Group pushes for sustained deregulation of downstream petroleum sector

A consortium of Civil Society Organizations (CSOs) has asked the federal government to entrench the deregulation drive of the downstream sector of the petroleum industry by enacting an appropriate legislation or embedding it as part of the Petroleum Industry Bill (PIB) expected to be submitted to the National Assembly soon.

The consortium also demanded that the government commences moves to repeal the laws establishing the Petroleum Equalization Fund and the Petroleum Products Pricing and Regulatory Agency (PPPRA) to signal its commitment to the full deregulation of the sub-sector.

The consortium, which took the positions at the end of a one-day webinar held on Thursday, 10th September, 2020, also asked the relevant authorities, especially the Central Bank of Nigeria (CBN) to ensure a level-playing field for all importers of Premium Motor Spirit and not place the Nigeria National Petroleum Corporation (NNPC) at an advantage over others.

The CSOs also called on the NNPC to take urgent practical steps to reverse the fortunes of the loss making refineries as revealed in its published 2018 audited reports of its subsidiaries, noting that the refineries remain cost centers that the Nigerian government can ill afford, given the impact of Covid-19 pandemic and other fiscal pressures on its economy.

“The Nigerian government should create an enabling environment for the private sector to contribute to the efficient running of the refineries so that Nigeria can reach its domestic refining goals”, they urged.

The group further called on the President and the Minister of Petroleum Resources to demonstrate their honest commitment to the deregulation efforts by expunging the laws that entrench the potential of returning to a subsidy regime and pre-deregulation.

They further advised the government to repeal the PPPRA Act, the PEF(M)B Act and the Price Control Act specifically, section 6(1) of the Petroleum Act, Schedule 1 of the Price Control Act, all acts that ensure a potential of returning to a price fixing regime and demonstrate to the Nigerian people that the declaration of full deregulation is merely a statement of intent and not yet honored.

“While we await appropriate legislation, we require the government to clarify the role of the Petroleum Support Fund in the new deregulation regime. Clarity is required about how that fund is being managed, whether the over-recovery sums was deposited there and how they are expected to be spent”, they stated again.

It also urged the Ministry of Petroleum Resources to back up its deregulation policy statement by empowering appropriate agencies, including the Federal Competition and Consumer Council to take over the consumer protection interests of Nigerians that may be adversely taken advantage of in a deregulated downstream sector and to protect the interests of the people would not suffer exploitation in the hands of profiteering marketers.”

On the issue of ameliorating the immediate effects of the removal of petrol subsidy, the group entreated the government to channel the revenues used for subsidy to improve the lives of its originally intended beneficiaries; impoverished Nigerians and not the rich, by investing in enablers of economic growth and development such as development of rural roads, education, health services and agriculture.”

According to the group, “if the NNPC must remain a player in the market, it must strive to operate under the same conditions and rules as other players in the sector regulated only by the prevailing market forces and competition.”

While commending the government for providing initial regulation to support the deregulation efforts in June 2020, the CSOs noted that the government’s engagement with the public on the effects of the deregulation left a lot to be desired. We encourage the government to ramp up its engagements with the public to improve their awareness and understanding of the deregulation process and all it portends for the Nigerian people.

Recall that the consortium had earlier issued a 10-point recommendation in May 2020 in a bid to support the government’s attempt to achieve sustainable deregulation of the downstream sector. The consortium, formed in April 2020 and spearheaded by the Nigeria Natural Resource Charter (NNRC) is comprised of the following civil society organizations, Civil Society Legislative Advocacy Centre (CISLAC), BudgIT, Connected Development (CODE), Media Initiative for Transparency in Extractive Industries and other groups.