By Naomi Uzor
The Lagos Chamber of Commerce and Industry (LCCI) has urged the Nigerian National Petroleum Corporation (NNPC) to withdraw completely from retailing of petroleum products.
Speaking on Tuesday at the first quarterly press conference on the economy, the president of LCCI, Otunba Femi Deru, said for a sustainable and beneficial deregulation system in Nigeria, the NNPC should exit completely from retailing of petroleum products, institution of an effective regulatory framework to ensure that the deregulation does not degenerate to exploitative practices of consumers of petroleum products, resolution of critical labour issues inherent in the deregulation to get support of labour organisations and major oil marketers, as well as the oil producing companies, should be given incentives to set up petroleum refineries in the country.
According to him, one of the major economic reform challenges in the Nigerian economy is the deregulation of the downstream oil sector and that AGO (diesel) and aviation fuel have already been deregulated.
â€œKerosene has been deregulated in practice, but still regulated on paper, what is left is the petrol (PMS) the federal government has admitted that the continued provision of subsidy for PMS is fraught with unspeakable abuses and corruption. Government reports that it spends a staggering N600billion annually as petroleum subsidy.
Public sector management of any economic sector typically creates problems for the economy and the citizens, we have examples in Nigerian Airways, NITEL, NIPOST, Nigeria National Shipping Line (now defunct), Nigerian Railways, PHCN, Airports etc. There is, therefore a strong case of deregulation, especially when the government claims it is spending over N600b on subsidy, much of which is consumed by corruptionâ€ he stated.
He said some of the potentials benefits of deregulation is better transparency and creation of enabling environment for additional private investment in the sector, creation of more jobs, improvement in the quality of service delivery in the industry arising from competition among providers, increased injection of private capital into the sector, creation of a level playing field for all operators in the sector,Â enhanced efficiency in the logistics and distribution chains and resources currently been committed to subsidy could be deployed for the purpose of improving the nationâ€™s infrastructures, especially power, railways and roads.
Emphasizing on the 2010 budget, Deru said the chamber is concerned about the deficit of 1.52 trillion naira which is 33 per cent of the total budget of 4.608 trillion ; and about 6 per cent of the GDP, adding that this is the highest level of budget deficit in recent years and that it poses a risk to price and exchange rate stability as well as to interest rate, and could also further weaken the purchasing power of the people.
â€œLet me also share our concern over the provision of 497 billion naira debt service, which is mainly for servicing the domestic debt portfolio. We believe that the commitment of this staggering sum to debt servicing is imprudent, this amount is 27 per cent of capital budget and 11 per cent of total budget, we need to watch the mounting domestic debt profile and more importantly, the interest rates on government borrowing. The opportunity cost to the economy of this huge debt service figure is very high. In an economy with serious infrastructure deficiencies, the use of 497 billion naira to service debt is neither good economics nor good judgement, besides, there is great risk of running the economy into a domestic debt trap if the current accumulation of domestic debt is not curbedâ€ he said.
Deru lamented over the problem of extortion by security operatives, local council official, tax officials and many other persons in assorted uniforms purportedly representing agencies of government on the nationâ€™s highways and within major cities, saying that it has become unbearable.
â€œThe situation got so bad recently that foodstuff dealers and transporters had to embark on a strike to draw the attention of the government to this matter, this nuisance has persisted for quite some time and we do not believe that it is intractable. We are calling on the Inspector General of police to remove all such extortion points on the nations highways and within the major citiesâ€ he stated.