By Peter Uzoho
The immediate-past Minister of Industry, Trade and Investment and Chairman of Africa Capital Alliance, Dr Okechukwu Enelamah, has joined his voice to the growing call for the total deregulation of the downstream sector of the Nigerian oil and gas industry.
Speaking at the recent 18th Annual Aret Adams Memorial Lecture Series, held virtually, tagged: “Total Deregulation of Nigeria’s Downstream Oil and Gas Sector: Challenges and Opportunities,” Enelamah, who chaired the occasion, said deregulation of the downstream sector would allow the industry to reach its full potential.
He advised the federal government to look for a win-win solution to the issue of removal of petrol subsidy, being the right thing to do from an economic perspective, noting that a lot of capital would be freed up for developmental purposes if the sector was fully deregulated.
He also said that the deregulation of the telecommunications sector which had transformed to a $20 billion industry in less than 20 years was a pointer that same could be achieved in the petroleum sector.
He posited that true competition, independent market regulator, consumer protection and investor protection were some of the factors that could help achieve a fully deregulated petroleum sector.
Enelamah added that full deregulation of the downstream sector would protect customers’ right and act as an anti-monopoly and price- fixing rules, arguing that that would also bring about robust protection of investors’ rights and framework for creating stable and enforcement of regulations.
Delivering his lecture, the Guest Speaker and Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Tunji Oyebanji, said total deregulation of the downstream had immense opportunities that would increase the country’s local refining capacity.
Oyebanji said if the sector was fully deregulated, it would increase investment in the rehabilitation and maintenance of industry infrastructure, storage facilities, pipelines, and trucks, among others.
He stated that that would also fast-track development of open access reception facilities and adoption of industry best practices.
On the future of the downstream sector, Oyebanji, who also the Managing Director of 11Plc (formerly Mobil), stressed the need to have a balance between ensuring the sustainability and growth of the crude oil value chain (Upstream through downstream) an providing value for the Nigeria consumer and the Nigerian economy.
He noted that the philosophy should be for the government to put legislative and commercial framework in place and let the market develop itself.
According to him, there was need for sustainable liberalisation of the downstream sector for rehabilitation of infrastructure and accountability.
On the state of the country’s refineries, the MOMAN chairman lamented that Nigeria had lost $13billon in 2019 to non-functional refineries.
Oyebanji noted that if the four refineries of the Nigerian National Petroleum Corporation (NNPC) were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.
“Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space.
“Total deregulation is more than just the removal of price subsidies, it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain and resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.
Oyebanji maintained that though the government had announced the removal of petrol subsidy in March 2020, with the price of crude oil above $60 per barrel, the current price of N162 per litre for petrol was was below the landing cost.
He stated that the NNPC as the sole importer of petroleum products was currently defraying the cost through under recovery, pointing out that that was not sustainable in the long run.