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Marketers blame FG’s policies for drop in downstream operations, importation

By Ediri Ejoh

STAKEHOLDERS have blamed the Federal Government’s policies for dwindling importation of petroleum products as well as low operations in the downstream sector of Nigeria’s petroleum industry. The Petroleum Tanker Drivers Association (PTDA) of Nigeria, Apapa Branch, which made the disclosure, stated that the downstream operations have dropped, especially as many private investors have not been able to participate.

Speaking to Vanguard on condition of anonymity, a Senior Executive of PTDA, said, “Importation of Premium Motor Spirit, PMS, popularly known as petrol has declined drastically. Before now, almost everybody was able to import and make profit. The major thing is the exchange rate because the oil industry deals with exchange with banks which finance the business. Now that everybody is clamped down, we are restricted in buying from the banks. In the past, when you imported, in the space of one week it is finished. Now, the whole thing is different.” He, however, attributed the availability of petroleum products to the intervention of the Nigerian National Petroleum Corporation, NNPC. “Nigerian National Petroleum Corporation, NNPC, normally imports the product and then gives allocation for import to flood the market. We have workers and filing stations who are trying very hard to get money and product.”

However, investigation carried out by Vanguard at the Depots, showed that there was increased competition among operators, leading to reduction in prices. A top management at one of the International Oil Companies, IOCs, who also preferred not to be named, corroborated current competition and decline in the downstream business. According to him, “We cannot say for sure the level of competition statistically. But all we know is that, there is massive decline in purchases of petroleum product by oil marketers.

Stakeholders react: The former President of Petroleum Technology Association of Nigeria, Mr. Emeka Ene, said that:  “We have to find a multi-purpose approach towards tackling issues in the downstream sector. “Nigeria should be an exporting and not importing nation. There is a fundamental flaw in the structure of the midstream and downstream industry, and until that is corrected; we are going to run into induced challenges. You cannot solve this kind of problem easily.

“But at the moment, government has begun a process and effort to create capacity for refining our product in the country. Multinationals cannot be forced to build refineries for the country. We have Nigeria entrepreneurs who can do that. What should be done is to create incentives, right environment and encourage them to refine product in-country. It is not a government thing alone. “For instance, you can create the ability for people to refine and store with the existing storage at the refineries. And so, people can come and set up their refinery and don’t have to invest in outside service facilities.  That would mean that within 12 months you can have the capacity you need. There are many solutions, models and they are not new. “The government have started with that and we need to focus on that rather than distracting the system by the talk on how to make people import more petroleum product, which should be 100 percent discouraged. As long as we depend solely on importation of refined products which will go up or down depending on oil price at the international market and foreign exchange volatility, we will continue to have problems and challenges in the downstream business. The old refineries should be privatized to make them more efficient. Also, proper incentives should be put in place for people to set up refineries. This will be the only solution to the challenges of our downstream sector.”




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