Stakeholders in the downstream sector are telling Nigerians to be prepared to spend N750 per litre for petrol at filling stations once fuel subsidy is removed.
This was the highpoint of stakeholders’ interventions online workshop, with the theme, “Deregulation of the Nigerian Downstream Sector: The Day After.” organised by industry stakeholders, in collaboration with the African Refiners and Distributors Association (ARDA) on Monday.
The workshop was necessitated by the Federal Government’s resolve to completely deregulate the downstream sector of the Nigerian oil and gas industry in the coming months.
The stakeholders while outlining the strategies and measures that should be deployed to ensure sustainable removal of petrol subsidy, also emphasized the need for the Federal government to address the challenges facing the sector before its decision.
The Federal Government, through the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, recently hinted that it would end the wasteful petrol subsidy regime before the end of President Muhammadu Buhari’s tenure on May 29, 2023.
Speaking at the session, National President of IPMAN, Mr. Chinedu Okoronkwo, who was represented by IPMAN’s National Operations Controller, Mr. Mike Osatuyi, revealed that the marketers were in full support of the government’s plan to embark on full deregulation of the downstream sector.
Okoronkwo warned Nigerians to prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal. He however, pointed out that the projected pump price was likely to drop to around N500 if the government encouraged the Central Bank of Nigeria (CBN) to provide foreign exchange for marketers at the official rate.
Okoronkwo also urged the government to channel expected savings from subsidy removal to provision of palliatives for the masses. He advised the government to be alert and sensitive to resentment from Nigerians.
The industry stakeholders at the workshop called on the government to implement appropriate palliatives in the form of public transportation and freight of agricultural produce, ensure transparent and effective communication, and improve access to foreign exchange. They also urged the government to address issues around 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.
They stressed the need for operators in the industry to institutionalise professionalism in the midstream and downstream petroleum sectors ahead of the take-off of full deregulation.
In his goodwill message, Chief Executive Officer, NMDPRA, Mr. Farouk Ahmed, told industry players that the authority would allow a free market-pricing regime to prevail in the petroleum marketing business in the country once the sector was fully deregulated.
National President of the Nigerian Association of Road Transport Owners (NARTO), Lawal Yusuf Othman, stated that the full deregulation of the downstream sector and complete removal of petrol subsidy would introduce a mix of opportunities and challenges into the operating environment.
In his presentation, Managing Director, CITAC Africa, Mr. Gary Still, explained that market liberalisation meant the removal of government subsidies and price controls on petroleum products and allowing market forces to determine the price and supply of petroleum products.
Still advised the Nigerian government to completely deregulate the downstream oil sector and free the market from the existing price fixing and control to allow investments to flow into the sector.
Fiscal Policy Partner and Africa Tax Leader at PwC, Mr. Taiwo Oyedele, charged the government and the regulators to identify potential pitfalls that could trigger resentment from citizens before, during, and after the removal of the petrol subsidy.
Oyedele said deliberate public sensitisation, industry engagement, and collaboration with civil society organisations were needed to aid public buy-in during the implementation of full deregulation by the government. He added that in the course of implementation of the policies, the government’s interpretation of its strategy must be issues-based and not confrontational.
Technical Consultant to the Executive Vice Chairman/Chief Executive Officer of FCCPC, Mrs. Morayo Adisa, in her presentation, emphasised 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.
Chairman of MOMAN and Managing Director of Ardova Plc, Mr. Olumide Adeosun, stressed that the virtual workshop was aimed at addressing key challenges and outlining strategies to ensure a sustainable future for the petroleum downstream sector. Adeosun added that safeguarding consumer interest in a deregulated environment was also underscored.
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 the Petroleum Industry Act (PIA) 2021.
The workshop provided data-driven insights into the sector’s growth potential, as stakeholders emphasised the need for continuous industry engagement, collaboration, and public sensitisation to aid public buy-in on new policies by the government.
It emphasised 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 Convention on Climate Change (COP).