Full deregulation of downstream sector will attract investors —Iheanacho

Following the lull in investment in downstream sector of the Nigerian economy, the Chairman, Integrated Oil and Gas Ltd, Capt. Emmanuel Iheanacho, has said that only full deregulation can bring the much needed investment to the sector.

He told Nigerian Tribune at the weekend in Lagos that full deregulation remained the best option to attract investors for sector development, against the backdrop of huge debt being owed marketers by the Federal Government.

He posited that full liberalisation and deregulation of Nigeria’s downstream oil sector will remove of all hindrances and bottlenecks that having been discouraging improvement of private investment and market competition.

According to him, “we should note that there is no provision of subsidy payment in the 2017 budget, which calls for government to fully deregulate the downstream sector to attract investors. We need full deregulation of the downstream sector. We do not need partial deregulation.

“I do not understand the so-called price modulation we are seeing and how it can work because presently, it is not working. Government should move from uncertainty to certainty. We have a situation where prices are capped on one hand.

“Market prices in Nigeria and international market prices are outside the control of our local policy. The current international price and imported petroleum products pricing template do not conform to the physical landing cost on the products when interpolated with the government’s template.”

Iheanacho appealed to government for payment of huge outstanding subsidy funds owing marketers for imported petroleum products which ran into billions of naira.

He said that marketers are rattled with the huge amount being paid as interests to banks whenever there was any delay in the payment of the subsidy.

“For instance, a marketer is being owed over N5 billion and pays about N3 million to service loan on daily basis. This attracts an additional interest from the banks on the importers. We borrowed money from banks on specific terms, on conditions which must be met.

“The painful aspect is that the Federal Government does not consider such accrued interest when paying the subsidy after several months of delay,’’ he said.

In the 2017 expectations, Iheanacho urged the government to urgently resuscitate the country’s refineries to improve and increase local refining capacity of petroleum products for local domestication.

According to him, “in going forward, we need to put more efforts in locally refined petroleum products which called for policy action to resuscitate existing refineries and create enabling environment for Nigerian private sector entrepreneurs to be able to invest in the refining capacity.

“In 2016 expenditure, nearly 70 per cent of forex required for running the economy went into the importation of the products. If we need to turn our economy around from consuming economy to producing economy, we have to deal with exporting of crude oil by creating the opportunity that local entrepreneurs can build private refineries.

“So, that Nigeria can become a net exporter rather than being a net importer/consumer of petroleum products.”

On pipeline vandalism ravaging the logistics arm of oil sector, he said that in spite of government’s efforts to eliminate the challenges of pipeline sabotage that was affecting crude oil transportation to the refineries on routine basis, crude oil theft and pipeline vandalism still persist unabated.

Iheanacho said that the singular economic sabotage amounted to monumental loss of funds that could have been deployed into critical areas of national development.

The oil magnate said that the menace continued to build up; weaning confidence in industry’s operators; and players and potential investors.

“Pipeline sabotage has continually strained Nigeria to resort to petroleum products’ importation and wastage of the limited resources meant for capital and human development programmes,’’ he said.

Iheanacho advised that the only way out of the challenge of pipeline vandalism is to ensure sound pipeline integrity that could guarantee safe transportation of the products all over the country.

He said that pipeline installation could now be done using state of the art technology in a manner that would be inaccessible to vandals.

Iheanacho suggested the use of co-ordinated security network to eliminate pipeline vandalism, review enabling legal instruments for sanctioning violators and evolve more effective counter-strategy against oil theft and sabotage.