Financial Energy Review
….,…..by Ben Ndubuwa in Abuja…….
Private sector operators have called on the federal government to cut back it’s involvement in the downstream sector to enable them to invest more in the sector.
The government involvement they said has over time kept away serious commitment by the private operators in putting down their money to develop and Expand the infrastructural facilities needed to grow the sector.
Government stay in the sector according to them has made the issue of fuel Subsidy yet unresolved. Therefor it has become difficult for them to invest in the sector only for the government to regulate the sector and not allow market forces to come to play.
According to them, they are ready to Invest in pipelines and Jetties to ease the transportation of petroleum products. They noted that the huge amount of fund need to expand the infrastructure in the downstream is huge and that the federal government do not have such resources right now so it has become imperative to allow the private sector operators to play deep into the downstream sectior.
Furthermore they said that stakeholders in the midstream and downstream oil and gas sector need to adopt the InfraCo model to bridge the infrastructure gap in the industry.
The stakeholders said the investments needed to unlock the potential of the sector were massive, adding that the Federal Government does not have the required funds to achieve the objective.
They spoke during a panel session on “Opportunities for Development in Midstream and Downstream Oil and Gas Sector” at the 2022 National Oil and Gas Conference on Wednesday in Abuja.
Mr Olumide Adeosun, the chairman, Major Oil Marketers Association of Nigeria (MOMAN) and Mr Adetunji Oyebanji, the managing director, 11 Plc.
Others were Mr Gbite Falade, the managing director, Niger Delta E & P and Ms Iroghama Ogbeifun, the managing director, Starz Investments Company Ltd.
Adeosun said the oil and gas industry need to borrow a leaf from the Nigerian telecommunications sector which had witnessed tremendous growth since being private sector driven.
He said it was clear that the oil and gas pipelines, jetties that need to be constructed need a structure like InfraCo to actualise the vision instead of relying solely on the government.
According to him, there are potential investors willing to invest in Nigeria who are only waiting for clarity on how they can recoup on their investments.
Also, Falade said the existing infrastructure in the sector were either dilapidated or subjected to vandalism leading to disruption in the distribution of petroleum products.
“The bulk of the infrastructure we have in place today are funded, developed and financed by government. We have insufficient balance sheet as a nation to bridge this gap,” he said.
Falade said the InfraCo model would allow the private investors to come into the sector and invest in critical oil and gas infrastructure which would grow the industry.
He however noted that the government needs to work out key issues around pricing and regulations which were discouraging the investors.
Similarly, Oyebanji decried the delay in the full deregulation of the petroleum downstream sector in spite of the passage of the Petroleum Industry Act (PIA) 2021.
Oyebanji said the government need to remove subsidy on Premium Motor Spirit (PMS) and deploy the huge amount being spent on subsidy on critical areas such as infrastructure, health, education and mass transportation.
On her part, Ogbeifun said the government needs to create the enabling environment to attract more investments to the sector.
She noted that the massive scale of oil theft and the divestment of assets by the International Oil Companies should be addressed urgently to boost investors’ confidence.
