‘Private refineries need a deregulated environment to thrive’
With Nigerians optimistic about the impact private refineries would have on petroleum products’ availability and pricing, the Managing Director and Chief Executive Officer of Rainoil Limited, Gabriel Ogbechie, has stated that upcoming refineries need a deregulated environment to thrive.
Lamenting the challenges of access to foreign exchange on the downstream sector, Ogbechie noted that price fixing remains unsustainable and discourages investment in the sector.
According to him, a fully deregulated downstream sector enables marketers to freely source products and leverage supply chain options, improves efficiency and customer-service and allows for better planning and projection by marketers.
He said government’s policy on alternative energy and the global drive for energy transition which requires $6bn presents opportunities for marketers to invest with a view to changing the narrative in the gas sector.
Speaking this during a webinar series themed “Deregulation and Sustainable Natural Energy Future Through Natural Gas” in Lagos, Ogbechie expressed worries oil marketers have been unable to access forex from the Central Bank of Nigeria (CBN) at official exchange rate of N401/410 to $1.
He said those doing business with the Federal Government and only the Nigerian National Petroleum Corporation (NNPC) could access forex at official exchange rates from the CBN.
For other oil marketers, he said the only option open to them was to access same at the parallel market, which he said comes at a premium of N485 to N495 to $1, lamenting that doing business under such arrangement puts marketers at about 20 per cent loss.
He said this remained the reason why NNPC is the only entity importing petrol at the moment, saying any other marketer that tries to compete with NNPC, will only end up struggling and cannot make profit but only end up running at a loss.
On gas, the Rainoil boss emphasized the need for petroleum marketers in the country to deepen investment in the nation’s gas sector.
He said government’s policy on alternative energy and the global drive for energy transition which requires $6 billion presents opportunities for marketers to plough in with a view to changing the narrative in the gas sector.
Specifically, he advised marketers to invest in gas adoption and utilization such as cooking gas bulk storage, trucks, filling plants, skids, gas cylinder manufacturing, liquefied natural gas plants, compressed natural gas/ liquefied natural gas trucks, liquefied natural gas regassification / compression stations and compressed natural gas filling station.
He disclosed that over N10 billion ($27 million) will be generated by switching 50 per cent of kerosene and firewood users to liquefied petroleum gas (LPG), otherwise known as cooking gas.
He explained that proper channelling of flared gas could impact the country’s gross domestic product by up to $1 +billion per year, adding that it has potential to create over one million jobs, 600,000 metric tons of liquefied petroleum gas per year and generate 2.5 gigawatts.