Downstream Stakeholders Seek Transparency in Setting Petrol Prices

Operators in the downstream sector of the oil and gas industry have called for establishment of transparent system for setting and publishing of prices of petroleum products..

In a communiqué released at the weekend, following the recent 2015 Oil Trading and Logistics (OTL) conference held in Lagos, the stakeholders also urged the Central Bank of Nigeria (CBN) to make it easier in the interim, for importers of petroleum products to have access to Foreign Exchange.

While describing petroleum products subsidy as a disincentive to supply chain infrastructure investment, market innovation and consumer value, the communiqué stated that in view of current realities of low crude oil price and devalued naira, the country can no longer afford the burden of subsidies. It strongly advised the Federal Government to remove all petroleum products subsidies as a matter of immediate urgency and fully deregulate the downstream petroleum industry

“Deregulation of the industry will attract appropriate investments, promote optimal efficiency, healthy competition, ensure efficient supply of petroleum products to the country and improve the infrastructures in the downstream sector,” the communiqué added.

The communiqué, which was signed by a former Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA) and Chairman of Advisory Board of OTL Africa Downstream Week, Mr. Reginald Stanley and the Chairman of OTL Africa Downstream, Mr. Emeka Akabogu, insisted that local refining of petroleum products should be prioritised by the country and a deliberate shift initiated from importing products to building refineries.

“There is a need for a National Refining Policy which defines the framework for encouraging investment in petroleum refining in Nigeria to facilitate increased national revenue and infrastructure development. In view of the significant number of jobs accounted for by the downstream sector of oil and gas, the private sector should be encouraged to drive the growth of the industry through institution of appropriate policies. The legal framework on which the downstream petroleum sector is anchored, including the Petroleum Industry Bill needs to be clarified and enacted with a view to ensuring legal certainty and promoting efficiency and competitiveness,” said the communique.

The communiqué added that downstream expansion of the country’s natural gas utilisation, with regulated gas price for domestic sales, governance limitation and institutional deficiency constituted both a challenge and opportunity for gas supply.

According to the operators, to stimulate investment in Liquefied Petroleum Gas (LPG), multiple taxes and high tariffs should be reduced while development of infrastructure and distribution channels such as, local cylinder manufacturing, storage facilities, filling plants, bob-tail trucks, gas pipeline for residential consumption, automobiles and petrochemical plants should be encouraged to enable the growth of LPG.

They also called for the removal of subsidy on kerosene to encourage the growth of LPG consumption in Nigeria.

“Oil companies are encouraged to undertake good corporate social responsibility to preserve the communities where they operate and to create a form of investment through job creation; thereby reducing threats of piracy and sea robbery. To encourage the development of the lubricants and base oils market in Nigeria; regulators, operators and consumers need to work together to stop the importation of substandard lubricants as well as the activities of illegal blenders while research and development should be ongoing for production of base oil in Nigeria,” the communiqué added.