Nigeria oil marketers has said that there is an increasing need to ensure full deregulation, effective reforms to drive needed growth in the petroleum sector.
It stated that non-functional refineries cost Nigeria over $13bn in 2019.
Speaking at the 18th Aret Adams Lecture, the Chairman of Major Oil Marketers Association of Nigeria, Adetunji Oyebanji, stressed on the need for a transition to a market-driven environment.
This, he said can be achieved through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.
He said, “Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019.
“If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.
”Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole.”
He said that deregulation which often guarantee the supply of products at commercial and market prices, requires unrestricted and profitable investments in infrastructure, as well as deliver reasonable returns to investors.
According to him, deregulation also requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices.
He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.
“As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.
“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”