Nigeria Spends N10 trillion on Petroleum subsidy in ten years, an amount capable enough to build 16 million boreholes, 1 million classrooms, 300,000 fully equipped primary healthcare centres, over 20,000 kilometres of roads, 27,000 megawatts of solar electricity, 600,000 houses.
Tunji Oyebanji chairman, Major Oil Marketers Association of Nigeria (MOMAN) who disclosed this said the cost of fuel subsidy is affecting Nigeria negatively. This includes an increasing number of truck accidents and explosions, degradation of industry infrastructures, lack of enough margins generated to maintain, renew, and upgrade industry infrastructures.
The MOMAN chairman who spoke during a webinar on the ‘Challenges and Impact of a Deregulated Downstream Sector on Nigeria’s economy,’ organised by the National Association of Energy Correspondents (NAEC), said the removal will have a positive impact such as alignment with the Nigeria National Petroleum Policy, construction, and maintenance of refineries, establishing Nigeria as the refining hub for Africa and product availability in the country and for export and increased foreign exchange earnings.
He also reiterated the need for the quality of petroleum products being sold to customers to be regulated to ensure that they meet the minimum standards.
The organisation also frowned at the lack of safety consideration by some stakeholders which has resulted in some fatality in the industry.
The MOMAN boss also expressed concern about the proliferation of Liquefied Petroleum Gas, LPG (cooking gas) plants across the country as well as usage of unsafe trucks in conveying petroleum products.
“They don’t have tracking devices because their owners don’t have funds to invest in new fleets. We believe that with the deregulation of the downstream sector, more investments will come in across the value chain.”
He called for “rigorous’’ regulation of the sale and distribution of Liquefied Petroleum Gas (LPG) following recurring cases of gas explosion in the country.
He said while MOMAN was in full support of the deregulation of the downstream sector – allowing market forces to determine prices -the association believes that there should be regulations in place.
Oyebanji who is also managing director, 11Plc spoke against the backdrop of the imperative of the federal government’s removal of the subsidy paid on imported petroleum products, the eventual deregulation of the downstream sector of the oil and gas industry, and highlighted the benefits derivable from the policy to the citizens.
The association, he said, is working with the National Assembly and the Ministry of Petroleum Resources to ensure that the Petroleum Industry Bill (PIB) would enhance the development of the industry when passed into law.
He noted that the PIB would create a new regulator that would focus solely on the downstream sector unlike the Department of Petroleum Resources (DPR).
The deregulation of the downstream sector and the passage of the PIB, he said would encourage more investments in Nigeria’s oil and gas industry and make the country a refining hub.
“Investors were not encouraged to invest because our market was not deregulated and there was a lack of government policy and regulations. Deregulation is a win-win for the Nigerian consumer, industry stakeholders, and the country as a whole.
According to him, the removal of subsidy on petrol had discouraged the smuggling of the product across the borders and reduced the strain on the nation’s foreign exchange reserves.
The MOMAN chairman, however, urged the government to create a level playing field for the importation of fuel into the country in order not to defeat the purpose of the deregulation.
“Deregulation works best when there are many players. The competition will help drive lower prices for the benefit of Nigerians.
“A situation where some people get forex at a cheaper rate than others to import products will only create a monopoly,’’ he added.