• Saturday, June 22, 2024
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Why Nigeria must deregulate petrol- MOMAN

Deregulation: A means to an end to perennial fuel scarcity!

The Major Oil Marketers Association of Nigeria (MOMAN) has said Nigeria should begin the process of deregulating the downstream petroleum sector to reduce the inefficient subsidies paid on the product.

“We would use this opportunity to address some issues that have been lingering in the industry for a few weeks now and answer questions from energy correspondents present,” the organisation said in a release.

The group said if Nigeria wishes to implement a subsidy, it must be in areas such as agriculture and transportation to reduce food price inflation and generate more jobs for Nigerians.

“Having subsidised petrol for so long, Nigerian institutions now have a diminished capacity to deal with the current local energy crisis. A disruption in any part of the supply chain causes ripple effects and results in station queues,” MOMAN said.

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“We must find a way to liberalise supply. We must bring transparency and competition into supply to ensure steadier, more efficient supply at optimum prices.”

The Nigerian National Petroleum Company (NNPC) Limited in its monthly FAAC report states that the country incurred N3.1 trillion on petrol subsidies from January to August this year.

According to the World Bank, Nigeria is expected to spend up to five trillion on petrol subsidies in the year 2022.

Meanwhile, the association said imported products must compete with locally refined products to find a meeting point between the need for local refining and competitively low but cost-recovered prices for Nigerians for sustainability.

“The dialogue with the Nigerian people needs to begin to identify, negotiate and agree on these areas and begin implementation to save the downstream industry, which has been in degradation free fall,” MOMAN said.

“This downfall is due to a lack of investment to maintain, renew and grow assets and facilities such as refineries, pipelines, depots, trucks, and modern filling stations.”

MOMAN also said this lack of investments contributes in no small measure to fuel distribution inefficiencies and high costs. Neither the new refineries nor the refurbished refineries will survive with the refining margins at current pump prices.

“The exploration, production, refining of crude oil and the distribution of refined products is an international business with ebbs and flows and has specific models, guidelines, rules, and norms designed to protect and sustain consumers of this type of energy and populations impacted by its supply chain,” MOMAN said.

“The government and the industry in Nigeria must demonstrably apply this accepted health, safety, environmental protection, and quality norms to be seen to care for its local populations.”

The oil market association said cutting corners would be irresponsible, unaccountable and unsustainable.