FG Must Deregulate Downstream to Address Fuel Supply Challenges – MOMAN
As petrol scarcity in Lagos, Abuja, and other cities persists, petroleum products marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) have said the most viable solution to the supply and distribution challenges is full deregulation of the downstream oil and gas sector.
The suggestion came as the Association of Distributors and Transporters of Petroleum Products (ADITOP) and the Independent Petroleum Marketers Association of Nigeria (IPMAN), yesterday, warned their members against selling petrol above the government approved price of N165 per litre.
The oil marketers made the remark a day after President Muhammadu Buhari said his government suspended the petrol subsidy removal because it was not in the country’s best interest. Buhari, who said this in an interview on Bloomberg, stressed that while removing subsidy looked good on paper, the human consequences could not be ignored. Although his administration was on the verge of removing petrol subsidy last year, Buhari said it became inadvisable after inputs from industry experts and other economic factors were considered. He said issues around petrol subsidy would be resolved through on-going efforts at boosting local refining, especially through private sector involvement.
Nevertheless, National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Festus Osifo, yesterday, insisted that Nigeria had enough stock of petrol, despite the scarcity in various parts of the country. Osifo, who spoke on a national television programme, maintained that Nigeria’s major problem was with the distribution of petroleum products. He said the tanker drivers were not loading as much products as they should because of pending issues around the “bridging fund.”
Analysts had warned that the federal government’s inability to take the tough decision on the subsidy issue was bound to have massive consequences for the overall implementation of the Petroleum Industry Act (PIA). The implementation of the PIA, which requires the removal of petrol subsidy, ought to have commenced in February 2022, but it was shifted to July 2022.
However, due to pressure and threats of protests by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), the decision on subsidy removal was suspended to next year. There are concerns that due to political considerations, it might not be implemented till 2023.
But in a statement yesterday, MOMAN stressed that urgent and full implementation of the PIA 2021, as regards full deregulation of the downstream sector to allow market forces determine the prices of products, especially petrol, was the way out of the frequent product shortages and attendant hardships on Nigerians.
The MOMAN statement was issued in Lagos at the end of its virtual press conference, which was jointly signed by its Chairman, Mr. Olumide Adeosun, and Executive Secretary/Chief Executive Officer, Mr. Clement Isong.
“The full deregulation of the petroleum downstream sector and full implementation of the PIA 2021 clearly remains the most viable long-term solution to the country’s supply and distribution challenges,” it added.
The association also empathised with customers of its member companies, as it continued to grapple with recurrent scarcity of petrol in various parts of the country. It said the current scarcity of petrol was occasioned by two main reasons, namely, supply inadequacy in the last few weeks, and distribution challenges created by the unavailability and continuous surge in international prices of diesel.
MOMAN said its members were working with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nigerian National Petroleum Company (NNPC) Limited through its marketing arm, the Petroleum Products Marketing Company (PPMC), the National Association of Road Transport Operators (NARTO), and other industry stakeholders to make petrol available at the pumps and eliminate the queues as quickly as possible.
The statement said, “MOMAN, as an association, fears that the current supply framework cannot guarantee steady and consistent supplies to the country, given the current state of government finances and unpredictable international supply shortages.
“We, therefore, recommend a gradual price deregulation with targeted palliatives (eg. transport and agricultural subsidies) to the public to ease implementation.
“However, in the interim, MOMAN recommends: the current single supplier strategy be reviewed; the Federal Ministry of Petroleum Resources, in collaboration with the Ministry of Finance and other relevant MDAs, should set up a taskforce to immediately focus on increasing diesel supply through accelerated initiatives to increase local modular refining capacity.”
The marketers’ union noted that the suggestions proffered would tackle the supply and distribution challenges, adding that the phased rehabilitation of existing NNPC refineries would hasten supply of middle distillates: diesel and aviation fuel.
The statement further said, “MOMAN recognises and closely associates with the need to ease challenges with respect to high energy and transportation costs occasioned by extraneous circumstances.
“MOMAN shall continually do its best to distribute petrol to its customers across the country and keep exploring opportunities to partner with industry stakeholders, the Authority, and the Government to ensure the sustainability and institutionalisation of a viable petroleum downstream sector in Nigeria.”