Stakeholders in the Nigerian midstream and downstream oil sectors have outlined strategies the Federal Government can adopt in removing petrol subsidy.
The appeal was made during a virtual workshop with the theme ‘Deregulation of the Nigerian downstream sector: The day after,’ organised by the Nigerian petroleum downstream industry in collaboration with the African Refiners and Distributors Association.
Farouk Ahmed, chief executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said the agency will allow free market pricing once the sector has been fully deregulated.
“The full deregulation of the downstream sector and complete removal of petrol subsidy will introduce a mix of opportunities and challenges into the operating environment,” Lawal Yusuf Othman, national president of the Nigerian Association of Road Transport Owners, said in his presentation.
Gary Still, MD of CITAC Africa, said that market liberalisation means the removal of government subsidies and price controls on petroleum products, and allowing market forces to determine the price and supply of petroleum products.
Chinedu Okoronkwo, national president, Independent Petroleum Marketers Association of Nigeria (IPMAN), who was represented by Mike Osatuyi, IPMAN’s National Operations Controller, said the marketers are in full support of the government’s plan to embark on full deregulation of the downstream sector.
“Nigerians should prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal,” he said. “The pump price is likely to drop to around N500 if the government encourages the Central Bank of Nigeria (CBN) to provide forex to marketers at the official rate.”
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Osatuyi also urged the government to channel savings from subsidy provisions to provide palliatives to the masses, adding that the government should be alert and sensitive to resentment from Nigerians.
Industry stakeholders at the workshop called on the government to implement appropriate palliatives in the form of public transportation, freight of agricultural produce, ensure transparent and effective communication, improve access to foreign exchange, trade finance, guarantee strategic stock, and provide access to crude oil for refineries ahead of the plan to embark on the total removal of petrol subsidy.
The workshop offered the industry regulator and all players across the midstream and downstream value chain the opportunity to deliberate on measures that needed to be put in place ahead of the full implementation of the Petroleum Industry Act in Nigeria.
Participants also focused on the need for operators in the industry to institutionalise the professionalisation of the midstream and downstream petroleum sectors ahead of the take-off of full deregulation.
Taiwo Oyedele, fiscal policy partner and Africa tax leader at PwC Nigeria, urged the government and the regulator to identify potential pitfalls that could trigger resentment from citizens before, during, and after the removal of the petrol subsidy.
According to him, deliberate public sensitisation, industry engagement, and collaboration with civil society organisations are needed to aid public buy-in during the implementation of full deregulation by the government.
He said that in the course of implementing the policies, the government’s interpretation of its strategy must be issues-based and not confrontational.
Olumide Adeosun, chairman of Major Oil Marketers Association of Nigeria, said the virtual workshop aimed at addressing key challenges and outlining strategies to ensure a sustainable future for the petroleum downstream sector.
“Safeguarding consumer interest in a deregulated environment was also underscored,” said Adeosun.