By Naomi Uzor
FOLLOWING the huge sums spent on the bridging of petroleum products through the Petroleum Equalization Fund (PEF), the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) has urged the federal government to scrape the PEF as the chamber is bothered by the horrendous cost of operating the system.

Speaking on the state of the Nation on Thursday, at NACCIMA house, the National President of NACCIMA, Dr Simon Okolo said the PEF should be scrapped and that NNPC should disengage completely from retailing petroleum products, adding that the ongoing acquisition of retail outlets by the NNPC should stop.

According to him, the role of the public institutions should be strictly regulatory, the production, procurement, distribution and marketing of petroleum products should be left to the private sector and that the private sector should be encouraged to set up refineries both for domestic consumption and for export, adding that the fundamental problems in the supply chain of the downstream oil sector  needs to be fixed if the recurring crisis in the sector is to be addressed.

“A critical factor is that public institutions are still the mergers of the sector. This is a major impediment to the investment growth, efficiency, commercial viability and the transaction integrity in the sector. The disengagement of public enterprises in the entire production and supply chain is critical and inevitable. This is what was intended with the deregulation and liberalization of the sector” he stated

On the issue of credit conditions in the economy, Okolo said NACCIMA welcomes the ongoing reform of the banking sector and that they believe that the CBN governor has acted in good faith.

“We note in particular the focus on of risk management, corporate governance and transparency in the banking system, but we are concerned about policy stability and the implications for the system and the economy.

Reform of the sector should be carefully managed not to undermine confidence in the system. Transition from one policy regime to the other, should be methodical to minimize shocks and there should be consultation with stakeholders to minimize disruption in the system” he said.

Okolo said the power sector is the greatest obstacle to the Nigerian economic development, job creation and poverty alleviation, stressing that the government needs to do something urgently about the sector.

“Our energy sources need urgent diversification, excessive concentration on gas powered station poses a major risk to the power sector and the economy. We should begin to quickly focus on other sources such as coal, solar, wind, hydro and nuclear energy sources” he stressed.

On the macro economic conditions, he said, the exchange rate stabilized within a narrow band of N146 to N150 to the dollar and because of the high import dependent character of the economy, the high rate is still an issue.

“Inflation appears to have moderated; it was 11.6 per cent in March 2010, down from 12 per cent in December 2009. High inflation typically weakens competitiveness of investments and undermines the welfare of the people .

The external reserve was at a comfortable level of 40.3 billion dollars as at 30th April 2010, compared with 40.68 billion U.S dollars in March. This level of reserves could finance 17 months of imports, which is well above the 3 months global benchmark” he stated.