Stakeholders in oil and gas industry yesterday implored President Muhammadu Buhari to consider total deregulation of the nation’s downstream sector of the petroleum industry, saying that the development would unlock the huge private investment potentials in the sector, and also stimulate sustainable growth therein, Independent report.
They expressed dissatisfaction over the huge amount of money spent by Federal Government annually on subsidy payment, saying such resources could be used to add value to other sector of the economy.
Mr Muda Yusuf, the Director General, Lagos State Chambers of Commerce and Industry (LCCI) told our correspondent that the biggest burden on the nation’s economy currently is the petroleum subsidy regime.
Yusuf said the government should encourage private sector players to take over the downstream sector of the petroleum business.
“When this is done, most of the challenges we see as regards subsidy, refineries and others will be adequately addressed. The government should only play a regulatory and not an operational role.
“Government has no business refining petroleum products, retailing or distributing fuel as well as the marketing of these products. We cannot continue to carry that kind of burden in the oil sector,’’ he said.
The Director General said that total deregulation of the downstream would enhanced free resources for investment in critical infrastructures such as power, roads, the rail systems, health sector, education sector.
He added that deregulation would unlock the huge private investment potentials in the downstream oil sector especially in petroleum product refining.
To Mr Felix Andrew, an energy expert, the continuous payment of subsidy is not sustainable and urged the government to liberalise the market and encourage ‘free entry, free exit’ to attract investors in the sector.
Andrew, the Executive Director, Blue-Sea Energy Limited, told our correspondent that Nigeria now spends about N1.7 trillion on fuel subsidy annually, whilst its education and health sector can only access a paltry budget of N300 million and N400 million respectively.
According to him, it is obvious then, that the fuel subsidy programme is placing a huge financial burden on the nation’s resources.
“Hence, there is no better time to deregulate as this initiative is an enabler in freeing up scarce resources to address the concerns clearly expressed by the citizens for which political leadership is unable to find the resources to satisfy such as providing adequate funding to support the health and education sector; improved infrastructure and better working conditions for the average Nigerian worker.
“One of the proposed reforms in the petroleum industry bill is the deregulation and the liberalisation of the downstream oil and gas industry which recommends that the deregulation proposition. If fully, implemented, will eradicate waste and corruption currently ravaging the country as a result of the tightly regulated economy”
The expert said that fuel subsidy in Nigeria has brought about industry degradation, such as poor maintenance of and inadequate investment in facilities (jetties, depots & stations), infrastructure (roads, bridges, rail & pipelines), human resources, transportation (vessels & trucks), existing refineries and poorer implementation of health, safety, environment and quality matters.
He said that subsidy spending in the sector amounts to a disproportionally high percentage of the country’s budget, adding that funds that would yield a better return on investment if invested in education, health services and agriculture are gobbled up in the subsidy of petroleum products.
Alhaji Debo Ahmed, Western Zone Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), urged government to liberalise and enforce total deregulation of the downstream sector to boost the country’s economic growth.
Ahmed said that deregulation remained the best option to move the economy forward; stressing that full deregulation would bring in investments into the sector as well as encourage the establishment of private refineries in the country.
“If government likes, they can introduce gradual removal of subsidy, but it should not go beyond 6 to 18 months period. If fully deregulated with rules, you will have the serious investors coming in to invest adequately, ’he said.
Ahmed said that passage of the Petroleum Industry Bill (PIB) remained the best options that would usher in deregulation, adding that even if the current PIB was not perfect, it could be amended after the passage.
“Once you deregulate, these refineries will be coming up. So, we will plead that we get the National Assembly to expedite action on the passage of the PIB.
Also, President of the National Association of Liquefied Petroleum Gas Marketers, Mr Nosa Ogieva-Okunbor, said that only full deregulation can bring the much needed investment to the sector.
Ogieva-Okunbor, said that full deregulation remained the best option to attract investors for sector development, against the backdrop of huge amount spent on subsidy.
He posited that full liberalisation and deregulation of Nigeria’s downstream oil sector will remove of all hindrances and bottlenecks to private investment and market competition in the sector.
According to him, government should fully deregulate the downstream sector to attract investors. We need full deregulation of the downstream sector to boost the economy.