The Minister of State for Finance, Mr. Remi Babalola, said at the weekend that full deregulation of the oil and gas sector had become necessary, arguing that the $4.6 billion subsidy per annum on fuel was not sustainable.
The minister stated this in a paper entitled, ”The Challenges of Managing Business Enterprises in Nigeria,â€ presented on Saturday at the annual management lecture of the Department of Management and Accounting of the Obafemi Awolowo University, Ile-Ife.
A statement by his Special Assistant (Media), Mr. Oluyinka Akintunde, in Abuja, yesterday said.
Babalola, who was represented his Special Assistant, Mr. Bode Agunbiade, noted that the subsidies on petroleum products accounted for about US$4.5 billion in 2008.
Said he: â€œOil remains our biggest blessing but the sector also faces enormous challenges.
“These challenges have discouraged private sector investments in new refineries and contributed to making existing refineries cost centres.
â€œOur aim is to maximise the opportunities in the industry, grow the downstream and deregulate the sector completely. Full deregulation of the oil and gas sector appears very imperative. This will encourage investment in refining and marketing infrastructure.â€
He added that the legal and regulatory framework for the comprehensive reform of this oil and gas sector of the economy was currently being considered by the National Assembly and reiterated the need to move away from government-owned and government-run institutions to avoid failed institutions or enterprises.
â€œIf we must liberalise the failing institutions, we must encourage privatisation and public private partnerships as the appropriate form of getting the best out of our resources.
“Weak infrastructure is the single most important binding constraint in Nigeriaâ€™s quest for enhanced firm level competitiveness.
â€œThe huge resource gap of government shows there is an urgent need for alternative funding source for infrastructure.
“We believe strongly that Public Private Partnership ( PPP ) will deliver real value for money if properly managed under the Infrastructure Concessioning Regulatory Commission (ICRC),â€ the minister said.
He added that the government was introducing a new generation of reforms in the oil and gas deregulation, power sector deregulation and election related reforms.
â€œOur aim has been to ensure these reform programmes form the bedrock for the Nigerian system. Major reforms have been implemented in the areas of taxation, public service, pension, insurance, capital market, banking, public expenditure, the judiciary and telecommunications. All of these remain critical to national development.
â€œAlso, laws which had hitherto hindered private sector investments have been either amended or repealed for orderly divestment of governmentâ€™s shareholding to private operators in vital areas of the economy such as mining, transportation, electricity, telecommunications, petroleum and gas and petrochemicals, among others.
â€œIndeed, a lot of investment incentives have been put in place by the Government to stimulate private sector investments from within and outside the country,â€ he said.
On Foreign Direct Investment (FDI), he confirmed that the investment recently peaked at US$13.95 billion from its level of USD$2.1 billion in 2004.
The bulk of the funds, he stated, was for the oil and gas sector; telecoms, beverages and banking.
â€œWe have adopted a strategy that is more inclusive, Arabs and the Chinese are joining the Europeans and mostly Americans investing in Nigeria . We are open to all, as investment has no colour,â€ he added.