How deregulation will transform Nigeria’s petroleum downstream sector

Experts say the deregulation of the downstream sector will improve the efficient use of scarce resources, end the scarcity of products, and improve the sector as operations will be governed by market rules.

Yusuf Lawal Othman, national president of the Nigerian Association of Road Transport Owners (NARTO), in a presentation in Lagos, said that deregulation will reduce economic waste and lighten social burdens caused by governmental control.

“It will further expand opportunities for economic growth in the competitive sector and help achieve a greater cost of effectiveness,” he said. “Saving the cost of petroleum subsidies.”

From the perspective of transportation in the sector, Othman said there is a need to take proactive steps before the implementation to address any foreseeable danger.

Nigeria has spent N7.3 trillion on fuel subsidies since 2016 and made provisions of N3.36 trillion to cover the first six months of this year.

Also in 2022, Nigeria’s average daily petrol consumption stood at 66 million litres, a figure many have doubted. For example, Sanusi Lamido Sanusi, a former CBN governor, said the figure was unrealistic.

“Deregulation of the sector will promote efficiency, add to the government’s revenue, and erode the issue of fuel scarcity,” said Billy Sotubo Gillis-Harry, president of the Petroleum Retail Outlet Owners Association of Nigeria.

According to him, there will be freedom in sourcing products, and some of the infrastructure, like the refinery, will already be implemented.

“Deregulation of the market implies that a trade liberalisation regime will be in place whereby petroleum products can be imported or exported. This will ensure abundant petroleum products in the economy and eliminate long queues at fuel stations.

“It will also allow the full participation of the private sector in refining petroleum products; this will ensure commercial viability and enhance profit maximisation, which is the major objective of every business. More retailers and marketers of petroleum products will come on board,” he said.

Gillis-Harry further said that the wide gap in petroleum product prices between Nigeria and her neighbouring countries was responsible for the high rate of smuggling of petroleum products.

“A deregulated petroleum products market will ensure that the price gap is closed and smuggling becomes unattractive.”