowest level of knowledge) that the government is unable to protect our borders and check the brisk smuggling going on. Even then, the figures still don’t add up. This is because even if 50 per cent of the petrol consumed in each of our neighbouring countries is illegally exported from Nigeria, the figures are still inaccurate. Why?
World Bank official figures put the population of these West African countries as Nigeria:158.4 million; Benin:8.8 million; Togo:6 million; Cameroun:19.2 million; Niger:15.5 million; Chad:11.2 million; and Ghana: 24.4 million.
Thus, the total population of all our six neighbours is 85.5 million.
Let’s do some more arithmetic by calculating the rate of petrol consumption in Nigeria and the total consumed divided by total population:
34 million litres divided by 158.8 million people = 0.21 litres per person per day.
b). Rate of petrol consumption in all our 6 neighbouring countries, assumed to be the same as Nigeria: 0.2 litres x 85.5 million people = 18.35 million litres per day
Now, if we assume that 50 per cent of the petrol consumed in all the six neighbouring countries comes from Nigeria, this value comes to 9.18 million litres per day!
However, there are two illogicalities flowing from this smuggling saga.
a) If 9.18 million litres of petrol is truly smuggled out of our borders per day, then ours is the most porous nation in the word. This is why: The biggest fuel tankers in Nigeria have a capacity of about 36,000 litres. To smuggle 9.18 million litres of fuel, you need 254 trucks. What our government is telling us is that 254 huge tankers pass through our borders every day and they cannot do anything about it. This is not just acute incompetence, but also a serious security challenge. For if the government cannot stop 254 tanker trailers from crossing the border daily, how can they stop importation of weapons or even invasion by a foreign country?
b)2nd illogicality: Even if we believe the government and assume that about 9.18 million litres is actually taken to our neighbours through smuggling every day, and all this is subsidised by the Nigerian government, the figures being touted as subsidy still don’t add up. This is why:
Difference between pump price before and after subsidy removal = N141.00 – N65.00 = N76.00
Total spent on subsidising petrol to our neighbours annually = N76.00 x 9.18 million litres x 365 days = N255 billion
If you take the N255bn away from the N617bn shortfall that the government cannot explain, there is still a shortfall of N362bn. The government still needs to tell us what/who is eating up this N362bn ($2.26bn).
Suffice it to point out some illogical assumptions. i) We have assumed that there are no working refineries in Nigeria and so no local petrol production whatsoever – yet, there is, even if the refineries are working below capacity.
ii) Nigeria actually consumes 34 million litres of petrol per day. Most experts disagree and give a figure between 20 and 25 million litres per day. Yet there is still an unexplainable shortfall even if we use the exaggerated figure of the government.
iii) Ghana, Togo, Benin, Cameroun, Niger, and Chad all consume the same rate as Nigeria and get 50 per cent of their petrol illegally from Nigeria through smuggling.
These figures simply show the incompetence and insincerity of our government officials. This is pure banditry.
The simplest part of the fuel subsidy arithmetic will reveal one startling fact: That the government does not need to subsidise our petrol at all if we reject corruption and sleaze as a way of life. Check this out:
a) The NNPC crude oil allocation for local consumption = 400,000 barrels per day (from a total of 2.450 million barrels per day).
b) If our refineries work at just 30 per cent, 280,000 barrels can be sold on the international market, leaving the rest for local production.
c) Money accruing to the Federal Government through the NNPC on the sale, using $80/bbl – a conservative figure as against the current price of $100/bbl – would be $22.4m per day. Annually, this translates to $8.176bn or N1.3tn.
d)The government does not need to subsidise our petrol imports – at least not from the Federation Account. The same crude that should have been refined by the NNPC is simply sold on the international market (since our refineries barely work) and the money is used to buy petrol. The 400,000 barrels per day given to the NNPC for local consumption can either be refined by it or sold to pay for imports. This absurdity called subsidy should be funded with this money, not the regular Federal Government budget.
If the government uses its regular budget for subsidising petrol, then what happens to the crude oil given to the NNPC for local refining that gets sold on the international market?
The Federal Government is making the deregulation issue a revenue problem. Nigerians are not against deregulation. We have seen deregulation in the telecoms sector and Nigerians are the better for it, as even the poor have access to telephones now right before the eyes of those who think it is not for them. What is happening presently is not deregulation but an all-time high fuel pump increase, unprecedented in the history of our nation by a government that has gone broke due to excessive and reckless spending largely on themselves. If the excesses of all the three tiers of government are seriously curbed, that would free enough money for infrastructural development without unduly punishing the poor citizens of this country.
Let me just cite, in closing, the example of the National Assembly excesses and misplaced spending as contained in the 2012 budget proposal:
1. Number of Senators=109
2. Number of Members of the House of Representatives=360
3. Total Number =469
4. 2012 Budget proposal for the National Assembly=N150bn
5. Average cost of Maintaining Each Member=N320m
6.Average Cost of Maintaining Each Member in USD$2.1m/year
Time has come for the citizens of this country to hold the government accountable and demand the prosecution of those bleeding our nation to death. Until this government downsizes, cuts down its profligacy and leads by example in modesty and moderation, the poor people of this country will not and must not subsidise the excesses of the oil sector fat cats and the immorality cum fiscal scandal of the self-centred and indulgent lifestyles of those in government.
Pastor Bakare is the Convener of the Save Nigeria Group
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