Oil marketers under the auspices of Major Oil Marketers Association of Nigeria (MOMAN) will resume fuel importation very soon, according to its chairman, Adetunji Oyebanji.
Oyebanji who was a guest speaker at the National Association of Energy Correspondents (NAEC) first webinar series, said that the regulation of the nation’s downstream for so long had dealt with the economy, stressing that full deregulation would lead to the beneficiation of all petroleum products and the increase in ancillary industries, raising the nation’s GDP and increasing economic growth.
He said that oil marketers would soon commence importation of PMS, thereby, freeing the Federal Government from the unsustainable cost and increasing debt burden associated with a regulated pricing system.
He noted that before the full deregulation of the sector early this year, over 30 tank farms were closed down due to lack of product resulting from regulated market and for the fact that NNPC was the only organisation that had access to foreign exchange.
“So part of the measures to improve the fortune of the industry is the deregulation of the market so that players are able to charge economic prices to cover cost. Under regulated system we were operating before now, you can’t recover your cost, maintain your facilities and service the bank loans. So our expectation is that there will be a free market whereby market fundamentals are allowed to determine the price at the pumps rather than sentiments and nationalistic tendencies,” he stated.
He said that what it required now was for the Federal Government to get the regulations right, cultivate the drive to adhere to industry standards and international best practices.
“Self-regulation and self-discipline need to be in place to achieve the objectives of deregulation. Federal Government must take full advantage of the savings to develop other key sectors of the economy.”
Oyebanji said that government must now eliminate internal price equalization within the country.
“Higher pump prices in the countries around Nigeria encourage smuggling of petrol, putting pressure on our scarce foreign exchange earnings and resulting in the Nigerian taxpayer essentially subsidizing petroleum consumption in those neighbouring countries.”
He also called for a single transparent foreign exchange rate.
“A situation where a few market operators gain access to forex at a cheaper rate distorts the market and creates an undue commercial advantage to those that have this access. Government must also ensure a level playing field for all downstream players. With a massive human resource base (excess population and highest number of universities) and significant mineral resources, Nigeria is better served by policies which consistently push for globalization or internationalization to fully exploit the African Free Trade Agreement and encourage other African countries to welcome Nigerians and Nigerian businesses and goods and services,” he said.
Full deregulation will enhance the growth of local refining capacity, leading Nigeria to becoming a net exporter of refined petroleum to West and Central Africa, meeting local and regional demands and earning Nigeria increased foreign exchange.