Oil marketers in Nigeria have lamented what they described as the absence of a level playing ground, accusing government of insincerity with the deregulation of the downstream petroleum sector.
The marketers say in their opinion, government was yet to truly deregulate the sector going by the irregularities and lop sided favouritism associated with the regime.
They explained that what is obtainable on ground is far from what a deregulated market should be, adding that the present operations module lacks the elements of a truly deregulated market.
The marketers’ spoke on Monday at a Webinar on stakeholders’ awareness on the deregulation of the downstream sector in Nigeria, organized by the Nigeria Natural Resource Charter (NNRC) and Civil Society Legislative Advocacy Centre (CISLAC).
The National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Mike Osatuyi, explained that deregulation without level playing ground for all players in the sector raises questions of sincere commitment on the part of the government.
“Deregulation will be when government opens the window for all marketers to buy forex, import products and sell at a market determined price,” Osatuyi said.
He stated that diesel and kerosene which have been deregulated are being determined by market forces based on cost, while consumers have the choice of where to buy their products.
“But to deregulate petrol and tie the hands of marketers is not deregulation. If you deregulate you can’t regulate price, you hands off like you did kerosene and diesel,” he explained further.
Speaking further he said, the price band per litre of petrol usually set by government usually favours the Nigerian National Petroleum Corporation (NNPC) which is a regulator and player in the sector, while IPMAN members are left to struggle with cost recovery and often run at a loss.
He noted that it is convenient for the NNPC to peg its pump price at the minimum price band because it has access to state instrument, which IPMAN members don’t have, underscoring the need for a level playing ground if government is sincere about deregulation.
Also speaking, Managing Director of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Clement Isong, said, the NNPC is presently the sole importer of petrol in Nigeria while all marketers buy from the corporation. He explained that there are different business models operating in the downstream sector as adopted by the MOMAN, IPMAN, DAPPMA and the NNPC retail.
“These business models are different because operations are different from one part of the country to the other. So, it’s difficult to price products from a central body under a deregulated market. The Petroleum Products Pricing Regulatory Agency (PPPRA) will struggle to manage these different business modules… marketers will be forced to sell below their cost price, which won’t be fair.”
Speaking on local refining, Mr. Isong said no investor will be willing to buy any of Nigeria’s existing refineries, if government were to put them up for sale, because they are not sure of selling their products at market determined price since government is still dictating price.
While faulting government’s sincerity to deregulation and ensuring cheaper petrol for Nigerians, industry expert, Ronke Onadeko, said government lacks the capacity to manage refineries.
“The sooner we privatise the refineries the sooner we will get cheaper fuel in Nigeria. Stakeholders should advocate for refineries to be handed over to private management as they can do a better job,” she said.
However, in his remarks, Comrade Igwe Achese, of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), said it was pure insensitivity to the wellbeing of Nigerians, on the part of government, in terms of making sure fuel is refined in-country.
While restating that government was insincere about rehabilitating the refineries, Achese emphasized that what is desperately needed to move the sector forward now, is the passage of the Petroleum Industry Bill (PIB).