Stakeholders in the nation’s downstream sector were unanimous in their position as regards the need for the government to commence a dialogue with the Nigerian people on the necessity for deregulation to reduce inefficient subsidy, address local energy crisis and mitigate further shocks that the global economy may bring next year.
According to the stakeholders, particularly Major Oil Marketers Association of Nigeria (MOMAN), having subsidised Premium Motor Spirit (PMS), for so long, Nigerian institutions now have a diminished capacity to deal with the current local energy crisis, adding that disruption in any part of the supply chain causes ripple effects and results in queues at stations.
Speaking during a webinar yesterday, MOMAN Chairman, Olumide Adeosun expressed worry that subsidy is no longer sustainable, hence the need to dialogue with Nigerian people to identify, negotiate and agree on identified concerns and begin implementation to save the downstream industry which has been in degradation freefall due to a lack of investment to maintain, renew and grow assets and facilities such as refineries, pipelines, depots, trucks, and modern filling stations.
As a country, he said: “we must begin the process of price deregulation to reduce this inefficient subsidy. If the country wishes to implement a subsidy, it must be in areas targeted to help those it should help such as in agriculture and transportation to reduce food price inflation and generate more jobs for Nigerians. In tandem, the country must find a way to liberalise supply. It must bring transparency and competition into supply to ensure steadier, more efficient supply at optimum prices. Imported products must compete with locally refined products to find a meeting point between the need for local refining and competitively low but cost-recovered prices for Nigerians for sustainability. These lack of investments contribute in no small measure to fuel distribution inefficiencies and high costs. Neither the new refineries nor the refurbished refineries will survive with the refining margins at current pump prices.”
Vice President, Crude and African Markets, Argus Media, James Gooder, explained that lower oil prices have made deregulation easier to approach, however, freight and other issues remain significant factors to consider as prices are not static.
He reiterated MOMAN’s position on the need to prepare the consuming public for the effect of deregulation, adding that the volatility in the oil market cannot be predicted, even though prices are low now.