‘Deregulation, key to attracting petroleum downstream investments’

Total deregulation of the downstream sub-sector of the country’s petroleum industry will unlock the huge private investment potential and drive sustainable growth operation-wise.

These were the views of stakeholders in the industry, who are also perturbed about the huge amount of money spent by Federal Government yearly on subsidy payment for imported petroleum products.

They stressed that such resources could be utilised to develop other sectors of the economy requiring attention.

The call for deregulation of the sector, according to the stakeholders, who spoke in separate interviews, had become imperative following the dearth of investments coupled with the growing subsidy liability of government.

Director-General, Lagos State Chamber of Commerce and Industry (LCCI), Muda Yusuf, said the petroleum subsidy regime had turned out to become the biggest burden on the economy today.

Yusuf said government should encourage private sector players to take over the downstream sector of the petroleum business, adding: “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 descibed subsidy on petrol as a big hole in the finances of government.

Also, an Executive Director of Blue-Sea Energy Limited, Felix Andrew, said continuous payment of subsidy was not sustainable, urging government to liberalise the market and encourage ‘free entry, free exit’ to attract investors in the sector.

He said: “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 has been unable to find solutions to in terms of adequate funding to support the health and education sectors; improved infrastructure and better working conditions for the average Nigerian worker.

“One of the proposed reforms in the PIB 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.”