FG’s plans excluding downstream liberalisation will worsen scarcity – experts

Experts in the oil and gas industry has warned that the Federal Government’s plan in the short, medium and long-term will worsen fuel scarcity situation in the country as they counsel the government to deregulate and liberalise the petroleum downstream sector.

According to the Nigerian National Petroleum Corporation (NNPC), the federal government on the short term is ramping up nationwide petroleum supply and distribution to all states to ensure product availability in the country. It claims it has sent 8 cargoes amounting to 320 million litres between March 29 and April 2.
Nigeria’s daily fuel consumption is put at 40million litres daily indicating that the supply will only last for 8 days hence the lingering fuel queues that have created an entire industry of black market retail where fuel products now sell between N150 and N300 per litre.
Further short term plans according to the NNPC, is collaboration with the Central Bank of Nigeria and major oil marketers to ease supply constraints due to foreign exchange challenges. It has secured willingness from major international oil companies to fund foreign exchange shortfalls.
Recently the national oil company initiated direct sale direct purchase (DSDP) supply contract that it claimed will save the nation $1 billion annually.
It further plans to guarantee one cargo par day from the first week in April 2016.
It is also ramping up efforts in the recovery of Escravos crude line after 6 years downtime now guaranteeing adequate crude supply to refineries.
For the Midterm solution, the government plans to strategic reserves policy and execution before the end of April, reduction of NNPC’s allocation holding for q2 to 50 percent and increased support of major marketers on importation.
As a long term solution, the government plans to rehabilitate oil and gas infrastructure nationwide including pipelines, depots, pump stations and refineries.
But experts posit that these plans are only band-aids and will not solve the problem. Muda Yusuf, director-general of Lagos Chamber of Commerce and Industry (LCCI) has called for a private sector driven petroleum downstream sector as the way of the current fuel scarcity crises.
Also Alex Ogedengbe, former managing director of Kaduna Refinery has urged the Federal government to replicate the success of the Eleme Petrochemical plant privatisation on the refineries in the country to ensure optimum utilisation and return them to profit.

ISAAC ANYAOGU