Full Deregulation, PIB Passage Top Marketers’ Expectations in 2021

Peter Uzoho

 

Marketers of petroleum products in Nigeria have reeled out their expectations for the downstream sector in 2021.

Top on their expectations include the total deregulation of the downstream sector, the passage of the Petroleum Industry Bill (PIB) and the completion of the Dangote Refinery.

The Chairman of Major Oil Marketers Association of Nigeria (MOMAN) and Managing Director of 11Plc, Mr. Adetunji Oyebanjo, told THISDAY that operators equally hope to recover from the losses they incurred last year as a result of the coronavirus pandemic and its attendant collapse of oil price and the oil and gas industry in general.

Controversies have continued to trail the federal government’s claim that it has deregulated the downstream sector of the nation’s petroleum industry as marketers have maintained their position that the market has not yet been deregulated.

They cited the continuous interference in petrol pump by the government and the privilege granted to the Nigerian National Petroleum Corporation (NNPC), which is the sole importer of petrol to be getting dollars at special exchange rate.
However, oil and gas players have been betting on the passage of an investment-friendly PIB to open up the industry for increased investment and massive participation by players.

Also, the Dangote Group had announced that refined products from its 650,000 barrels per day refinery currently under construction at the Lekki Free Trade Zone, Lagos, would be in the market by the last quarter of this year.
All these, according to Oyebanji, are highly needed for the industry to be beehive of activities again this year and beyond.

“First and foremost, we are hoping that we will be able to recoup some of the lost grounds in 2020. As you know, for all industry, COVID-19 really dealt a very serious blow.
“So, hopefully, at least may be as from second quarter, we hope that we begin to see a reverse of some of the huge losses that all of us incurred because it was a very tough year in 2020. So that will be one thing.

“Then, we are hoping that finally, we will see a PIB in place, but not just a PIB for the sake of it, but a PIB that will actually enhance and help the industry to grow and attract investment and all that,” Oyebanji said.
He added: “Then, hopefully, we will begin to get towards where the Dangote Refinery, even if it is not in use in 2021, at least it will be close because when that happens, it will be like a game changer.

“Also, we hope that we will finally have true deregulation and not the kind of deregulation in which one day we will say we have deregulated and another day we will say we have reduced the price by N5.
“So we hope that we will have a consistent, full and total deregulation backed by law. I think those are the key things we are hoping for 2021.”
Oyebanji, however, justified the call by state governors for the NNPC to end its Direct-Sale-Direct-Purchase (DSDP) arrangement, saying the governors might have felt that the arrangement was opaque and not beneficial to all.

He said such arrangement does not encourage competition in the industry, adding that why it might appear that there is no more scarcity and queues at the filling stations partly because of such arrangement, the actual cost needs to be interrogated.

He added: “You know, I told you that the only thing the press and Nigerians don’t want to hear is scarcity of petrol but nobody is looking at the cost. That is where what the governors are talking about comes into play.
“So, the point is, yes, there are no queues, there is no scarcity. But this is the dilemma Nigeria has. We don’t want to face the reality of the economics of the products.

“People think petrol should be a social welfare product like health and education which should not be, because if you do it like that, you will not get the people who should invest in it to invest.
“They are not sure whether they will make money or not. So they are always hesitant to make investment.

“And you see now, the governors who are looking at the books and trying to balance their budget have looked through and said, ‘wait a minute, this DSDP you are doing is opaque. Nobody can see what is happening, it’s like it is not transparent?’ At what exchange rate are you doing all these transactions?
“Is it not crude that should have been sold and the money shared to the states that is now going into subsiding indirectly the cost of petrol?”