Financial Energy Review
Photo: from Left Clement Isong, Tunji Oyebanji and Emeka Akabugo
….…..by Ben Ndubuwa….
Operators of the downstream petroleum sector particularly oil marketers have again blamed the continues scarcity of foreign exchange to import petroleum products as the major challenge of their operations.
This according to them is further acerbated by Nigeria National Petroleum Company limited (NNPC ltd) being the mojor importer of petroleum products into the country a monopoly currently being enjoyed by the company.
This is consequent to the downstream sector becoming uncompetitive stalling the spirit of full deregulation as well as what the PIA was set to achieve.
This assertion was made at a recent post-conference press briefing of the 2023 Expo of the Oil Trading Logistics Africa Downstream Energy Week, in Lagos, recently.
Tunji Oyebanji the former Chairman of Major Oil Marketers Association of Nigeria (MOMAN), and who is the Managing Director of 11 Plc and now the Chairman of the Oil Trading and Logistics said Prices of petrol are still not reflective of true market dynamics as a result of these two major distortions.
“There should be healthy competition throughout the value chain, and all these have been impossible due to NNPCL monopoly,” he said.
Oyebanji maintained that the reason other marketers are yet to import products have been their inability to access forex exchange at a competitive rate as the NNPC ltd.
“Not all oil marketers have access to forex at competitive price. But as of today, NNPC has access to forex because it sells crude oil but we don’t. So, you see a situation where NNPCL still dictates the pace in the market”
“Because if I for instance, ask for 100 trucks of petrol, and I get 5, then, my market share has been automatically determined by the NNPC. And this is not competition and is unhealthy for the industry” Oyebanji said
On his part, the Executive Vice Chairman of OTL, Dr Emeka Akabogu, advocated for the collaboration of all stakeholders.
According to him, the collaborative efforts of industry stakeholders would raise the fortune of the downstream sector.
He added that although the PIA had advocated for the deregulation of the downstream sector and removal of subsidies, the timing was wrong.
“Don’t forget that it took us almost 20 years to achieve passage of the PIA. And despite that the PIA had been passed and subsidies had been removed, however, the industry is still not in the right place because the timing was wrong.
“It was wrong to have removed subsidies on May 29 because at that time, prices of crude at the international market were high and the Federal Government floated the naira. Before May 29, the exchange rate was around 400-500/$1. However, after subsidies were removed, if we decide to implement the PIA, petrol should be selling for N1,000 per litre,’ he said.
Also, the Executive Secretary of the Major Oil Marketers Association of Nigeria, Clement Isong, advised FG to create an avenue where marketers would have access to dollars at the official rate.
According to Isong, this would enable consumers to fully benefit from the removal of fuel subsidies.
