• Saturday, July 20, 2024
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Governors want full deregulation, here is what it means

Petrol

Ahead of Thursday’s Federation Accounts Allocation Committee (FAAC) meeting, Nigeria Governors’ Forum (NGF) is proposing the implementation of full deregulation of petrol price while also suggesting a pump price of around N385 per litre.

Read Also: LCCI urges FG to set up pricing window to mitigate impact of petrol deregulation

This clamour has been on for so long that most experts claim it already sounds like a broken record.

This is because, over the years, successive efforts by various government administrations have been unsuccessful in delivering a fully deregulated downstream market that should be based on the basic economic principle of demand and supply.

According to a committee headed by Kaduna State Governor, Nasir el-Rufai, appropriate pricing of petrol in Nigeria, which he called for full deregulation, would push the price of petrol to sell at N385 per litre, thereby allowing FAAC to gain between N1.3 trillion and N2.3 trillion per year.

For many Nigerians, the talk about full deregulation is now like a cliche most government officials throw around without any political will to implement.

“Deregulation has been approved so many times, I’ve lost count of the number of approvals various bodies have approved. They should just get on with it if they want to do it,”  Seun Smith, an industry research analyst tweeted on Thursday.

In recent times, the non-implementation of full deregulation of the downstream sector meant allocations to states have also dwindled amid a slump in oil revenue and disruption in the global oil market, with FAAC meetings always ending in a stalemate.

The minister of state for Petroleum Resources, Timipre Sylva on Tuesday revealed that the Department of Petroleum Resources (DPR) rescued Nigeria from a financial crisis by remitting funds to the FAAC last month.

The minister, who did not mention the exact amount the DPR provided, said revenues from marginal field programmes were of use when the nation was in dire need of funds to share among the federating units.

“We cannot say for how long DPR is going to keep from paying,” he said.

More than one year after the Federal government announced the supposed deregulation of Nigeria’s downstream sector, indifferent attitude towards deregulation, uncertainties, intrigues and a face-off between Federal Government and labour unions have meant the status quo has remained the same for a sector in desperate need of private investments.

While many Nigerians have called for its removal in order to enable the government to invest the fund into other developmental projects, others have condemned such calls, citing it as perhaps one of the few “benefits” the masses enjoy from the government.

Most analysts say a fully transparent deregulated downstream oil and gas sector means that all players within the sector are given equal opportunities to import petroleum products, whilst the regulators continue to monitor to ensure that players play within the rules and regulations set out for them to operate in the sector.

While this development would increase investments in the downstream sector, Labour unions, especially the Nigerian Labour Union (NLC) and the Trade Union Congress, which couldn’t stand the speed at which the pump price is heading as crude oil price rebalances at the international market had held government by the throat after succeeding in reducing the price from N167 to N162 per litre.

Although many Nigerians have called for its removal in order to enable the government to invest the fund into other developmental projects, others have condemned such calls, citing it as perhaps one of the few “benefits” the masses enjoy from the government.