Stakeholders seek deregulation of downstream sector
Stakeholders in the Nigeria’s downstream sector have called on the Federal Government to urgently deregulate and liberalize the country’s downstream petroleum sector for unfettered private sector participation and investment, which is course subject to an appropriate regulatory framework.
They emphasized the need for a level playing field for all operators, including the Nigeria National Petroleum Corporation (NNPC), which they believed would put an end to the perennial problem of fuel scarcity in the country and the hardships suffered by citizens to fuel scarcity.
According to them in a communiqué signed by the Director-General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, this would also attract more investment, generate more jobs and reduce the pressure on foreign reserves.
Stakeholders stressed the need for the role of the NNPC to be clearly defined. It should not be an operator and still have regulatory influence in the sector. An arrangement that would allow for a level playing field should be adopted for all players including the NNPC.
They stated: “The roles of the DPR and the PPPRA also need to be better defined as there are often instances of overlapping and duplication of responsibilities.
“The nation’s refineries should be made to run as commercial business entities. Stakeholders recommend that the NLNG model should be adopted for the refineries to improve efficiency and reduce the burden of the refineries on the nations’ treasury.
“The nation’s pipelines should the concessioned for a more efficient management and reduction of road haulage for fuel”.
They also expressed concern over transparency issues in the management of the foreign exchange allocations. It therefore urged the CBN to ensure a more transparent process in the allocation of foreign exchange.
The stakeholders urged the government and the Central Bank to ensure the payment of matured LCs to their offshore fuel suppliers. This was estimated at over $1 billion as at 2015.
The want Government to put incentives in place to promote the utilization of LPG. Manufacturers of cylinders should be incentivized to reduce the cost of cylinders.
The forum called for regular dialogue between policy makers and the investors in the sector to ensure the desired progress for the sector and the economy as a whole.
Stakeholders expressed concern over the state of the petroleum downstream sector in Nigeria and the implications for investors in the sector; the various disruptions to the operations of other enterprises in the economy, especially the SMEs and the hardship suffered by the citizens as a consequence of the recurring fuel scarcity.
Issues raised include lack of clarity on the deregulation and liberalization of the sector which has put many investments in the sector at risk.
The centralization of petroleum products supply driven by the NNPC was identified as a major cause for concern for investors, especially the inherent entrenchment of the dominance of the NNPC to the detriment of private investors in the sector.