By Michael Eboh & Ediri Ejoh,
A civil society organisation, the Africa Network for Environment and Economic Justice (ANEEJ), has accused the body of former Group Managing Directors of the Nigerian National Petroleum Corporation, NNPC, of pursuing a selfish agenda in calling for a hike in price of petrol.
They claimed the call was capable of ruining the country.
In an e-mailed statement to Vanguard in Abuja, Executive Director of ANEEJ, Mr. David Ugolor, also warned that care should be taken in managing government policy which could attract a negative reaction from the public, especially with regards to fuel price.
“My initial response to their proposal was to reflect on their core demands which include the urgent need for NNPC to increase the price of fuel in the Country and the need for NNPC to retain the National Petroleum Investment and Management Services, NAPIMS, which was not a surprise considering the history and characters of those who were in the meeting,” Ugolor said.
In the context of ongoing oil and gas reform debate in the country, Ugolor stated that he expected the former NNPC GMDs to consider the state of NNPC which he said is not very healthy due to the conflict of interest and widespread corruption.
According to him, to deal with the problems in NNPC, there was an urgent need for reform which started a long time ago but vested interests in government, from the military regime to democracy era resisted it.
He said, “For instance, one of the key reasons why there has been a campaign to get the Petroleum Industry Bill (PIB) passed into law is to remove the discretionary power of the Honourable Minister of Petroleum from retaining the power of regulation and the award of oil blocks and also through the Nigerian Petroleum Development Company, NPDC, participating in exploration and production.
“This model has not helped the country and you know that most of the ex-GMDs were the promoter and for them to turn around in the face of current challenges to be suggesting that President Buhari should sustain the traditional NNPC business model is really a shame.
“Looking into their proposal at a glance you can see the conflict inherent in it. For example, they are suggesting that NNPC should increase fuel price based on market approach and also at the same time asking NNPC to retain NAPIMS which clearly exposed their selfish agenda that has ruined the Country.
“How do you reconcile using a market approach in the fuel price and then at the same time encouraging State control of the institutions that will drive efficiency in the oil sector?”
Ugolor further lamented the huge waste and lack of transparency in the petroleum industry, stating that the amount of resources stolen in the process of oil swap deals was enough to carry out the turn -around maintenance of the country’s refineries.
He, therefore, called on the Federal Government to ensure the speedy passage of the PIB so as to eliminate all the waste in the industry.
In addition, he said, “The present economic situation is very bad and the government should not add more pains by increasing the fuel price. I think what the government should be thinking of doing is to consider other options that will help reposition the Oil and Gas sector in Nigeria.”
Meanwhile, a renowned Petroleum Economist and President, Nigerian Association for Energy Economics, NAEE, Professor Wumi Iledare, blamed marketers for misunderstanding the intentions of government when it hiked the price of petrol in May.
According to him, “the concept of fixing a price at N145 per litre introduced by government in May this years was actually supposed to be a ‘price feeling’ and not ‘price floor’.”
He noted that petroleum marketers refused to allow the system work itself out but merrily took the product’s price from N87 per litre to N145 per litre, stressing that the action then was uncalled for as it was not the intention of government then for PMS to be sold at the floor price from the beginning.
According to him, “Because the marketers converted price feeling to price floor that is why now they want it to go up.” He explained that, “If they had gradually increased it from N87 per litre to may be N100 per litre, there would not have been any problem now, but they went for the wrong one in order for them to make profit during the time.
“At the time the marketers hiked the price of petrol to N145 per litre the breakeven price of the product using the exchange rate to a dollar then was below N125 per litre. For the fact that the marketers went for 145 per litre, paved way for the trouble currently besetting the clamour for price hike.”
Explaining the details of what transpired, he said, “If you remember at that particular time, the exchange rate was N285 to US$1 but now there is no place to get a dollar for N285 and that is why the marketers are struggling.
“If they had increase the price to N120 per litre at that particular time, by now they would have the opportunity to get the price towards N145. But instead, they went for the jugular at that particular time. And as we know, they cannot on their own increase the price of petrol because the act that set up the Petroleum Products Pricing Regulatory Agency (PPPRA) as the price regulator is still there,” he added.
Holistic approach is the key— PETAN
But Chairman, Petroleum Technology Association of Nigeria, PETAN, and Managing Director, Oildata Inc, Mr. Emeka Ene, argued that the petroleum industry must be approached holistically for profitability among other benefits embedded in its workable process.
According to him, what is more important at this point is how to stabilise the nation’s economy from its point of strength which he said is the oil and gas industry.
He noted that except the country’s leaders muster the political will to address the critical issues facing the industry it will continue to drift in crisis.
He identified some of the issues that require urgent attention to include; addressing local refining of petroleum products, passage of the Petroleum Industry Bill, PIB, as well as improving local content in the sector.
“You diversify the industry by having secondary production or secondary processing, so, rather than export oil, you export petroleum products. That is a means of diversification. You do not just wake up one day and throw away your oil industry.”