The fixing of petroleum products’ prices
is denying the country investment in the downstream sector of the oil
and gas industry and depriving Nigerians certain benefits from the
country’s petroleum resources, industry stakeholders said on Thursday.
The Federal Government currently
regulates the prices of Premium Motor Spirit, otherwise known as petrol,
and kerosene, and subsidises their prices to enable Nigerians to get
the products at the regulated prices.
The regulated price of petrol is
currently N87 per litre while that of kerosene is N50 per litre. But the
products are sold above the regulated prices in parts of the country,
despite government’s subsidy.
The Group Managing Director, Nigerian
National Petroleum Corporation, Dr. Emmanuel Kachikwu, in his address at
the National Association of Energy Correspondents’ conference in Lagos,
said, “Subsidy creates distortions in government revenue distribution
as a result of round-tripping and unnecessary carry-over of expenditures
every year in a way that is difficult for government to control or
sustain.”
He noted that subsidy accounted for 20 per cent of the Federal Government budget in 2013.
Kachikwu, who was represented by the
acting Managing Director, National Engineering and Technical Company
Ltd, Mrs. Bola Ashafa, said, “Deregulation policy is essential to the
transformation and growth of the downstream sector of the oil and gas
industry.
“Speedy implementation of this policy in
Nigeria would go a long way in encouraging inflow of private sector and
international investment; ensure that Nigerians derive fair deal from
the abundant petroleum resources in the country through fair product
prices for consumers and full cost recovery and reasonable margins for
operators.”
He said the implementation of the policy
would entrench efficiency in product usage; product availability and
effective competition among investors, hence putting an end to product
shortage.
He, however, said critical enablers such
as security of the product and distribution infrastructure must be
assured to guarantee the availability of the petroleum products at
affordable prices.
The NNPC boss said, “We are fully
committed to reforming the existing refineries and boosting domestic
petroleum product supply. Currently all the refineries have been
re-streamed but are yet to attain optimal capacity.
“Removal of price control mechanisms is
deemed imperative to ensure full growth of the sub-sector by allowing
private stakeholders to complement the government efforts in developing
the industry.”
He said the NNPC would continue to
maintain stability in the supply and distribution of petroleum products
nationwide to avoid energy crisis.
According to him, the corporation has
enough stock of petrol to service the country for 25 days at a national
consumption rate of about 40 million litres per day.
“Unfortunately, the stock is not
immediately available across the 21 depots in view of the challenges
facing the distribution pipelines facilities,” he said.
The Chairman and Managing Director, Mobil
Oil Nigeria Plc, Mr. Tunji Oyebanji, said, “What we are talking about
is deregulation of the prices; for the prices to be determined by market
forces,” but that “there has to be government regulation in terms of
standard and quality.”
He noted that there was a time in the country where prices were not fixed by the government.
According to Oyebanji, the lack of full deregulation generates uncompetitive climate and lack of investment and innovation.
He said, “We are looking for a
sustainable industry where pricing is liberalised, leading to steady
supply, increased profitability, large-scale investment in refineries,
increased competition, and an industry where technology plays a role.
But currently there is no incentive.”
He said the government had yet to pay them their subsidy arrears.
On his part, the Director-General, Lagos
Chamber of Commerce and Industry, Mr. Muda Yusuf, decried what be called
the absence of clear policy direction from the government with respect
to the oil and gas industry.
According to him, there are people who
want to invest in the industry but who are being discouraged by lack of a
clear policy direction.
“It is important that we quickly deregulate the downstream sector to attract investment,” Yusuf said.
The Managing Director, NIPCO Plc, Mr.
Venkataraman Venkatapathy, said the move from a regulated market to
deregulation should be done in a phased manner, adding, “We must take a
holistic approach rather than one pre-determined solution.”
The President, Petroleum and Natural Gas
Senior Staff Association of Nigeria, Comrade Francis Johnson, said, “As a
labour union, we are not averse to deregulation but that the focus of
deregulation should be based on local production rather than
importation.
