Experts have called for the total deregulation of the downstream subsector in the oil and gas industry to pave way for accelerated growth in the sector.
They say that the current system is strangulating the sector, while charging the Federal Government to emulate other countries that have deregulated their downstream subsector if the country ever hopes to reposition the industry as a catalyst of growth and development.
“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,” Bismarck Rewane, managing director of Financial Derivatives Company Ltd said during an interactive session with journalists on the challenges facing local oil companies listed on the Nigerian Stock Exchange – a statement states.
Rewane said that the imposition of a price ceiling on petroleum products which affect the margins of the operators will not attract the volume of required investment to scale up their operations and explore the opportunities in the value chain.
He admitted that subsidy as a social policy requires sensitive management, 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 in 2018.
Tunji Oyebamiji, chairman of the Major Oil Marketers Association of Nigeria (MOMAN) has also called for the liberalization of the sector to make it attractive for investments.
“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,” Oyebamiji said.
“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,” he added.
Josephine Okojie
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