• Thursday, July 25, 2024
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Subsidy payment drops to N1.1trn from N2.09trn

Subsidy payment drops to N1.1trn from N2.09trn

It is no mean achievement that the cost of subsidy payment dropped from N2.09 trillion to just about N1.1 trillion within a period of one year. For this to happen, it must have taken the workers of the Petroleum Products Pricing Regulatory Agency (PPPRA) a lot of work and guts to carry out the much needed sanitisation of the sector.

The sector before 2011 was a wash with all manner of flight-by-night briefcase oil marketers whose interests were just to find means of creating problems in the importation of Premium Motor Spirit (PMS) or petrol supply channels and make huge sums of money at the expense of the populace. They caused lots of problems through their spurious subsidy claims that almost brought the nation’s economy to its knees.

According to Stanley Reginald, executive secretary of the Agency who spoke to journalists in Lagos, the numbers of marketers that import PMS also dropped from 128 in 2011 to 38 in 2012. He however stated that the number could increase provided they meet the laid down standard by the management of the Agency.

With all the reform initiatives put in place, the industry has recorded a drastic reduction in supply volumes from December 2011 to October 2012 in terms of quantity; the average daily provisional PMS supply from 38.298million litres per day was recorded as at march 2013. This is 36.41 percent lower than the PMS daily supply of 60.259million litres per day the year 2011.

“We have been able to take away the away the briefcase markets and replace them with asset based marketers who can be identified in the event of anything going wrong as regards the transaction entered into with the Agency. If you want to participate in the downstream business you must play according to the rules,” he said.

Read also: Subsidy payment delay hits oil marketers’ earnings

The Agency, he said has been able to reduce the volume of premium PMS consumes in the country in 2011 which was put 60 million litres to 40 million litres per day.

The PPPRA boss also said that the Agency has put in place the necessary things that would allow it to connect foreign suppliers of petroleum products to the country as that would further increase the level of transparency the transaction. “We is going to publish the name of international suppliers to the country,” he stated.

He advised that the Federal Government should construct strategy products reserve in all the six geographical locations across the country. Doing so would save the country from running problems in the event of any unfriendly development that can cause the nation’s oil supply any form of difficulties.

Sustaining the tempo of reforming the administration of subsidy scheme is germane to the sustainability of the Nigerian’s downstream sector.

He said that if the deregulation policy is carefully implemented it will stimulate the economic growth and social well being of the populace, adding that abounding opportunities and benefits far outweigh the short term run cost of discomfort.

It is however instructive to note that deregulation without regulatory controls leads to development of anti-competitive practices and profiteering of operators.

The ongoing reform in the industry presents the PPPRA with great challenges and activities, in all its bid at carrying out its statutory mandate. It was however able to chart a new cause for the deregulation of the downstream sector along with other stakeholders.

The maintenance of product supply stability in the two years of the Reginald Stanley administration cannot be divorced from his wide industry network capacity and expertise. This is in addition to the value he brought to the table in terms of confidence building among operators with much needed tonic in the very challenging period.

According to the PPPRA boss, the ultimate goal of the agency is to make the sector self –financing and self-sustaining to support a more robust national economy.