By Michael Eboh
Immediate Past President of the Society of Petroleum Engineers, SPE, Mr. Joe Nwakwue, has called on the Federal Government to immediately find new roles for the Petroleum Equalisation Fund, PEF, and the Petroleum Products Pricing Regulatory Agency, PPPRA, stating that the downstream petroleum sector regulators would become redundant and irrelevant under the current policy of deregulation.
Speaking in Abuja, at a capacity building workshop on the Petroleum Industry Bill, PIB, Nwakwue, however, cautioned against outright scrapping of the agencies, to avoid worsening the country’s unemployment situation, with the sack of their staff.
He advocated replacing PEF with the Petroleum Infrastructure Fund, PIF, while he stated that the PPPRA, lacking in commercial regulation, would be difficult to function in a deregulated sector.
He said: “The PEF helps equalise petrol price across the country because we had sought to provide a uniform price of petrol across the country. It is an agency that collects and disburses equalization funds. Under a fully deregulated market, the promise of a uniform price across the country is eliminated. Even under the equalization price, petrol was not sold at a uniform price.
“The notion that we were equalizing price was never feasible and not right. I lived in Eket for five years, there was no day that the price was uniform in Eket with other parts of Nigeria. The existing model of equalization has failed; then one would ask, why would one want to keep an institution that had failed in its duties.
“If we deregulate fully, there is no promise of uniform price, which also means there is no need for price equalization, ensuring that the body should be shut down and used for another purpose.
“I suggest PEF be restructured to an infrastructure fund that would identify, commercially viable and feasible private sector project, invest and take equity stake in them, like the Sovereign Wealth Fund, SWF.
“FG would not have had any need to go borrow $2.8 billion to build AKK; it would have partnered with some investment consortia and the infrastructure fund to provide the funding for that project. The essence of transitioning it to infrastructure fund is so as not to dismiss its staff.
“What has PPPRA been doing since 2015 that Premium Motor Spirit price had been fixed at N145 per litre. However, shutting them down would create an unemployment and labour crisis; so, they need to be re-purposed.”
He further stated that the Federal Government should completely do away with the temptation to resume fixing of fuel price, stating that government should instead be concerned with regulation of the sector.
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He said: “We should go away from fixing prices; let the market determine the prices. An attempt should not be made to regulate the prices, market forces should be allowed to fix the prices. The fully deregulated market option is our best bet.
“The notion that should happen is the regulation of quality and quantity, not price. People should be served the right quantity of products paid for and the quality sought.”
Also speaking, Professor Omowumi Iledare, Ghana National Petroleum Corporation, GNPC, Professorial Chair in Oil and Gas Economics and Management at the Institute for Oil and Gas Studies, University of Cape Coast, also added that the fact that the government was deregulating the downstream petroleum sector does not mean that the government would not enforce efficiency and effectiveness.
He also noted that the market does not support price gouger, adding that any marketer doing that would be sanctioned, such as having its license revoked.