The Federal government has been urged to address the key challenges in Nigeria’s midstream and downstream sectors.
The stakeholders, who made this appeal during a virtual online workshop with the theme “Deregulation of the Nigerian downstream sector: The day after,” also outlined strategies for a sustainable future in the petroleum downstream sector.
The virtual workshop was organised by the Nigerian Petroleum Downstream Industry in collaboration with the African Refiners and Distributors Association (ARDA) held in Lagos.
Speaking at the forum, the Chief Executive of Nigerian Midstream and Downstream Petroleum Regulatory (NMDPRA), Farouk Ahmed, assured the authority’s readiness to allow free market pricing once the sector is fully deregulated.
Managing Director of CITAC Africa, Mr. Gary Still, explained that market liberalization means the removal of government subsidies and price controls on petroleum products and allowing market forces to determine the price and supply of petroleum products.
In his presentation, the National President of the Nigerian Association of Road Transport Owners (NARTO), Alhaji Lawal Yusuf Othman, warned about the full deregulation of the downstream sector and complete removal of petrol subsidies will introduce a mix of opportunities and challenges in the operating environment.
National President Independent Petroleum Marketers Association of Nigeria (IPMAN), Elder Chinedu Okoronkwo, represented by Mr. Mike Osatuyi, IPMAN’s National Operations Controller, revealed that the marketers are in full support of the government’s plan to embark on full deregulation of the downstream sector.
He warned Nigerians to prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal, adding that the pump price is likely to drop to around N500 if the government encourages the Central Bank of Nigeria (CBN) to provide forex to marketers at the official rate.
Osatuyi also urged the government to channel savings from subsidy provisions to provide palliatives to the masses.
He charged the government to be alert and sensitive to resentment from Nigerians.
Industry stakeholders at the workshop called on the government to implement appropriate palliatives in the form of public transportation, freight of agricultural produce, ensure transparent and effective communication, improve access to foreign exchange and 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.
The Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Olumide Adeosun, who doubled as the facilitator, stated that the virtual workshop addressed key challenges and outlined strategies to ensure a sustainable future for the petroleum downstream sector. He added that safeguarding consumer interest in a deregulated environment was also underscored.
The Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers (PwC), Mr. Taiwo Oyedele, , in his presentation, charged the government and the regulator to identify potential pitfalls that could trigger resentment from citizens before, during, and after the removal of the petrol subsidy.
According to him, deliberate public sensitization, industry engagement, and collaboration with civil society organizations are needed to aid public buy-in during the implementation of full deregulation by the government. He said that the government’s interpretation of its strategy must be issues-based and not confrontational when implementing the policies.
Mrs. Morayo Adisa, Technical Consultant to the Executive Vice Chairman/CEO of the Federal Competition and Consumer Protection Commission (FCCPC), who represented Mr. Babatunde Irukera, EVC of FCCPC, emphasized 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.
The Executive Director of DSSRI NMDPRA, Ogbugo Ukoha, gave insights on the role of the regulator in pricing, safe operation and enforcement in his presentations, whilst the Managing Director CITAC Africa, Mr Gary Still, touched on market liberalization or elimination of subsidies.
The Executive Secretary (ES), ARDA, Anibor Kragha, shed light on product specifications – ARDA roadmap, regional initiatives (AU / ECOWAS).
Managing Director, NRL, Huub Stokman, highlighted what needed to be in place for a successful transition while Olufisayo Duduyemi, 2nd Vice President-Elect, NGA, talked about the role of gas as a transition fuel.
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 Nigeria’s Petroleum Industry Act (PIA).
Participants at the online session also focused on the need for operators in the industry to institutionalize the professionalization of the midstream and downstream petroleum sectors ahead of the take-off of full deregulation
The workshop also provided data-driven insights into the sector’s growth potential.
Stakeholders emphasized the need for continuous industry engagement, collaboration, and public sensitization to aid public buy-in on new policies by the government.
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 Framework Convention on Climate Change (COP), was reiterated at the workshop.