Stock photo of an offshore oil rig“Without natural capital accountability GDP growth is meaningless’
By Udeme Akpan
THERE are strong indications that the downstream sector of Nigeria’s petroleum industry would not be fully deregulated in 2020 as the enabling factors, especially structures, institutions and the Petroleum Industry Bill, PIB, are not yet in place. Under a regulated market regime, the prices of petroleum products are supposed to be determined by the forces of demand and supply without much intervention.
But investigation by Energy Vanguard, showed that the Petroleum Equalisation Fund, PEF, which has the responsibility to settle the cost of bridging petroleum products from one part of Nigeria to another, under a deregulated regime, was still performing its role, despite claims that the sector has been deregulated.
Officials of the Fund did not take their calls nor respond, yesterday, but information obtained from its website, stated: “The bridging scheme was originally introduced as a temporary measure during turn-around maintenance, TAM, wherein government sought to encourage and support marketers in transporting petroleum products nationwide.
“Although bridging was meant to be a temporary solution until the refineries were producing back at full capacity, the state of the refineries has worsened over the years.
“In addition, pipeline vandalism by militants and economic saboteurs has been on the increase, to the point where trucks have become the major source of distributing petroleum products in recent times.
“The initial projection was to have a maximum of 10 percent of total petroleum products bridged while the remaining portion will be pumped through the pipelines.
“However, trend analysis indicates that bridging of products have consistently increased over the years to about 40 per cent.
“There is also a noticeable trend whereby products are bridged from Lagos to the South East and South-South areas of the country to address products unavailability from the refineries in Port Harcourt and Warri.”
The investigation further showed that the government would not disband PEF and the Petroleum Products Pricing Regulatory Agency, PPPRA, which also, performed pricing function under a regulated regime, until the PIB is passed into law.
However, it was established that the legislators, expected to return from their holiday next week would start all over on the PIB, meaning that the passage of the bill would take many months, than previously anticipated.
Nevertheless, in his message to Vanguard, the Ghana National Petroleum Corporation, GNPC, Professorial Chair, Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Prof. Omowumi Iledare, stated: “Let me say without mincing words that if the President had signed the Petroleum Industry Fiscal Bill and the Host Community Bill, PIGB in 2018, the story would have been a lot different. In fact, the ongoing fire-brigade scrabbling for a way out of deregulation would have been averted.”
He added: “Interestingly, 15 months later, the executive Petroleum Industry Bill, PIB to validate deregulation is yet to reach the National Assembly. One of the options is to have a Central Bank of Nigeria, CBN type to regulate the Oil and Gas industry for posterity and the unsigned PIGB is very close to what Nigeria needs to avert Venezuela’s experience.”