Worried by the recurring fuel scarcity in the country, the Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government to liberalise the downstream petroleum sector for unfettered private sector participation and investment, while ensuring that the refineries are operated as commercial business entities.
As stated by the chamber, the approach should be subjected to appropriate regulatory framework that defines the role of the Nigerian National Petroleum Corporation (NNPC) while a model that would allow for a level playing field for all operators including the NNPC should be adopted.
Indeed, the chamber advocated the adoption of the NLNG model which allows for private sector management for the refineries, noting that such move would improve efficiency and reduce the burden of the refineries on the nations’ treasury.
The chamber in a statement noted that the fuel crisis of the past few weeks underscores the need to urgently review the current policy framework for the petroleum downstream segment of the oil and gas industry, adding that the pipelines should the concessioned for a more efficient management and reduction of road haulage for fuel.
“We have concerns over lack of clarity on the deregulation and liberalization of the sector. This policy lacuna has put many investments in the sector at risk; while many other investment decisions have been put on hold. The concentration of petroleum products supply in the NNPC remains a major cause for concern. The arrangement is an inherent entrenchment of the dominance of the NNPC to the detriment of private investors in the sector.
“The Downstream petroleum sector currently suffers from overregulation which has profound negative consequences for growth, investment and job creation in the sector.
“Evidently, the current model of managing the downstream petroleum sector is not sustainable. It is at variance with the present administration’s vision to diversify the economy and create jobs. It perpetuates the phenomenal of rent economy and detrimental to economic competition. It is important to stress that the citizens are the ultimate beneficiaries of a competitive market environment”, the statement read in part.
LCCI noted that the weak compliance with the regulated price of premium motor spirit in parts of the country is largely a symptom of much deeper problems and distortions in the petroleum products supply chain.
As stated by the LCCI, the Department of Petroleum Resources [DPR] has been spending valuable time and energy fighting the symptoms of a problem, rather than addressing the fundamentals.
“The CBN needs to ensure a more transparent process in the allocation of foreign exchangeto petroleum products marketers. It should also ensure the payment of matured LCs to their offshore fuel suppliers”, the chamber added.