Operators in the petroleum downstream have told the Federal Government to take advantage of the unique opportunity provided by the crash in global crude oil prices to fully deregulate the sector.
They also called for a legislative framework to address compliance, enforcement and pricing in the importation of Premium Motor Spirit (PMS), to ensure that market forces solely determined the cost of the product for Nigerians.
The operators spoke at the Nigerian Petroleum Downstream Summit webinar, hosted by Oil Trading and Logistics (OTL) Africa Downstream.
Mr Adetunji Oyebanji, Chairman of the Major Oil Marketers Association of Nigeria, said the crash in crude oil price was a unique opportunity to take fundamental decisions to revolutionise the downstream.
Oyebanji, who is the Managing Director of 11Plc, said the government must allow private sector input in deliberations leading up to full market deregulation.
He explained that the government never stopped marketing companies from importing PMS, adding that market forces were responsible for their decision.
“We need a framework to avoid past mistakes. When government retains control of prices, it brings pressure on itself and this is not sustainable.
“Take in the following numbers: N10 trillion has been spent on subsidies in 15 years,” he said.
Also, Hajiya Amina Maina, Chief Operating Officer of MRS Holding Ltd., said the company had invested in West Africa’s largest petroleum jetty facility in anticipation of deregulation.
Maina said the facility had capacity for 100,00MT LR2 vessels to save cost, improve efficiency and transfer savings to consumers, adding that deregulation would provide the best time for depot operators to put their investments to work.
Dr Billy Gillis-Harry, President of the Petroleum Products Owners Association of Nigeria, said the group supported total deregulation and that it would be wrong to assume that retail outlets operators were indifferent to the initiative.
He, however, argued that pressure from deregulation weighed heavily on last-mile operators as they were the operators in direct contact with consumers.
Mr Emeka Akabogu, Chairman of OTL Africa, explained that the legislative framework was critical because the prices of crude would rise definitely in future, which might result to another subsidy regime.
“There must be a legislative framework that addresses compliance; that addresses enforcement and also addresses a pricing formula.
“This is important so that at any point in time, no matter how high the crude price becomes at the global market, the formula will help to adjust the price to protect the market,” he said.