Petroleum marketing companies in the country have said the lack of deregulation in the downstream sector of the nation’s oil and gas sector is taking a toll on their business and hampering investment.
They said that full deregulation of the sector would help to stabilise the fuel market and boost local refining.
The Chairman, Conoil Plc, Dr Mike Adenuga Jr, said the much-anticipated review of the current policy framework for the downstream petroleum segment, which could have eased marketers’ credit portfolio burden, especially as it related to the issue of pricing of Petroleum Motor Spirit, did not materialise last year.
“Obviously, this was a disincentive to private investment in the downstream sector, especially in fuel importation,” he said in the company’s 2017 annual report and accounts.
He added, “While we note the Federal Government’s untiring efforts to resolve the bottlenecks hanging on the otherwise, vibrant downstream sector, it is pertinent to reiterate that deregulation remains very key to solving the problems bedevilling the sector, and ensuring rapid growth.”
The Chairman, 11 Plc (formerly Mobil Oil Nigeria Plc), Ramesh Kansagra, said at the company’s 40th Annual General Meeting in Lagos, “We are all expecting the government to deregulate. But instead of deregulating, not only have they continued to regulate, they set the price at which we can sell some of our key products and what we can buy them.
“Government has not largely encouraged private enterprise to thrive in this industry, private enterprises have very little money to make in the sale of oil products.”
The Managing Director, 11 Plc, Adetunji Oyebanji, said the company would prefer a deregulated environment because that would augur well for competition, innovation, efficiencies and investments in the industry.
He said, “When this is not the case, investments are stifled, and that is why we will prefer a deregulated environment.
“Ultimately, government will be the one to decide the state of the industry and this will be with regard to political considerations but as an economic entity, we at 11Plc will prefer a deregulated environment where business can thrive.”
The Chairman, Total Nigeria Plc, Stanislas Mittelman, said it was difficult for marketers to import Premium Motor Spirit last year as the landing cost was higher than pump price.
He said, “The capacity of oil traders to import products was greatly diminished. In most of 2017, the Nigerian National Petroleum Corporation assumed the role of sole importer of the PMS. This led to supply challenges and of course PMS shortages.
“Notwithstanding pump price remained N145 per litre throughout 2017. Since June 2016, it has not been possible to directly buy dollars from the upstream sector and this has made doing business difficult for us as we have challenges procuring dollars for the importation of the AGO and ATK.
The immediate past Executive Secretary, Major Oil Marketers Association of Nigeria, Mr Obafemi Olawore, said at his send-off ceremony recently in Lagos that the deregulation of the oil industry with strong regulators would allow for participation of real investors in the sector.
He said, “As from the time of General Ibrahim Babangida, we have been clamouring for deregulation, and it is sad that Ghana that came here to study how the Petroleum Product Pricing Regulatory Agency works has gone back to set up their own agency for product pricing and has deregulated; so what’s our excuse?
“MOMAN’s goal will be achieved when we have a free market as no one will be owed then and all will work optimally with foreign exchange issue not arising.”