May 8, 2020

UPDATED: Oil price crash: Privatise refineries, repeal PPPRA, PEF Acts, CSOs tell FG

Crude oil price hits $65.85 per barrel after OPEC, Non-OPEC meeting

…Seek legal backing for fuel subsidy removal

By Michael Eboh

A coalition of 14 Civil Society Organisations (CSO), yesterday, enjoined the Federal Government to urgently privatise the country’s four refineries and salvage the country from further loss of revenue, especially with the looming global economic downturn and the low crude oil price brought about by the novel Coronavirus (COVID-19) pandemic.

In a statement issued in Abuja, the consortium of CSOs also called for the repeal of the Acts establishing the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Petroleum Equalisation Fund (PEF), while they advised the Federal Government to clarify its stance on the Petroleum Support Fund, especially with the elimination of subsidy on petroleum products.

Civil Society Legislative Advocacy Centre (CISLAC), Budgit, Spaces for Change (s4c)’ Youth Forum Of Extractive Industry Transparency Initiative (EITI), Centre for the Study of The Economies of Africa (CSEA), Nigeria Natural Resource Charter (NNRC), Media Initiative For Transparency In Extractive Industries (MITEI), Orderpaper Advocacy Initiative.

The rest are: Women In Extractives (WIE), Connected Development (CODE), Africa Network For Environment and Economic Justice (ANEEJ), Centre For Transparency Advocacy (CTA), Koyenum Immalah Foundation (KIF), and African Centre For Leadership Strategy And Development (CENTRELSD)

The CSOs called on the government to adopt a merit-based model, should it consider an outright sale of the refineries, or in the privatization of the refineries, such as the Nigerian Liquefied Natural Gas (NLNG) model.

They said, “We suggest the adoption of a transparent merit based model for privatization either considering the NLNG for part privatization or an outright sale. We encourage the government to adopt favorable fiscal terms that bring about a renewed investors’ confidence and also help fast track the proposed 29+ refineries, which still have valid operating licenses.”


Concerning the PPPRA and PEF, the group emphasized a restructuring of the two downstream agencies in light of recent developments in the international crude oil market and realities in the Nigeria petroleum industry.

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They said, “We encourage the government to transition the PPPRA and PEF into new roles to ensure the sustainability of the proposed ‘non-subsidy policy’. Repeal of the PPPRA and PEF(M)B Act and transition them into efficient and competent institutions to support the reforms encapsulated in the proposed PIB are possible options to consider.”

The CSOs charged the Federal Government to openly declare its support and give legal backing to the pronouncement of the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, that government would no longer pay subsidy on petrol.

They said, “We enjoin the Presidency and the Minister of State of Petroleum Resources, Department of Petroleum Resources, and PPPRA to publicly support the declarations made by the GMD of NNPC on the removal of fuel subsidy through an official public statement on April 8, 2020 signed by the signed by the GMD-NNPC in various media appearances in recent times.

“We entreat the government to lay out defined processes and regulatory guidelines to support the announced removal of fuel subsidy. These should be pushed forward and announced by the Presidency and the Minister of Petroleum Resources to give the policy an official seal of affirmation to all Nigerians that we are not in another false expedition.

“We call for the Federal Government to commit to the sustainability of the no-subsidy regime by entreating it in law, either through a stand-alone legislation, or through appropriate clauses integrated into the Petroleum Industry Bill (PIB) will allow for the sustainability of the no-subsidy regime.

“We require the government to clarify the role of the Petroleum Support Fund in the new no-subsidy regime. Clarity is required about how that fund is being managed, whether the over-recovery sums were deposited there and how they are expected to be spent.”

No advantage for NNPC

The consortium further advised the government to prioritise consumer protection in its quest to liberalise the petroleum industry, while they cautioned against giving preferential treatment to the NNPC during the liberalization of the industry.

The consortium said, “We urge government to prepare for a post-price regulation era by prioritizing consumer protection to ensure that when the downstream sector of the petroleum industry is liberalized, the interests of the people would not suffer exploitation in the hands of profiteering marketers.

“We suggest anti-trust or competition propositions using the Federal Competition and Consumer Protection Act 2019.

“We encourage the government to consider providing varied options for Nigerians in terms of transportation systems in the country when inevitably, increases in price of crude oil increases result in the rise of the price of refined petroleum products.

We suggest that the NNPC as the National Oil Company should not be given any advantage, whether comparative or competitive, over other petroleum products marketers in terms of access to foreign exchange to handle their importation of products activities to create a level playing field for all players.

“If the NNPC must remain a player in the market, it must strive to operate under the same conditions and rules as other players in the sector regulated only by the prevailing market forces and competition.”