Deregulation of the downstream sector of the petroleum industry remains an enabler for a private sector investment. But this cannot be achieved as long as the price of premium Motor Spirit (PMS) is being controlled by the government. The sector will continue to face decline as many of the investors will turn their back against the sector while some of those currently operating may even close shops just as the case is presently.
For instance, about 44 depot operators came out as members of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) a few years back, today, only 15 of them are currently operating, because the enabling environment is no longer conducive for them to operate. Several depots have closed down partly because the government has been owing them and have not pay them, this coupled with the fact that the enabling environment is not there for them any longer to operate. The banks also no longer borrow them money because they are owing huge amount of money.
Full deregulation is an enabler for any private sector investment. The downstream industry requires significant investments to raise the standards along the supply chain, from improving the refining capacity, pipelines, trucks, depots and filling stations to supporting the ancillary and derivative industries that will emerge from an improved downstream sector. However, investors require and attractive environment, devoid of uncertainty.
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Marketers who spoke at the recent Nigerian Petroleum Downstream Summit Webinar, in Lagos said the downstream industry requires significant investments to raise standards along the supply chain.
The marketers, however, said investors required an attractive environment, devoid of uncertainties.
The group of panellists that examined the downstream situation and it implications for the Nigerian economy were delighted that government was taking the issue of full deregulation seriously and had taken some important steps noting that the country would benefit by going beyond the current steps taken.
According to them, the conversation with government and other stakeholders continues to ensure the process is completed as soon as possible, creating a win-win situation for Nigerians, the government, stakeholders, and the industry.
Maintaining the petrol subsidy which has resulted in operational inefficiencies is not sustainable. This would not be an appropriate channel to support or plan for the future of Nigeria. Removal of price controls, allowing market forces and competition to determine prices, especially for PMS will benefit the country and the industry.
Now that the government claimed it has removed subsidy and also deregulated the downstream the best thing is for to her follow them up with appropriate new legislation needed to be put in place and enforced as deregulation could only be as effective as the legal framework put in place to guide it.
According to Tunji Oyebanji, managing director of 11plc and chairman Major Oil Marketers Association of Nigeria (MOMAN), he said, the survival and indeed, the growth of the downstream oil industry is important to Nigeria and Nigerians as it provides employment directly and indirectly to millions of Nigerians via the industrial sector, construction sector, transportation sector, station sales and administrative personnel, regulatory personnel and other businesses that service and support the downstream.
Dame Winifred N. Akpani, MD/CEO Northwest Petroleum and Gas Company Limited and also chairman Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) in her contribution, said the money saved can be used to grow the economy by investing in infrastructure, educating the next generation of Nigerians and keeping the population healthy.
“This in turn will generate revenue for the country, creating an avenue for Nigeria to leave the poverty trap and emerge as the refining hub for West and Central Africa.”
