- N10.7 trillion spent in the last 10-years on subsidy
- N750 billion spent on subsidy in 2019 alone
Stakeholders in the oil and gas sector have re-emphasised
the need for total deregulation of the downstream sector to provide the right
market template for investors and ensure maximization of investments.
The stakeholders who spoke at the 18th Annual Memorial
Lecture Series 2021 of Chief Aret Adams, the first Group Managing Director of
the Nigerian National Petroleum Corporation, NNPC, said deregulation was
critical to the viability and sustainability of existing and planned
refineries.
The Aret Adams 2021 lecture was tagged: “Total Deregulation
of Nigeria’s Downstream Oil and Gas Sector: Challenges and Opportunities.”
They noted that "As for the issue of the price of
petrol, it is a work in progress. The federal government, governors and the
NNPC are to discuss and find a solution to the issue of right pricing for
petrol in the country.”
In his opening remarks, Mr. Okechukwu Enelamah, a former
Minister of Industry, Trade and Investment, aligned with the summation of full
deregulation of the petroleum downstream sector to allow the industry to reach
its full potential.
Enelamah, who also chaired the lecture, also advised the
federal government to look for a win-win solution to the issue of removal of
petrol subsidy, being the right thing to do from an economic perspective.
The former minister, said
a lot of capital would be freed up for developmental purposes if the
sector was fully deregulated.
He also said that the deregulation of the telecommunications
sector which had transformed to a $20 billion industry in less than 20 years
was a pointer that same could be achieved in the petroleum sector.
According to him, true competition, independent market
regulator, consumer protection and investor protection are some of the factors
that can help achieve a fully deregulated petroleum sector.
Enelamah, who is also a co-founder/ Chairman of African
Capital Alliance said full deregulation of the downstream sector would protect
customers' right, anti-monopoly and price- fixing rules in place.
He said that would also
bring about robust protection of investors' rights and framework for
creating stable and enforcement of regulations.
Delivering his lecture, Mr. Tunji Oyebanji, Chairman, Major
Oil Marketers Association of Nigeria (MOMAN) said that total deregulation of
the downstream had immensed opportunities that would increase the country’s
local refining capacity.
Oyebanji said that if the sector if fully deregulated, it
would increase investment in the rehabilitation and maintenance of industry
infrastructure, storage facilities, pipelines, trucks etc.
He said that would also fast-track development of open
access reception facilities and adoption of industry best practices.
On the future of the downstream, Oyebanji said that there
was need to be a balance between ensuring the sustainability growth of the
crude oil value chain( Upstream through downstream) an providing value for the
Nigeria consumer and the Nigerian economy.
He said that the philosophy should be for the government to
put the legislative and commercial framework in place and let the market
develop itself.
According to him, there is need for sustainable
liberalisation of the downstream sector.
rehabilitation of infrastructures and accountability.
On the state of the country’s refineries, the MOMAN chairman
said that Nigeria lost $13 billon in 2019 to non-functional refineries.
Oyebanji, who is also the Chief Executive Officer of 11 Plc
noted that if the four NNPC refineries were operating at optimal capacity,
Nigeria would have imported only 40 per cent of what it consumed in 2019.
He said: “Full deregulation of the downstream sector remains
the most glaring boost to potential investors in this space.
“Total deregulation is more than just the removal of price
subsidies, it is aimed at improving business operations, increasing the
investments in the oil and gas sector value chain and resulting in the growth
in the nation’s downstream petroleum sector as a whole.”
Our Energy Correspondent, National, reports that Oyebanji,
said that though the government had announced the removal of petrol subsidy in
March 2020, with the price of crude oil
above $60 per barrel, the N162 the product was currently being sold was below
the landing cost.
He said NNPC as the sole importer of petroleum products was
currently defraying the cost through ‘under recovery”, stressing that was not
sustainable in the long run.
The MOMAN chairman also disclosed that Nigeria had the
cheapest fuel price among its African neighbours, which encouraged smuggling of
the product across its borders.
He said deregulation would increase more investment
especially with the taking off of the African Continental Free Trade Agreement
(AfCFTA) which would give Nigerian businesses opportunities to expand.
Oyebanji, said the coming of stream of the 650,000BPD
Dangote Refinery, Bua Group Refinery, Waltersmith Refinery and others would
transform Nigeria into a net exporter of crude oil in the near future.
In his address of welcome, Mr. Charles Osezua, Chairman,
Board of Trustees, Aret Adams Foundation, said the late NNPC boss had over 32
years ago championed the campaign for full deregulation of the downstream
sector.
“Aret fought for the removal of subsidy and wanted to
release the creative and entrepreneurial capacities of Nigerians.
“There was resistance which led to his removal as the GMD
which was termed ‘national interest’, but 32 years later, the discussion of
subsidy removal remains topical and emotive, ” Osezua said.
Over 100 participants all over the countries attended the
zoom virtual Aret Adams Memorial Lecture Series 2021.
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