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Deregulation: FG should ensure proper consultation—Expert

It is no longer a secret that the Federal Government is set to fully deregulate the oil and gas sector as it has consistently argued that the $4.5 billion subsidy on petroleum products was no longer sustainable if the country must effectively tackle the enormous challenges facing the sector. In this interview, Dr. Mike Aderohunmu, oil and gas analyst and managing director Oilgas Marinetech speaks on what needs to be done to ensure the government proposed deregulation of the downstream sector delivers real value for the economy.


THERE are indications that the Federal Government is set to ensure full deregulation of the downstream sector despite doubts about the enabling environment that would ensure effective implementation of the policy. How would you react to that?

Well, I think that nothing can be done in isolation. The Nigerian society need to be informed. There has to be an awareness about the policy orientation. Many people are not aware about the petroleum bill. They don’t know its content as it is only given to some certain people. So, that is one of the first thing I think should be addressed. Let the people of Nigeria know the kind of policy that the government is bringing in to further strengthen the industrial revolution policies of the country.

Do you think the policy would be successful when glaring obstacles such as inadequate receptive facilities and existence of powerful cartel that most times manipulate policy implementation for selfish benefits are yet to be addressed?

The policy objective has to be clear on what we want to achieve but there is the basic fact that Nigeria is lagging behind in terms of infrastructure. The infrastructural aspect is yet to be addressed at least to embrace principles which we call the enabling environment. You cannot call for investment in a sector that is not yet ready for further growth. Many areas are still neglected and I think those areas need to be tackled first before we can talk of further aspects of deregulation.

But having said that, we can’t stop them not to continue doing what they want to do but I think a proper consultation has to take place first. Lately, I think the information about the Petroleum Import Bill was given only to some people as only the chairman of the committee on energy was the only way one can consult. You have to go through his own e-mal box while actually this is supposed to be made public so as to let the stakeholders know what is going on. In terms of cartel, that we cannot control.

It is left for the regulators to ensure that whatever they are doing is well regulated. The cartel are businessmen and they would always go for their own interest. It is the regulators that would make sure that the interest of the business would go along with the business of the nation. So, that is the only way you can handle that.

How can the country achieve a well guided deregulation policy that would ensure economic growth and creation of job opportunities?
The term deregulation needs to be defined. Deregulating what? You have to define what you want to achieve which is your objective, then a policy can be strengthen towards achieving your objectives.

Though the government has said deregulation would encourage investments in refining and marketing infrastructure, well that’s a good one but we can’t achieve that without some political inputs.

The economy has been deregulated lately and we can see how much money is spent on importation of refined petroleum products rather than refining locally. The issue of Niger-Delta is there, that cannot be overemphasized until it is tackled politically. That is part of efforts of the government that can affect deregulation and then put in the regulators who are willing to regulate effectively to achieve results. There is difference between efficiency and effectiveness.

These two things are married together inside deregulation. So, you can’t just isolate one and achieve the another as they must go together. There must, therefore, be political willingness to make sure that Niger-delta issues are resolved. It shouldn’t be looked at as a problem but rather as potential for investment for development because investors would always invest in places where they are sure that they can make money. So, if Niger-delta issue is being regarded as an area whereby Nigerians can develop and maximize their potentials, it should be treated as such and not as a problem.

Would you consider the government’s amnesty offer to the militants in the region as a bold step towards resolving the lingering crisis in the region?

In any way there was dialogue and so you have to look at it from the position of what do you get out of that. So, we can’t say we are satisfied. There must be dialogue and a way to resolve the issues and government must realize that as the regulator, it must strive to achieve peace for where there is no peace, there can’t be development. So, at all cost we must negociate for peace to be able to move forward.

Another major loophole in the deregulation policy is the absence of a clear cut policy that would promote local refining of petroleum products so as to discourage over-reliance on importation, another obstacle that could render the policy ineffective?

Everything must go with what, how and which. If you don’t have that, you can’t achieve any result. They sound theoretical but those are the approach you have to take before you can obtain  any result. Nigeria cannot be isolated because it is part of the global economy. The global economy is like a market place and so we must go to the market to buy and sell.

If we are buying all the time, we are not contributing to the market effectively. We are only being a participant or a spectator kind of. So, we must be able to produce to the market. If Nigeria is having crude oil and she cannot refine it, then we will continue to buy refined product from other countries, that’s a linkage .

Again if you look at the current global economic crisis, initially it was called credit squeeze, then later to financial crunch, then to meltdown and financial crisis and eventual today we are talking about economic crisis. Each of them has an effect that led to the other. Nigeria is now importing crisis from abroad because we are not settled internally. There is no solution outside rather our solution lies inside and there is no global crisis without internal solution.

So, the solution must come from within. One of the  problem here is that whatever Nigeria might have acquired or gained in terms of increase in price of crude oil have been imported back by importing finished products. We all  saw what happened to the banking sector, the recent increase indirectly affected the sector. That is why internal regulation is important. So, our home must be in order before deregulation can be effective and then have positive effect on the economy.


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