INDUSTRY NEWS
Deregulation: Nigeria to Become Refining Hub - MOMAN
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igeria stands to become the refining haven for Africa if it allows full deregulation of the downstream sector.
The above assertion was made by Chairman, Major Oil Marketers Association of Nigeria, MOMAN, Tunji Oyebanji at the maiden webinar session of the Association of Nigerian Energy Correspondents, NAEC. In his presentation as the guest speaker of the event, Mr. Oyebanji explained that full deregulation of the downstream sector would set Nigeria ahead of other African economy in the area of local petroleum products refining as against exporting crude oil for refining. He listed other benefits to be expected from the process as; alignment with the Nigeria National Petroleum Policy, construction and maintenance of refineries, product availability in the country and for export, increased foreign exchange earnings, including transforming the country into a centre for innovation and technology. Others are the growth of local refining capacity, leading Nigeria to become a net exporter of refined petroleum to West and Central Africa, and meeting local, regional
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Majorwaves Energy Report
OCTOBER 2020, Vol 3 No 10
demands and earning Nigeria increased foreign exchange, a winwin for the Nigerian consumer, industry stakeholders and the country, importation of PMS by marketers can resume, freeing the Federal Government from the unsustainable cost and increasing debt burden associated with a regulated pricing system. This he said, will also lead to the beneficiation of all petroleum products and the increase in ancillary industries, raising the nation’s GDP and increased economic growth.
Oyebanji called for legislation to support deregulation, explaining: “Wherever you have a free-market operation, there needs to be a watchdog: a consumer protection agency that will oversee and make sure that operators are not colluding to exploit the public. “That is an area that needs very close regulation. In countries like the US and parts of Europe, if you collude to fix prices in a particular area, whoever is involved is punished with a very stiff penalty and in some cases, possibly, jail terms.”
Admitting that price deregulation does not mean the outright end of regulation in the industry, he said there is still the need to regulate issues like product quality and how products are sold to give consumers value for their money.
He, however, stressed the need to initiate right internal economic policies and legislations as Nigeria transitions from a regulated price environment to a deregulated environment. He also listed the opportunity cost of fuel subsidy, on which Nigeria has spent about N10 trillion in the last 10 years, to the economy, saying that subsidy deprived Nigeria huge social investment.
He called for regulation of issues aroun d H ealth , Safet y an d Environment (HSE) across the value chain of the downstream sector, adding another area that needs to be regulated is competition.
Themed: Challenges and Impact of a Deregulated Downstream Sector on Nigeria’s Economy, Oyebanji who was the guest speaker harped on the econometrics of a fully deregulated downstream sector.
However, he said, that for Nigeria to take advantage of this opportunity, the right internal economic policies must be in place.
