The federal government has been called upon to set the rule guiding its deregulation policy in the downstream oil sector in order to attract fresh investment and funding.
Principal Consultant, DRNL Consult Limited, Ronke Onadeko, who spoke at a Webinar organised by the Facility for Oil Sector Transformation (FOSTER) in partnership with the Finance Correspondents Association of Nigeria (FICAN) said the deregulation of the subsector is expected to improve the efficiency of the market.
She, however, ask the government to help transform the system by introducing new policy that will ensure that the country becomes a new investment destination and strengthen private investment in building more refineries with a clear guidelines on how the sector should run.
“There is a need for the government to come out with detail modalities on private sector participation in bringing refined oil into the country,” she said.
Onadeko also called for the privatisation of the government three refineries to reduce the burden of operating inefficient plants and help the government to generate resources for its expenditures.
She said the government has expended about N462 billion in subsidising fuel consumption in 2019 and had projected to spend another N417 billion in the 2020 budget before the sharp drop in global oil prices and the impact of coronavirus provided the opportunity for the deregulations of the sector.
She said the options before the government is to adopt the Liquified Natural Gas (NLG) model by diluting its shares in the refineries and allow the private sector to run them in order to ensure efficiency.
She was optimistic on the possible outcome of the deregulation of the downstream sector of the petroleum industry, saying it will result in a multiplier effect of the entire system.
“Nigeria may not likely go back to the old ways of doing things,” saying the next step should be how to attract funding for the sector in view of the deregulation of the sector.
She said now that is no more subsidy, what next? Nigerians, should not entertain any fear over the possible hike in prices of petroleum products as a result of the deregulation of the downstream sector.
She said the policy will engender competition in the market and create more value for customers in the long run. “It is going to be more competitive among petroleum marketers, service delivery, efficiency and competitiveness will improve market and consumer will get a better deal.”