Expert recommends ways to achieve full deregulation of oil downstream sector
By Edith Ike-Eboh
Malam Bello Rabiu, a Former Chief Operating Officer, Upstream of the Nigerian National petroleum Corporation (NNPC) has recommended Long, Medium and short term ways to achieve full deregulation of the downstream petroleum sector.
Rabiu made the recommendation in a report presented at a media education series on Petroleum Industry Bill (PIB) obtained by the News Agency of Nigeria (NAN), in Abuja, on Sunday.
NAN reports that the Federal Government in March 2020 announced full deregulation of the downstream oil sector which brought about controversies as petrol price continued to increase in the country.
He said that in the medium and Long term, the Central Bank of Nigeria (CBN) must provide access to foreign exchange at the official rates to the importers.
He noted that the regulators should also enable the market to determine the price of Petroleum products and services.
He added that to encourage competition, the Petroleum Equalisation Fund (PEF) and National Transportation Allowance (NTA) charges should be removed from the Petroleum Products Pricing Regulatory Agency (PPPRA) template.
“In establishing the true cost of importation of products, PPPRA should resume the publication of key elements of its templates such as FOB Costs and FX rates.
“If NNPC remains a sole importer of Premium Motor Spirit (PMS) also known as petrol, the total cost of importing the product should be publicly disclosed and the imported product should be shared to all eligible wholesalers at cost.
“ To minimise actual cost of importation, government should carry out a benchmark audit on the current Direct Sales Direct Purchase (DSDP) arrangement to determine if it is still cheaper than cost incurred by other Oil Marketing Companies (OMCs),’’ he said.
He noted that expanding the port capacity to receive liquid fuels in greater quantities or increasing the speed of discharge, increasing fuel storage capacity, and enabling cheaper transport of petroleum products (by pipeline or rail rather than road transport) remained important.
In the short term, he recommended effective operation of the network of pipelines and depots to depend on the continuous operations of the four refineries.
“ Private sector investments into these critical infrastructures when reinforced with appropriate ownership and governance structures operating under a transparent and open access regulatory environment will guarantee sustainable development of a liberalized downstream petroleum sector.
“The decision to privatise or enter concessions with respect to the assets is a strategic one based on what the government perceives its future role in the sector to be and the market appetite for partnership with the Government.
“The recent pronouncement from National Assembly that Government Plans to engage Strategic investors this year with majority equity of 51 per cent is a welcome development,’’ he said. (NAN)
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