As the federal government prepares to completely deregulate the downstream sector of the Nigerian oil and gas industry in the coming months, industry stakeholders have warned Nigerians to be prepared to pay as much as N750 per litre of fuel at filling stations.
This was the climax of the participants’ remarks during an online session titled “Deregulation of the Nigerian Downstream Sector: The Day After.”
The training was organised in conjunction with the African Refiners and Distributors Association by industry stakeholders (ARDA).
The downstream actors, in concert with economic policy analysts and relevant government agencies, also detailed the plans and steps that must be implemented to ensure the withdrawal of petrol subsidies in a sustainable manner.
The Organization of the Petroleum Exporting Countries (OPEC) producer’s sales have been impacted by strikes in the French refining industry and seasonal maintenance at units in other parts of Europe.
In a separate development, former Chief of Policy and Plans for the Nigerian Navy, Rear Admiral Henry Babalola (ret.), urged the federal government to bring treason charges against oil thieves. Babalola was dissatisfied with the government’s handling of the oil theft problem. He stated that the administration was not doing enough to address the scourge that was undermining the revenue base of the country.
The federal government recently hinted, via the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, that it would end the wasteful petrol subsidy programme prior to President Muhammadu Buhari’s term ending on May 29, 2023.
In their separate comments at the online workshop, however, stakeholders emphasised the necessity for the government to solve the sector’s difficulties.
Representatives of the ARDA, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Major Oil Marketers Association of Nigeria (MOMAN), the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and the Independent Petroleum Marketers Association of Nigeria were present at the workshop (IPMAN).
Additional participants included NNPC Retail Limited (NRL), the Petroleum Retail Outlets Owners Association of Nigeria (PETROAN), the Federal Competition and Consumer Protection Commission (FCCPC), PricewaterhouseCoopers (PwC), and CITAC Africa.
At the discussion, Mr. Chinedu Okoronkwo, National President of IPMAN, who was represented by Mr. Mike Osatuyi, National Operations Controller of IPMAN, revealed that the marketers fully supported the government’s proposal to de-regulate the downstream sector.
After the complete implementation of the subsidy removal, Okoronkwo warned Nigerians to expect to pay up to N750 per litre of petrol. He noted, however, that the projected pump price would likely decrease to around N500 if the government encouraged the Central Bank of Nigeria (CBN) to provide foreign exchange at the official rate for marketers.
Okoronkwo also encouraged the government to use the anticipated savings from the elimination of subsidies to provide palliatives for the masses. He asked the administration to be vigilant and sensitive to Nigerians’ dissatisfaction.
The industry participants at the workshop urged the government to provide appropriate palliatives, such as public transportation and goods of agricultural output, ensure transparent and effective communication, and increase access to foreign exchange. In addition, they requested the government to handle concerns related to trade financing, ensure strategic stock, and offer access to crude oil for refineries in advance of the intention to eliminate fuel subsidies entirely.
Prior to the launch of full deregulation, they emphasised the need for industry operators to institutionalise professionalism in the midstream and downstream petroleum sectors.
Mr. Farouk Ahmed, the chief executive officer of the NMDPRA, stated in his message of goodwill to the petroleum marketing industry that, if the sector was fully deregulated, the authority would allow a free market pricing regime to prevail in the petroleum marketing industry.
Lawal Yusuf Othman, the national president of the Nigerian Association of Road Transport Owners (NARTO), indicated that the full deregulation of the downstream industry and the complete elimination of petrol subsidies would present a variety of opportunities and problems to the operating environment.
Gary Still, managing director of CITAC Africa, stated in his presentation that market liberalisation entailed the removal of government subsidies and price controls on petroleum products and enabling market forces to determine price and supply.
Still advised the Nigerian government to completely deregulate the downstream oil sector and liberate the market from the current price fixing and control in order to attract investment to the sector.
Mr. Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, has tasked the government and regulators with identifying potential hazards that could enrage citizens prior to, during, and after the elimination of the petrol subsidy.
Oyedele stated that careful public sensitization, industry participation, and partnership with civil society organisations were required to increase public buy-in during the government’s execution of complete deregulation. He stated that the government’s interpretation of its approach must be issue-based and non-confrontational during the implementation of the programmes.
In her presentation, Mrs. Morayo Adisa, Technical Consultant to the Executive Vice Chairman and Chief Executive Officer of FCCPC, emphasised the need for the industry regulator to establish quality and safety standards for petroleum products, including fuel quality standards, storage and transportation safety regulations, and environmental regulations.
Mr. Olumide Adeosun, Chairman of MOMAN and Managing Director of Ardova Plc, emphasised that the objective of the virtual workshop was to address critical concerns and outline measures to secure a sustainable future for the petroleum downstream sector. In addition, Adeosun emphasised the importance of protecting consumer interests in a deregulated economy.
Prior to the full implementation of the Petroleum Industry Act (PIA) in 2021, the workshop provided the industry regulator and all participants in the midstream and downstream value chains with the chance to discuss the necessary steps.
The workshop gave data-driven insights into the sector’s growth potential, while players emphasised the necessity for continual industry engagement, collaboration, and public sensitisation in order to increase public acceptance of the government’s new policies.
It emphasised connecting to regional markets, positioning Nigeria as the regional refining hub, 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 Framework Convention on Climate Change (COP).
Finally, the collaborative workshop provided a forum for stakeholders to exchange information and devise solutions to guarantee that the Nigerian Petroleum Downstream Industry remained a strong, competitive force while transitioning to a more sustainable future.