fuel, Nigeria, NBS, PMS
Petrol

By Udeme Akpan, Obas Esiedesa, Prince Okafor, Ediri Ejoh

Experts, Labour and Non-Governmental Organisations, NGOs, Thursday, disagreed on the governors’ proposed full deregulation of the price of petrol in Nigeria.

The governors had in their virtual meeting, Wednesday, considered the report of a committee headed by Kaduna State Governor, Mallam Nasir el-Rufai, and accepted its recommendation backing full deregulation of petrol price, which has been rising due mainly to the relatively high price of crude oil in the global market.

The forum which puts the pump price of the product at N385 per litre also recommended that the federal government should buy 113 buses to cushion the effects of the price increase.

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But in different interviews with Vanguard, yesterday, the experts, labour, and NGOs expressed divergent views on the subject.

Deregulation is essential for growth

For instance, Chairman, Major Oil Marketers Association of Nigeria, MOMAN, Tunji Oyebanji, said: “We have been saying it and it has always been an issue. Like the many issues in the country, if we don’t have the will to do something at the appropriate time, the situation will force itself on us eventually. That is what has happened to us at the moment.

“I will not say it’s good or not good. we are all citizens of Nigeria and this is where we find ourselves at the moment.

“Governor’s realisation that the current situation is not sustainable is a welcome development.  However, that desire has to be translated into action. We await further reactions from the government on subject, remember government says they are still discussing with labour who are opposed to deregulation at the moment.

“So for now we see the Governor’s statement as only an acknowledgement and a wish until the policy steps are legally put in place.

“On labour, I will only say they have been taking  this position for the last 25years and it’s about time they take a different track. The country can no longer afford the subsidy. If it is not removed many of the states that depend on Federal Allocation may soon collapse with many workers losing their jobs.

“So they need to have a rethink. They were also against the privatisation of the refineries,  now they are complaining that the refineries are not working. So sometimes what is popular is not always economically viable and sustainable.

“As to benefits of deregulation,  we have repeated this many, many times and there is no need to repeat ourselves. In anycase, it is no longer a matter of choice but an imperative for survival. If you doubt let’s wait and see what happens if we continue in the way we are going.”

On plight to Nigerians, he said: “We would have to adjust our lifestyle. for individual, when there are changes we should adjust. For Nigerians, we like to enjoy without rational thinking. When people are saying we would suffer, yes it will happen if we don’t adjust our spending habits.”

on the benefits, Mr. Oyebanji explained that full deregulation of the downstream sector would set Nigeria ahead of other African economy in the area of local petroleum products refining as against exporting crude oil for refining.

He listed other benefits to be expected from the process as; “alignment with the Nigeria National Petroleum Policy, construction and maintenance of refineries, product availability in the country and for export, increased foreign exchange earnings, including transforming the country into a centre for innovation and technology.

He added: “Others are the growth of local refining capacity, leading Nigeria to become a net exporter of refined petroleum to West and Central Africa, and meeting local, regional demands and earning Nigeria increased foreign exchange, a win-win for the Nigerian consumer, industry stakeholders and the country, importation of PMS by marketers can resume, freeing the Federal Government from the unsustainable cost and increasing debt burden associated with a regulated pricing system.”

No deregulation without PIB becoming an act – Iledare

For Professor Wumi Iledare, Ghana National Petroleum Corporation, GNPC Professor & Chair in Petroleum Economics & Management, Institute for Oil and Gas Studies, Cape Coast, Ghana, “There can be no deregulation without the Petroleum Industry Bill, PIB becoming an Act. Another populist president can always come and revert back using the PA1969 as amended.

“Meanwhile,  this is being pragmatic as we await the implementation of PIB. A partial and gradual decontrol will ameliorate the shock on Nigeria economy.

“Going from 162 to 385 per litre may create disequilibrium beyond the sharp rise in the exchange rate. So let NNPC continue at a lower price only in NNPC filling stations for public transporters only with a sunset in place. Of course, it pre supposes integrity in the avoidance of round-triping!

“Just thinking outside the box away from my usual what ought to be! 385 is still a competitive price, judging from boarder countries. Decentralizing the product market is also important.

“Honestly,  I do not seem to know what to say.  I read the communique but what needs to be evaluated is the technical report backing the communique.  Something like deregulation cannot be drastic but gradual and partial over a period of time!

“I am also shocked that the motive is to engage federation account.  That’s inviting trouble because it should be about more money to share.”

Deregulation in line with oil market

For instance, a Port Harcourt-based Energy Analyst, Dr. Bala Zaka said: “With the rise in oil price, it would now cost more to procure and refine crude oil, meaning that the cost would be transferred to Nigeria as the nation currently imports all its petrol from the global market. This seems to justify the need for full deregulation.”

However, the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has questioned how the Governors Forum arrived at the N385 per litre as pump price of petrol.

The Secretary General of PENGASSAN, Comrade Lumumba Okugbawa told Vanguard in a telephone interview that the figure made no sense and would never fly.

Comrade Okugbawa stated that while the union supports Federal Government plan to deregulate the price of petrol, such policy must not be import driven.

He said: “The big question is how the governors arrived at that price? Do they know the landing cost, the traders’ margins and all other components of the pricing template.

“As for PENGASSAN, we have always said that though we support deregulation, it must be one that is not import driven. It must be locally based.

“This is because anything that is import driven, we don’t have control over it. Especially in terms of exchange rate and fluctuations in the international price of crude oil.

“So the best deregulation is to base the policy on local refining and processing”.

He noted that refining in-country would create jobs and increase the value derived from Nigeria’s crude oil.

He described the governors position as ill-advised, saying it wont fly.

He pointed out that such high increase in pump price would lead to hyper-inflation in the country.

He added that it is only the Petroleum Products Pricing Regulatory Agency, PPPRA, that has the mandate to determine the price of petrol in the country, and should be allowed to do their job.

Also speaking to Vanguard on the issue, the National Coordinator of Publish What You Pay Nigeria, PWYP, Mr. Peter Egbule also questioned how the governors arrived at the figure.

Egbule said: “If subsidy is going out, it is the market that should determine the price not the governors. Their calculation is questionable.

“You cannot at one hand say you are removing subsidy and on the other hand fixing the price. The government has to be clear on the policy it wants to pursue”.

He added: “I am not sure of the template they used in arriving at that price. Is it a price that will remain or is a price that is based on prevailing indices”.

He described the governors position as hasty, saying the government has to be open on what it is doing to implement the policy.

“If subsidy is going, the government has to tell us what it is replacing it with”, Egbule stated.

No deregulation without PIB becoming an act – Iledare

Nevertheless, Professor Wumi Iledare, Ghana National Petroleum Corporation, GNPC Professor & Chair in Petroleum Economics & Management, Institute for Oil and Gas Studies, Cape Coast, Ghana, said: “There can be no deregulation without the PIB becoming an Act. Another populist president can always come and revert back using the PA1969 as amended.

Specifically, he said: “Meanwhile,  this is being pragmatic as we await the implementation of PIB. A partial and gradual decontrol will ameliorate the shock on Nigeria economy.

“Going from 162 to 385 per litre may create disequilibrium beyond the sharp rise in the exchange rate. So let NNPC continue at a lower price only in NNPC filling stations for public transporters only with a sunset in place. Of course, it pre supposes integrity in the avoidance of round-tripping!

“Just thinking outside the box away from my usual what ought to be! 385 is still a competitive price, judging from boarder countries. Decentralizing the product market is also important.

“Honestly,  I do not seem to know what to say.  I read the communique but what needs to be evaluated is the technical report backing the communique.  Something like deregulation cannot be drastic but gradual and partial over a period of time. I am also shocked that the motive is to engage federation account.  That’s inviting trouble because it should be about more money to share.”

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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.