Operators reiterate need for downstream sector deregulation
Operators alongside managing Director of Financial Derivatives Company Ltd, Bismarck Rewane and other operators, has called on the government to urgently deregulate the downstream sector to pave way for accelerated growth of the oil and gas sector.
Rewane, an economist, said the current system is strangulating the sector, noting that deregulation would open up the market.
He charged the Federal Government to emulate other countries who have deregulated their downstream sectors if it hopes to reposition the industry to truly serve as growth catalyst.
Rewane said this during an interaction with journalists on the challenges facing local oil companies listed on the Nigeria Stock Exchange.
According to him, the imposition of a price ceiling on petroleum products which affects the margins of the operators will not attract the volume of investments required to scale up their operations and explore the opportunities in the industry’s value chain.
“A factor affecting the operators is that they do not have control of the pricing of their products, which shouldn’t be as they are at the mercy of others”, he added.
The financial expert admitted that subsidy as a social policy, requires sensitive management.
He, however, said the government must make up its mind to take the bull by the horn to free the industry of its current strangulation.
The International Monetary Fund (IMF) had recently urged Nigeria and other countries subsidizing fossil fuel to put an end to it, noting that the policy benefits the rich more than the poor.
Though the IMF, which stated this in a blog post titled: ‘Fuel for Thought: Ditch the Subsidies’ did not name any country, it is believed that the message was directed to countries like Nigeria whose fuel subsidy has become an avenue for siphoning public resources.
A recent World Bank report said Nigeria spent N731 billion to subsidise petrol consumption last year.
The chairman of the Major Oil Marketers Association of Nigeria (MOMAN) and 11 Energy PLC, Tunji Oyebamiji, also called for the liberalization of the sector to make it attractive for investments.
He said: “Well, we are a competitive industry. We believe in competition. We believe that when you give players in the industry a free hand to go into the market and to compete effectively, it brings out the best in them
“Many of our facilities are out-dated and getting older. We believe that government needs to free up the industry just like it has done in so many other industries. We have seen the massive development in sectors that have witnessed deregulation.”
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