Stakeholders in the sector have told Nigerians to be ready to pay as much as N750 per litre of fuel at filling stations, as the federal government prepares to completely deregulate the downstream sector of the Nigerian oil and gas industry in the coming months.
This was the highpoint of stakeholders’ interventions during an online workshop, with the theme, “Deregulation of the Nigerian Downstream Sector: The Day After.”
The workshop was organised by industry stakeholders, in collaboration with the African Refiners and Distributors Association (ARDA).
The downstream players, in conjunction with economic policy analysts and relevant government agencies, also outlined strategies and measures that should be deployed to ensure sustainable removal of petrol subsidy.
It emerged, yesterday, also, that Nigeria was struggling to find buyers for its crude oil, as strikes in the French refining sector and seasonal maintenance at plants elsewhere in Europe cut into the Organisation of Petroleum Exporting Countries (OPEC) producer’s sales.
In another development, former Chief of Policy and Plans, Nigerian Navy, Rear Admiral Henry Babalola (rtd), called on the federal government to prosecute persons involved in oil theft for treason. Babalola expressed disappointment with the government’s poor handling of the oil theft issue. He said government was not doing enough to eradicate the menace destroying the country’s revenue base.
The federal government, through the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, recently hinted that it would end the wasteful petrol subsidy regime before the end of President Muhammadu Buhari’s tenure on May 29, 2023.
But, in their separate interventions during the online workshop, stakeholders emphasised the need for the government to address the challenges facing the sector.
Participants at the workshop included representatives of the ARDA, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and Independent Petroleum Marketers Association of Nigeria (IPMAN).
Others were NNPC Retail Limited (NRL), Petroleum Retail Outlets Owners Association of Nigeria (PETROAN), Federal Competition and Consumer Protection Commission (FCCPC), PricewaterhouseCoopers (PwC), and CITAC Africa, among others.
Speaking at the session, National President of IPMAN, Mr. Chinedu Okoronkwo, who was represented by IPMAN’s National Operations Controller, Mr. Mike Osatuyi, revealed that the marketers were in full support of the government’s plan to embark on full deregulation of the downstream sector.
Okoronkwo warned Nigerians to prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal. He however, pointed out that the projected pump price was likely to drop to around N500 if the government encouraged the Central Bank of Nigeria (CBN) to provide foreign exchange for marketers at the official rate.
Okoronkwo also urged the government to channel expected savings from subsidy removal to provision of palliatives for the masses. He advised the government to be alert and sensitive to resentment from Nigerians.
The industry stakeholders at the workshop called on the government to implement appropriate palliatives in the form of public transportation and freight of agricultural produce, ensure transparent and effective communication, and improve access to foreign exchange. They also urged the government to address issues around 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.
They stressed the need for operators in the industry to institutionalise professionalism in the midstream and downstream petroleum sectors ahead of the take-off of full deregulation.
In his goodwill message, Chief Executive Officer, NMDPRA, Mr. Farouk Ahmed, told industry players that the authority would allow a free market-pricing regime to prevail in the petroleum marketing business in the country once the sector was fully deregulated.
National President of the Nigerian Association of Road Transport Owners (NARTO), Lawal Yusuf Othman, stated that the full deregulation of the downstream sector and complete removal of petrol subsidy would introduce a mix of opportunities and challenges into the operating environment.
In his presentation, Managing Director, CITAC Africa, Mr. Gary Still, explained that market liberalisation meant the removal of government subsidies and price controls on petroleum products and allowing market forces to determine the price and supply of petroleum products.
Still advised the Nigerian government to completely deregulate the downstream oil sector and free the market from the existing price fixing and control to allow investments to flow into the sector.
Fiscal Policy Partner and Africa Tax Leader at PwC, Mr. Taiwo Oyedele, charged the government and the regulators to identify potential pitfalls that could trigger resentment from citizens before, during, and after the removal of the petrol subsidy.
Oyedele said deliberate public sensitisation, industry engagement, and collaboration with civil society organisations were needed to aid public buy-in during the implementation of full deregulation by the government. He added that in the course of implementation of the policies, the government’s interpretation of its strategy must be issues-based and not confrontational.
Technical Consultant to the Executive Vice Chairman/Chief Executive Officer of FCCPC, Mrs. Morayo Adisa, in her presentation, emphasised the need for the industry regulator to establish quality and safety standards for petroleum products, including fuel quality standards, safety regulations for storage and transportation, and environmental regulations.
Chairman of MOMAN and Managing Director of Ardova Plc, Mr. Olumide Adeosun, stressed that the virtual workshop was aimed at addressing key challenges and outlining strategies to ensure a sustainable future for the petroleum downstream sector. Adeosun added that safeguarding consumer interest in a deregulated environment was also underscored.
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 (PIA) 2021.
The workshop provided data-driven insights into the sector’s growth potential, as stakeholders emphasised the need for continuous industry engagement, collaboration, and public sensitisation to aid public buy-in on new policies by the government.
It emphasised the importance of connecting to regional markets, positioning Nigeria as the regional refining hub, and fostering relationships with international service providers, including rating agencies, finance and governance institutions, and aligning with the goals of the Conference of the Parties to the United Nations Convention on Climate Change (COP).
Ultimately, the collaborative workshop provided a platform for stakeholders to share knowledge and develop strategies to ensure the Nigerian Petroleum Downstream Industry remained a strong, competitive force, while transitioning to a more sustainable future.