Following the recurring fuel scarcity in the country, the Lagos Chamber of Commerce and Industry (LCCI), on Sunday, released a statement reporting that Nigeria’s petroleum industry was flawed with over-regulation and lacked clarity in its operations. Thereby hampering the growth, investment and job creation in the sector. the LCCI also lashed out at the Department of Petroleum Resources (DPR) for fighting the ‘symptoms,’ rather than addressing the fundamentals.
Here are four things highlighted by the Director General of the LCCI, Mr. Muda Yusuf, in the statement:
Managing the downstream sector
“The current model of managing the downstream petroleum sector is not sustainable. It is at variance with the present administration’s vision to diversify the economy and create jobs. It perpetuates the phenomenal of rent economy and is detrimental to economic competition. It is important to stress that the citizens are the ultimate beneficiaries of a competitive market environment.”
Irregular price of Premium Motor Spirit (PMS) around Nigeria
He argued that the weak compliance with the regulated price of Premium Motor Spirit, PMS, in parts of the country was largely a symptom of much deeper problems and distortions in the petroleum products supply chain.
Lack of clarity on the deregulation and liberalisation of the sector
“We have concerns over lack of clarity on the deregulation and liberalisation of the sector, as the lacuna policy has put many investments in the sector at risk; while many other investment decisions have been put on hold. The concentration of petroleum products supply in the Nigerian National Petroleum Corporation, NNPC, remains a major cause for concern. The arrangement is an inherent entrenchment of the dominance of the NNPC to the detriment of private investors in the sector.”
The way forward
According to Muda, the Federal Government should liberalise the downstream petroleum sector for unrestricted private sector participation and investment. “There should also be a level playing field for all operators, including the NNPC. This would put an end to the perennial problem of fuel scarcity in the country and the hardships suffered by citizens to fuel scarcity,” he said. “It will also attract more investments, generate more jobs and reduce the pressure on the country’s foreign reserves. It should not be an operator and still have regulatory powers, but have a model that would allow for a level playing field for all operators including the NNPC should be adopted.”
He further added that the roles of the DPR and the Petroleum Products Pricing and Regulatory Agency, PPPRA, need to be better defined.
