Franklin Alli & Naomi Uzor
The Lagos Chamber  of Commerce and Industry(LCCI), has faulted  the continued dominance of the down stream oil sector by the NNPC.

“The truth is that as long as the NNPC continues to play a dominant role in the procurement, refining, distribution and marketing of petroleum products, the Nigerian economy would remain burdened by the sorry state of affairs in the sector,” said LCCI President, Otunba Femi Deru

Reacting, Tuesday,  to the lingering problem of fuel scarcity, he noted that the current problem is the outcome of the tragic deficiencies in the management of the downstream oil sector of the economy by the Corporation.

“This situation manifests in profound inefficiency, characterised by grave integrity and transparency issues,” he said.
According to him, aside NNPC’s factor, there are other fundamental factors in the current fuel scarcity, and they include the following:

*The private sector importers could not secure the quarterly import permit for the fourth quarter until late November 2009. Yet, these marketers have to undertake all manner of processes, including banking transactions, credit negotiations, liaising with suppliers, all of which normally would take about sixty days. Consequently, the economy was denied the private sector component of the supply, which is over 40 per cent.

*The comatose state of the domestic refineries, which ordinarily would have made fuel importation less critical.
*Heavy indebtedness of the PPPRA to the marketers under the Petroleum Support Fund (PSF). This created challenges of access to bank credit for marketers.
*There is also the sad reality that the entire country had to rely on petroleum products from the Lagos Ports, which have to be distributed by road. The horrendous cost and logistics implications are better imagined, particularly with the poor state of our roads.

The Chamber , he said believes that in order to deal with this recurring problem of fuel scarcity, the fundamental issues in the supply chain need to be urgently addressed.

*A critical factor in the current crisis is the fact that public institutions are still the main drivers of the downstream oil sector. This is the paramount obstacle to investment growths, operational efficiency, commercial viability and the transactions integrity in the downstream sector.

“Therefore, the exit of public enterprises in the entire production and supply chain is vital, urgent, imperative and inevitable as a major component of the solution. This is what was intended with the proposed reform of the downstream sector with deregulation and liberalization as the major planks of the reform.
*An exit strategy for all public enterprises should be immediately worked out to stop them from direct production, procurement, distribution and marketing of petroleum products.

*The Petroleum Equalization Fund should be scrapped.*There should be creative incentives for the private sector to set up refineries both for domestic consumption and for export.

*Private Sector Agencies should be engaged to manage and maintain the pipelines.*The refineries should be immediately privatised, with labour issues adequately addressed.

*The NNPC should disengage completely from retailing petroleum products. The ongoing acquisition of retail outlets by the NNPC is totally inconsistent with the proposed reforms in the sector. Retail outlets, is the least of the problems in the sector. The commitment of public funds to the acquisition of retail outlets is absolutely unacceptable.*There should be a strong regulatory institution with clear guidelines to guide investors in the sector and protect the interest of the consumers.