The Nation Newspaper

Tag: deregulation

  • ‘Deregulation the way forward’

    ‘Deregulation the way forward’

    Members of the Organised Private Sector (OPS) are insisting that deregulating the oil and gas sector is the best way to go in view of present economic realities in the country. They also lamenting the negative effect of incessant fuel scarcity and poor electricity on businesses, insisting that the new administration should prioritise its policy and deal with the twin problem of electricity and inadequate fuel supply.

    Speaking to The Nation in Lagos, Director General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, cautioned against half-measures and “fire brigade” approach at arriving at solutions, noting that for the first time telecommunication companies threatened to shut down their services if the fuel scarcity continued.

    He berated the Nigeria Labour Congress (NLC) for speaking against calls for deregulation, accusing them of not being in tandem with current economic realities. He reiterated his earlier position that subsidy payment is for the rich and not for the poor as erroneously believed.

    Yusuf advised that the huge subsidy cost, which reportedly runs into trillions of naira, should be used in the provision of infrastructure such as good roads, water, electricity, hospitals and schools that will directly impact on the poor who are in the majority. He said Labour should have a re-think except they are not fighting for majority of their members and the poor in the society.

    On the reforms in the power sector, the LCCI boss regretted that the much touted reforms have not made the much needed impact in the economy, asking that the perimeters be studied and possibly redesigned.

    LCCI Vice President, Chief Micheal Olawale-Cole, said he does not see the fuel scarcity and other related problems easing very soon until the refineries are fixed and subsidy payment regime discontinued.

    He said the current administration may not fight corruption effectively without sorting out the issue of fuel subsidy, as the process is riddled with corruption. His words: “The current administration should revitalize our refineries; look at the short, medium and long term solutions. The medium term solution must be the discontinuation of importation especially by fuel marketers.

    “If any person must import fuel it has to be the government doing it themselves unlike the fraud currently dubbed fuel subsidy. I have always believed that the way out is by encouraging the establishment of modular refineries, which will eventually aggregate to what we need as a country in terms of fuel production.”

  • Is deregulation the answer?

    Is deregulation the answer?

    Nigeria, the world’s seventh largest oil exporter, is unable to meet its domestic fuel needs. In the past four weeks, Nigerians have been groaning under a biting fuel scarcity. Where they get petrol to buy, they pay through the nose. This has paved the way for adulteration, among other sharp practices. For how long will this continue? Is deregulation, as some suggest, the way out? EMEKA UGWUANYI examines the issue.

    AN acute scarcity of petrol has led to long queues of vehicles, motorcycles and people clutching jerry cans at filling stations.

    It appears there is no solution to the problem. The marketers and the Ministry of Finance are waiting to see who blinks first. The citizens are bearing the brunt as marketers sell at over the regulated price of N87 per litre. Currently, most of the retail outlets don’t sell to vehicles; they prefer to sell to hawkers who sell to motorists in 10-litre containers at between N250 and N400 per litre.

    The marketers claim the government owes them over N200 billion in subsidy arrears and are insisting on “no pay no fuel import”; the government, which has three days to the end of its tenure, is buying time so that the incoming administration will inherit the debt – and its consequences.

    The government’s inability to pay its debt, according to the operators, seems to confirm the allegation that Nigeria is broke. But the Minister of Finance and the Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, has refuted the allegation several times. If the government is not broke, why did it issue a post-dated N100 billion cheque  last month to the marketers? Why can’t it pay its debts, which accrued from a business deal and save Nigerians from going through this harrowing experience? operators asked.

    Petrol scarcity has  been caused by delays in the payment of subsidies to marketers, a situation that adversely affects economic activities. Besides, the failure to pay subsidy encourages marketers and tanker drivers to cut corners.

     

    Is fuel subsidy sustainable?

     

    The fight for the removal of fuel subsidy and full deregulation of the downstream sector of the petroleum industry started during President Olusegun Obasanjo’s administration. At a point, Mr. Funsho Kupolokun, a former Special Adviser to the President and a former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), was nicknamed “Mr. Deregulation,” for his campaign for the deregulation of the sector. The government wanted to deregulate the sector then, but the coalition of labour and civil society groups rose  against it and the plan was stopped. Every government since, then, has made attempts to stop fuel subsidy, but couldn’t achieve it owing to protests and strikes.

    A former Group Managing Director of the NNPC and Minister of Petroleum Resources, now a traditional ruler in Rivers State, the Amayanabo of Nembe Kingdom, Mingi XII, Dr. Edmund Daukoru, noted that the reasons for lack of support and hostility towards the government’s deregulation policy were as a result of broken promises by past governments, poor implementation record, poor track record of price decline in the country, mistrust, and lack of proper approach to public enlightenment. He said the government could not  sustain deregulation because the number of consumers increase yearly and the refineries were not working to make the petroleum products available.

    However, each year, the cost of subsidy continued to soar reaching its zenith in 2011, when over N2.1 trillion, about half of the federal budget for that year, was spent on subsidy. Rattled by that expenditure, the Federal Government on January 1, 2012 announced full deregulation of the sector and a litre of petrol sold  about N140.  Supported by the public, labour and civil society groups, again, rose against it. The opposition grounded economic activities across the country for over a week, and the government, again, succumbed to regulation and fixed the price of a litre of fuel at N97 after series of engagements with the labour and civil society groups. Despite entreaties by the government and operators of the downstream sector to persuade the populace to embrace deregulation, which will attract investors to build refineries and make petroleum products cheaper, labour groups opposed it.

    From 2006 to date, trillions of naira have been spent on fuel. For instance, a breakdown of the subsidy payments showed that N261.105 billion was spent in 2006, N278.859 billion in 2007, N630.571 billion in 2008, N463.517 billion in 2009, N673 billion in 2010, over N2.1 trillion in 2011, N1.5 trillion in 2012, and N1.1 trillion 2013 and, certainly, 2014 subsidy shouldn’t be less than a trillion naira. The regrettable aspect of the fuel subsidy regime, according to an official of the Finance Ministry, is that the government pays for the interests on bank loans taken by marketers as well as the foreign exchange differentials. For example, the government last year paid the marketers N345 billion, which was subsidy for 2013 and part of 2014 leaving an outstanding of N264 billion for the remaining part of 2014 and January, this year. Out of the N264 billion, the main subsidy was N164 billion while the foreign exchange differential and interest on loans from banks was N100 billion. By end of February, the debt has risen to N354 billion, of which the Federal Government paid N154 billion in April, leaving a balance of N200 billion, which is the reason marketers refused to import fuel. Also by the time the government agrees to pay, the debt could have risen to over N300 billion. However, the outgoing government should endeavour to settle its debts to the marketers because it is an agreement, so that the incoming government should decide whether to continue with subsidy or not, the official said.

    Also, the oil majors in the downstream, such as Total and Mobil Plc have at various yearly general meetings told their shareholders that their inability to build refineries in Nigeria is because of regulation of fuel price, adding that shareholders’ money cannot be subjected to such risks. It is also in view of the recurring fuel scarcity coupled with dysfunctional refineries that the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said the  dependence on imported petroleum products and payment of subsidy would not help the country, adding that the only remedy is the deregulation of the downstream sub-sector. “We can’t eat our cake and have it, without deregulation of the downstream oil sector; investors will not come and invest, so we must think of deregulating our downstream sooner or later for us to have a lasting solution,” she said.

     

    Why marketers refused to import

     

    Earlier, whenever the government makes a part payment to the marketers on how huge the outstanding debt is, it calls the marketers to a meeting, assure them on the payment of the  balance and plead with the marketers to resume importation. But it is not so this time. Besides, the National Assembly has reduced subsidy money in the budget to a very insignificant level, sending signals of full deregulation of the sector. The banks have also stopped funding fuel import by marketers because of fear of owing.

    However, operators have condemned the action of the government for avoiding payment because the subsidy model instructs the oil marketers to import petroleum products with their money, while the government pays them the differential between the actual cost of pump price and the regulated price as well as the interest on bank loans and foreign exchange. Therefore, if these patriot marketers commit their money to this project, exposing them to huge financial risks and interests on bank loans, the government should fulfill its part of the agreement. The agreement as enshrined in the Petroleum Support Fund (PSF) is that within 45 days of import with verifications of documents by the Petroleum Products Pricing Regulatory Agency (PPPRA), payment will be made. But the government is not faithful to this agreement as payment is delayed into several months and years leading to unwarranted accumulation of interests on loans, the operators said. The recent drastic fall in value of the naira substantially affected the subsidy debt profile as the petroleum imports are carried out in dollar. Therefore, when the costs of transactions are converted into naira, the amount soars. They said  the administration should clear the arrears of outstanding claims before handing over to the new government on May 29, this year because the new government might further delay payment under the guise of probes, which could lead to another round of scarcity.

    The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN) Mr. Obafemi Olawore told reporters that after a meeting with the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, in January to discuss the mode of payment of the subsidy, she assured the marketers the debt would be cleared by the end of March, a promise she didn’t fulfill. The government only paid us N154 billion, out of N354 billion, he added.

    The debt covered money owed MOMAN members, which consist of Mobil, Oando, MRS, Total, Conoil and Forte Oil and members of Depot and Petroleum Products Marketers Association (DAPPMA) as well as members of the National Association of Road Transport Owners (NARTO) that lift the products to the various parts of the country.

    However, the conflicting figures of the actual amount owed the marketers also worsened the non-payment of subsidy and import of fuel. According to Olawore, the marketers are owed N200 billion while the Ministry of Finance said it is N131 billion. He said the N200 billion debt has been confirmed by the Central Bank of Nigeria (CBN) and the Petroleum Products Pricing Regulatory Agency (PPPRA) but that Mrs Okonjo-Iweala still went on to set up a committee to verify the claims. The government is blaming the delay in the payment to the non-completion of the verification, which according to Olawore, is a ploy to pass  the debt to the incoming government on May 29.

    The implication of this approach by the President Goodluck Jonathan government is that if the debt is passed on to the new government, the process of verification and approvals by PPPRA, CBN, Debt Management Office (DMO) and Minister of Finance, would start afresh and could take some months to complete, thereby compounding the fuel scarcity.

    The marketers have held a meeting on the issue of the conflicting debts. It was attended by the CBN and other stakeholders. But the matter wasn’t resolved. Mrs Okonjo-Iweala, it was learnt, said the outstanding claims would be paid by the new government, adding that government is a continuum. “The understanding reached with the marketers, is that all the outstanding debts owed will be paid based on claims processed by Petroleum Pricing Products Regulatory Agency (PPPRA).

     

  • Manufacturers seek deregulation of oil sector

    Manufacturers seek deregulation of oil sector

    Manufacturers warned at the weekend that the economy would die, if the crippling fuel scarcity continues.

    The Lagos Chambers of Commerce and Industries (LCCI) called for a drastic response to the situation which, it said has a risk of social unrest.

    A faction of the Nigeria Labour Congress (NLC) is threatening a strike over the crisis.

    The scarcity has virtually crippled the economy, with telecom firms warning that they could scale down their services for lack of diesel to power their base stations.

    Air travel has been hit as flights have been either cancelled on the domestic routes or the frequency substantially slashed.

    Food prices have risen steeply in many parts of the country due to the cost of transportation.

    LCCI  President Remi Bello,  in a statement, said most economic and social activities had been paralysed, with the danger of an imminent shutdown of the entire economy. “There is no evidence of active engagement with stakeholders in the petroleum industry to bring an end to the crisis.  The government needs to demonstrate accountability to the people,” he said, adding:

    “The impression should not be created that governance has been abandoned.  The administration has responsibility for the management of government business till the very last day of its tenure. The country and the economy should not be allowed to continue to drift as if there is no one in charge

    “The power sector has practically collapsed, with power generation slightly above 1000 megawatts.”

    Bello warned that the option of alternative power generation, which the private sector has resorted to, “ is fizzling out, with the acute shortage of petroleum products”.

    He said: “Economic activities across virtually all sectors are progressively grounding to a halt, communication services are on the verge of being shut down as telecommunication companies have given indication of imminent shutdown of their base stations.

    “We call for an urgent intervention by President Goodluck Jonathan  to bring a halt to the imminent collapse of economic and social life in the country. There should be an immediate engagement of stakeholders in the petroleum industry to discuss the outstanding issues of indebtedness and related labour matters, in the interest of the economy and the citizens. The situation should not be allowed to degenerate any further

    “It is in the overriding interest of the economy and the citizens to quickly deregulate the sector.”

    Mobile giant MTN said it urgently needed diesel to prevent shutting down services.

    MTN Nigeria posted a message on Twitter, saying most of its base stations and switches are powered by generators. The company, with 50 million subscribers, said it might be compelled to suspend service if it does not receive significant amount of fuel in the next 24 hours.

    Another leading telecom company, Airtel Networks Limited, in a statement, said “the prevailing situation in the country regarding the scarcity of diesel and other petroleum products is at present impacting negatively our commitments to delivering best-in-class quality of service and seamless telephony experience to all Nigerians.

    “While we are currently doing everything within our means as well as going the extra mile to ensure that all our base stations and switches are up and running, it is sad to note that it is becoming increasingly difficult to replenish current stock of diesel due to the lingering scarcity of the products.

    “We are also concerned that, if the situation persists, it may have adverse effects on our network, impacting both voice and data services.”

    Arik Air, the biggest airline operator, yesterday operated only one-third of its schedule. It cancelled all domestic flights on Saturday as the fuel shortage worsened. Spokesman of the airline Banji Ola said: “We’re operating just a few flights today, maybe 30 per cent of our normal operations. We could not operate domestic flights yesterday.”

    Arik Air, with 26 aircraft, cut two-thirds of its 120 daily flights. That included flights to London’s Heathrow and New York needing to stop over for fuel in Kano, about 1,000 kilometers (620 miles) north of Lagos, Banji said.

    Aero Contractors Ltd., Nigeria’s second-largest carrier, said on its website that “all our flights will not operate regularly as scheduled” due to fuel scarcity.

    In a statement, Aero said:” Due to the general scarcity of aviation fuel (Jet A1) in the country, the airline will not be able to operate over 80 per cent of her domestic flights as scheduled.

    “In the last few weeks, the supply of aviation fuel has been very irregular, which has compelled the airline to cancel some flights. We apologise to our esteemed customers for the inconvenience they may have been experiencing due to flight delays and cancellations caused by the scarcity of aviation fuel.

    “We urge our customers to always check our website at www.flyaero.com or contact the call centre agent to affirm if their scheduled flight will operate. Aero regrets any inconvenience the changes will cause. All measures are being made to ameliorate the situation and revert to her regular flight schedule. We hope that the situation improves very soon.”

    But Air Peace said it was not affected by the scarcity of aviation  fuel.

    An official of the airline said operations had been running unhindered

    Medview Airlines, DANA Air and AZMAN Air are also running normal flights.

    The Comrade Joe Ajaero-led faction of the NLC has described the chronic fuel scarcity as a war against the citizens and a deliberate attempt to subject 170 million Nigerians to economic suicide.

    The faction’s deputy President Comrade Issa Aremu, in a statement, said:

    “Nigeria is the only country on earth which unacceptably and criminally denies its citizens basic sources of energy; fuel and electricity?’.

    “After several weeks of deliberate deprivation of petroleum products by both the government and marketers alike with all the associated hardship, it is time all Nigerians stop agonising and rise in unison against this (Nigeria’s) agony capitalism.

    “With petroleum products’ prices as high as N350 per litre (far above N87 per litre!) claims and counter-claims between Finance Minister Ngozi Okonjo-Iweala and marketers over so-called  N159bn subsidy payments and all state actors looking indifferent, Nigeria is the only country on earth  which unacceptably and criminally denies its citizens basic sources of energy; fuel and electricity.

    “What is happening in Nigeria amounts to economicide which is a conscious subjugation of 170 million people to economic suicide and economic ruination through unsustainable petroleum import-based racket that denies petroleum products needed for mass movement of goods and services, enriches few cabal, puts pressure on foreign exchange, fuels products hoarding and promotes sheer price robbery of the already impoverished citizens.

    “This is an unofficial declaration of war against the citizens by combined forces of irresponsible ruling elite and business crooks. Economicide, just like genocide, is a deliberate and indiscriminate policy violence against a group of people with the intent to destroy the entire group physically and economically”.?

  • Is deregulation the answer?

    Is deregulation the answer?

    Nigeria, the world’s seventh largest oil exporter, is unable to meet its domestic fuel needs. In the past three weeks, Nigerians have been groaning under a biting fuel scarcity. Where they get petrol to buy, they pay through the nose. This has paved the way for adulteration, among other sharp practices. For how long will this continue? Is deregulation, as some suggest, the way out? EMEKA UGWUANYI examines the issue.

    AN acute scarcity of petrol has led to long queues of vehicles, motorcycles and people clutching jery cans at filling stations.

    It appears there is no solution to the problem. The marketers and the Ministry of Finance are waiting to see who blinks first. The citizens are bearing the brunt as marketers who have the product, sell at over the regulated price of N87 per litre.

    The marketers claim the government owes them over N200 billion in subsidy arrears and are insisting on “no pay no fuel import”; the government, which has two weeks to the end of its tenure, is buying time so that the incoming government will inherit the debt.

    The government’s inability to pay its debt, according to the operators, seems to confirm the allegation that Nigeria is  broke. But the Minister of Finance and the Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, has refuted the allegation several times. If the government is not broke, why did it issue a post-dated N100 billion cheque  last month to the marketers? Why can’t it pay its debts, which accrued from a business deal and save Nigerians from going through this harrowing experience, operators noted

    Petrol scarcity has  been caused by delays in the payment of subsidies to marketers, a situation that adversely affects economic activities. Besides, the failure to pay subsidy encourages marketers and tanker drivers to cut corners.

     

    Is fuel subsidy

    sustainable?

     

    The fight for the removal of fuel subsidy and full deregulation of the downstream sector of the petroleum industry started during President Olusegun Obasanjo’s administration. At a point, Mr. Funsho Kupolokun, a former Special Adviser to the President and a former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), was nicknamed “Mr. Deregulation,” for his campaign for the deregulation of the sector. The government wanted to deregulate the sector then, but the coalition of labour and civil society groups rose  against it and the plan was stopped. Every government since, then, has made attempts to stop fuel subsidy, but couldn’t achieve it owing to protests and strikes.

    A former Group Managing Director of the NNPC and Minister of Petroleum Resources, now a traditional ruler in Rivers State, the Amayanabo of Nembe Kingdom, Mingi XII, Dr. Edmund Daukoru, noted that the reasons for lack of support and hostility towards the government’s deregulation policy were as a result of broken promises by past governments, poor implementation record, poor track record of price decline in the country, mistrust, and lack of proper approach to public enlightenment. He said the government could not  sustain deregulation because the number of consumers increase yearly and the refineries were not working to make the petroleum products available.

    However, each year, the cost of subsidy continued to soar reaching its zenith in 2011, when over N2.1 trillion, about half of the federal budget for that year, was spent on subsidy. Rattled by that expenditure, the Federal Government on January 1, 2012 announced full deregulation of the sector and a litre of petrol sold  about N140.  Supported by the public, labour and civil society groups, again, rose against it. The opposition grounded economic activities across the country for over a week, and the government, again, succumbed to regulation and fixed the price of a litre of fuel at N97 after series of engagements with the labour and civil society groups. Despite entreaties by the government and operators of the downstream sector to persuade the populace to embrace deregulation, which will attract investors to build refineries and make petroleum products cheaper, labour groups opposed it.

    From 2006 to date, trillions of naira have been spent on fuel. For instance, a breakdown of the subsidy payments showed that N261.105 billion was spent in 2006, N278.859 billion in 2007, N630.571 billion in 2008, N463.517 billion in 2009, N673 billion in 2010, over N2.1 trillion in 2011, N1.5 trillion in 2012, and N1.1 trillion 2013 and, certainly, 2014 subsidy shouldn’t be less than a trillion naira. The regrettable aspect of the fuel subsidy regime, according to an official of the Finance Ministry, is that the government pays for the interests on bank loans taken by marketers as well as the foreign exchange differentials. For example, the government last year paid the marketers N345 billion, which was subsidy for 2013 and part of 2014 leaving an outstanding of N264 billion for the remaining part of 2014 and January, this year. Out of the N264 billion, the main subsidy was N164 billion while the foreign exchange differential and interest on loans from banks was N100 billion. By end of February, the debt has risen to N354 billion, of which the Federal Government paid N154 billion in April, leaving a balance of N200 billion, which is the reason marketers refused to import fuel. Also by the time the government agrees to pay, the debt could have risen to over N300 billion. However, the outgoing government should endeavour to settle its debts to the marketers because it is an agreement, so that the incoming government should decide whether to continue with subsidy or not, the official said.

    Also, the oil majors in the downstream, such as Total and Mobil Plc have at various yearly general meetings told their shareholders that their inability to build refineries in Nigeria is because of regulation of fuel price, adding that shareholders’ money cannot be subjected to such risks. It is also in view of the recurring fuel scarcity coupled with dysfunctional refineries that the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said the  dependence on imported petroleum products and payment of subsidy would not help the country, adding that the only remedy is the deregulation of the downstream sub-sector. “We can’t eat our cake and have it, without deregulation of the downstream oil sector; investors will not come and invest, so we must think of deregulating our downstream sooner or later for us to have a lasting solution,” she said.

     

    Why marketers refused

    to import

     

    Earlier, whenever the government makes a part payment to the marketers on how huge the outstanding debt is, it calls the marketers to a meeting, assure them on the payment of the  balance and plead with the marketers to resume importation. But it is not so this time. Besides, the National Assembly has reduced subsidy money in the budget to a very insignificant level, sending signals of full deregulation of the sector. The banks have also stopped funding fuel import by marketers because of fear of owing.

    However, operators have condemned the action of the government for avoiding payment because the subsidy model instructs the oil marketers to import petroleum products with their money, while the government pays them the differential between the actual cost of pump price and the regulated price as well as the interest on bank loans and foreign exchange. Therefore, if these patriot marketers commit their money to this project, exposing them to huge financial risks and interests on bank loans, the government should fulfill its part of the agreement. The agreement as enshrined in the Petroleum Support Fund (PSF) is that within 45 days of import with verifications of documents by the Petroleum Products Pricing Regulatory Agency (PPPRA), payment will be made. But the government is not faithful to this agreement as payment is delayed into several months and years leading to unwarranted accumulation of interests on loans, the operators said. The recent drastic fall in value of the naira substantially affected the subsidy debt profile as the petroleum imports are carried out in dollar. Therefore, when the costs of transactions are converted into naira, the amount soars. They said  the administration should clear the arrears of outstanding claims before handing over to the new government on May 29, this year because the new government might further delay payment under the guise of probes, which could lead to another round of scarcity.

    The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN) Mr. Obafemi Olawore told reporters that after a meeting with the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, in January to discuss the mode of payment of the subsidy, she assured the marketers the debt would be cleared by the end of March, a promise she didn’t fulfill. The government only paid us N154 billion, out of N354 billion, he added.

    The debt covered money owed MOMAN members, which consist of Mobil, Oando, MRS, Total, Conoil and Forte Oil and members of Depot and Petroleum Products Marketers Association (DAPPMA) as well as members of the National Association of Road Transport Owners (NARTO) that lift the products to the various parts of the country.

    However, the conflicting figures of the actual amount owed the marketers also worsened the non-payment of subsidy and import of fuel. According to Olawore, the marketers are owed N200 billion while the Ministry of Finance said it is N131 billion. He said the N200 billion debt has been confirmed by the Central Bank of Nigeria (CBN) and the Petroleum Products Pricing Regulatory Agency (PPPRA) but that Mrs Okonjo-Iweala still went on to set up a committee to verify the claims. The government is blaming the delay in the payment to the non-completion of the verification, which according to Olawore, is a ploy to pass  the debt to the incoming government on May 29.

    The implication of this approach by the President Goodluck Jonathan government is that if the debt is passed on to the new government, the process of verification and approvals by PPPRA, CBN, Debt Management Office (DMO) and Minister of Finance, would start afresh and could take some months to complete, thereby compounding the fuel scarcity.

    The marketers have held a meeting on the issue of the conflicting debts. It was attended by the CBN and other stakeholders. But the matter wasn’t resolved. Mrs Okonjo-Iweala, it was learnt, said the outstanding claims would be paid by the new government, adding that government is a continuum. “The understanding reached with the marketers, is that all the outstanding debts owed will be paid based on claims processed by Petroleum Pricing Products Regulatory Agency (PPPRA).

     

  • ‘Deregulation way out of perennial fuel scarcity’

    ‘Deregulation way out of perennial fuel scarcity’

    In a monitored television magazine programme in Abuja, the Federal Capital Territory, the Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, shedlight on the current fuel scarcity and offered suggestions on how to nip the perennial fuel crisis in the bud, reports Ibrahim Apekhade Yusuf

    What is the cause of the current fuel crisis?

    First, there was the problem of nonpayment of subsidy claims. There was the problem of the devaluation of the naira. There was the problem of banks, initially, being reluctant to assist us with the letters of credit. But I think all of these have been solved due to the intervention of Mr. President and the CBN governor. So, mainly, I’m here to say that very soon things will return to normal.

    Into Lagos on Tuesday, we supplied about 132 trucks, which normally consume just t110 trucks a day. We stepped up to about 132 because we want to quickly overcome this. And that’s from the major marketers alone, okay. In Lagos, we have other marketers, other depots that would normally do their bit of the load down. We have Nipco, Aiteo and Capital Oil. All of these installations will load into the market. Some of these marketers last Monday loaded 87 trucks to Abuja. Abuja normally consumes about 120. But we are stocking up. For example, last week to Abuja, it came to 139.

    It is unfortunate. I said it earlier on, if you load the day before yesterday from Lagos to Abuja, you won’t expect the truck there now. It probably will take three, four, five days to get there. That’s why I’m urging everybody to look towards the weekend; it should be over because now there are products. Before there wasn’t, now there are products.

    For your information, NNPC, PPMC, MOMAN have started bringing in products. I know three vessels that have just arrived.  So by the time they break bulk, by the time they come into smaller vessels and add their own volume into the market.

    Is it sabotage by oil marketers?

    I like to talk a little bit about sabotage. We don’t sabotage anybody. We’re private companies and our job is just to bring in products and sell. We’re not interested in anybody, we’re not politicians.  The word sabotage we want to beg anybody that wants to use it to forget about it. We’re private individuals. We sell at a price approved by government and in the process, there is a subsidy. The subsidy comes up because we’re not selling at the price we buy the products. So, we need to get compensated and at the right time.

    But don’t forget, there was drop in international price of crude oil. So, the inflow to the government coffers also reduced. Always I say that national income is not a stock, it’s a flow. So, we’re also sympathetic to the cause that you don’t expect that immediately something happens, government brings out the money. They have their own plans. Once we have their assurance that these monies would be paid.  On Wednesday, I came to Abuja to pursue the monies, and we were told the monies would be out that same day.

    But it is actually not our money. These are monies borrowed from the banks. Once we pay the monies into the banks, the banks will just collect it. The only thing they would do is they would now open another line of credit for us, and then we bring in more products. Products are coming in, thanks to the banks, thanks to the CBN governor that appealed to them and we’re all moving.

    Are oil marketers happy that the federal government reduced the pump price to N87?

    We’re definitely happy. We wrote to the government thanking them for the reduction but reminding them that the reduction means increasing subsidy. That’s the simplest thing. If they have not decreased the price, if they had retained at N97, we would have been paying some money to government before the devaluation. We were already in the regime of over… because at that time our landing cost was lower.

    Deregulation is it

    We prefer deregulation.  We prefer a situation where we deregulate, we allow market forces to operate but with a strong regulator to ensure that people do the right thing. Regulators in the mode of NCC, we have DPR, we have PPPRA, but we want them to be empowered to be able to do.

    In other words, if you breach any of the rules, they should be able to call you to order. That is not regulation. It is a framework for you to operate in a deregulated environment.

    Have you made case for oil marketers?

    Deregulation way out of fuel scarcity. We have written several letters, we met government officials. We have met other stakeholders. As a member of the PPPRA Board, when there was one, labour was part of the board. And it comes up every time. Our position is that let government look at those issues and do at least part of what they are asking for.

    I don’t think they disagree with deregulation.  But the government has to create an atmosphere of trust and confidence with labour, civil society groups, etc. once all these groups are convinced that deregulation will not bring too much suffering, initially, it will bring some discomfort but after some time we will all benefit from it. The oil marketers are also glad if the refineries work optimally or there are new refineries.

    Our business is to sell oil and not to import. We were happy when Port Harcourt and Kaduna refineries at some point were privatised.  But people protested that the process leading to the privatisation was not fair or open enough. We always believe that once we privatise the refineries, we will be happy.

    There was this Eleme Petrochemicals; it was formerly run by government.  When it became privatised, it is now working. The same set of workers that were there when it was run by government that are still there. They do the TAM themselves. So, the real thing is for the government to allow those who have the expertise to turnaround things to do so.

    It should be open tender, competitive, and possibly international so that people will come in, and get the winner, somebody who will make the refineries work. Our position is we want privatisation, deregulation, but we want also a better regulatory framework.

    I can tell you and tell the viewers that the current fuel crisis will abate by Saturday (yesterday).  Whether it will happen again or not depends on so many factors. For me, one of the factors is deregulate, the other one is if you’re not deregulating, and there is a subsidy, pay.

    What if the government doesn’t have enough money to pay?

    Listen very carefully, if government doesn’t have money to subsidise and they don’t want to deregulate, are they expecting somebody to go and borrow money to do their business?

  • NECA calls for deregulation of oil and gas

    NECA calls for deregulation of oil and gas

    • Employers praise reduction of fuel price

    The Nigeria Employers’ Consultative Association (NECA) has described government’s reduction of the pump price of petrol as a right action within a wrong policy framework, calling for the proper deregulation of the sector.

    In a press statement signed by the Director General, NECA, Mr. Segun Oshinowo, NECA commended government’s decision to reduce the price of petroleum from N97 to N87, adding that this demonstrated that government is sensitive to the welfare of Nigerians.

    NECA, however, said this action by government is begging the more fundamental issue of appropriate policy framework that will promote investment in the downstream sector of the oil & gas industry and put a stop to the embarrassing and shameful practice of importation of Premium Motor Spirit (PMS), also known as petrol.

    “Our expectation therefore, is that government would seize the opportunity of the current decline in the price of crude oil to commence implementation of the policy on deregulation of the downstream sector of the oil & gas industry. This is a unique timing the government cannot afford to miss as full implementation of deregulation, which in time past had led to price increase and reaction by the labour movement in form of industrial action, does not have any negative effect on the masses.

    “We are indeed, surprised that government’s announcement was limited to just the reduction in the price of fuel (PMS) as one would have expected a far more holistic announcement of a new policy thrust of deregulation of the downstream sector and privatisation of the four refineries, which have now become sink-holes.

    “We do appreciate the fact that election is around the corner and government is being unusually cautious on the possible backlash which announcement of deregulation of the downstream sector of the oil & gas industry could have on its electoral fortunes. We, however, do not share the sentiment, given the fact that this is one moment when such a policy announcement would not have any damaging impact on the populace,” Oshinowo said.

    According to Oshinowo, it is a common thing for government to weigh economic imperatives against political exigencies at moments of political engagement and political process as the country is currently experiencing. He said government is more likely to accord priority to political exigencies while relegating economic imperatives to the background particularly if the fall-out of the economic imperatives will undermine public perception of the government.

    “The issue, however, is that the government is not faced with that choice under the current circumstance as the economy stands to gain from the deregulation policy. We, therefore, call on the government to do the needful by coming out boldly and courageously to inform the Nigerian populace that it has deregulated the downstream of the oil & gas sector,’’ he said.

  • OPS seeks deregulation of downstream oil sector

    OPS seeks deregulation of downstream oil sector

    Memebers of the organised private sector (OPS) have renewed the call for the deregulation of the downstream oil sector. The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf said the need to deregulate the downstream sector had become imperative in view of the wastage arising from fuel subsidy.

    Mr. Yusuf, who spoke at a forum organised by the petroleum downstream sector of the LCCI with the theme, ‘Removing Subsidy: The Implications on Banks, Downstream and Upstream Sector, Government and the Populace’, said that while countries in the Middle East and other Arab nations have been able to manage their oil resources and use the revenue from the oil sector to develop the critical sectors of their economies and lifted the standard of living of their citizenry, this has not been the case for Nigeria.

    “Unfortunately in our country, the potential of the sector has not been developed or optimised due to fraud, leakages and over regulation. As stakeholders we believe that except the subsidy regime is removed the nation cannot be moved forward,” he argued.

    Mr. Yusuf said: “The same vested interest that has stalled the passage of the Petroleum Industry Bill (PIB) is also the same cabal behind the whole subsidy set-up.” While arguing that the rich consume fuel more, he said the poor have nothing to lose but all to gain if the sector is deregulated and fuel subsidy removed. “The monies saved through the subsidy regime will benefit the poor better if it is channelled into strategic infrastructure provision such as good roads, hospitals, schools and so on,” he said.

    Underscoring the need to deregulate, Former President, Nigeria Economic Summit Group, Mazi Sam Ohuabunwa said that Nigerians have an example of the benefit of deregulation with the telecommunications industry. According to him, the Nigerian Telecommunications Limited (NITEL) after more than 45 years of operation was only able to offer 400,000 lines with inefficient services, but with deregulation of the industry, in just five years, there were over 100 million lines at a very competitive rate coupled with effective services.

    Ohuabunwa, who is also a member of   board of the Subsidy Reinvestment and Empowerment Programme (SURE-P), said deregulating the sector would check lending by banks to speculators and those who do round tripping and collect money and payments from the government without offering services to the people.

    He said the savings from the partial subsidy removal revealed that since its creation in 2012, the programme has spent N280 billion on intervention projects nationwide. He said the money was spent on road and railway constructions among others. He said while the sum of N360 billion was allocated to the programme last year, N80 billion was rolled over from last year’s allocation.

    According to him: “it is important to know that in two years of our existence, we have spent less than N300 billion. Out of the N360billion that was allocated to us, we rolled over N80billion; so we spent about N280billion. That’s what we used to get the East-West Road to where it is, the rail line running from Kano to Lagos, and all the works that have been done. “So you can imagine if the over N1trillion that was spent on subsidy is released for infrastructure development,” he stated.

  • Govt appeals judgment on petroleum deregulation

    The Federal Government has filed an appeal against the judgment of a Federal High Court, Abuja, which declared the deregulation of the downstream sector illegal.

    It also asked the High Court to stay execution of the judgment until the appeal is determined.

    Attorney-General of the Federation, the Minister of Petroleum Resources and the Minister of Commerce and Industry are the appellants.

    The judgment was delivered by Justice Adamu Bello on March 19 in a suit by activist-lawyer Bamidele Aturu.

    The judge had granted all the plaintiff’s claims and nullified the deregulation of the downstream sector of the oil industry.

    The nine-page Notice of Appeal is dated April 10, and filed by seven lawyers led by Dr Fabian Ajogwu (SAN) on behalf of the Federal Government.

    Ajogwu confirmed the appeal when The Nation contacted him yesterday evening.

    He said he filed the appeal and that it is based on “solid grounds”.

    He said: “Yes, we filed an appeal with solid grounds. It was filed just before Easter.”

    The appellants urged the Court of Appeal to hold that the lower court erred in law on the question of the respondent’s locus standi when it held that under both the narrow interpretation of locus standi and the broader interpretation, the plaintiff had the legal right to sue.

    The appellants said learned trial judge misdirected himself when he held that the combined reading of sections 4 and 6 of the Price Control Act and the Petroleum Act leaves no one in doubt that the control of and regulation of prices of petroleum products, among others, is a legal duty imposed on the Government.

    According to them, the judge made a mistake in holding that by enacting the Price Control Act and the Petroleum Act, the Government has made the economic objective in section 16(1)(b) of the Constitution in Chapter II justiciable.

    For the appellants, the Court also erred in law when it summarily granted the reliefs in the respondent’s originating summons.

    The government said the trial judge failed to consider and pronounce on all the issues submitted before it.

    It said failure to do so amounted to a denial of fair hearing.

    No date has been fixed for the hearing of the appeal or the motion for stay of execution

     

     

     

     

     

     

     

  • Refineries must work before deregulation, say NUPENG, PENGASSAN

    The National Union of Petroleum and Natural Gas Workers (NUPENG) has urged President Goodluck Jonathan to stop the proposed deregulation of the downstream sector until the four refineries are fully operational.

    President of NUPENG, Comrade Igwe Achese, said at the weekend in Calabar that deregulating the industry and removing fuel subsidy without making sure the nation’s refineries are working optimally would make the country to import petroleum products.

    The NUPENG President who was with his Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) counterpart, Comrade Babatunde Ogun, said: “If we are deregulating the environment, you will agree with me that there will be inflation in the country. The cost of living will be very high. But then, what are the palliative measures government will put in place?

    “I read in the newspapers that the president said the money that will be saved from the subsidy will be used to put infrastructure on ground. And you ask yourself, how long will these infrastructures be put in place? As a union, we have looked into it and we are still saying if government must remove subsidy or deregulate the environment, the refineries must be working optimally.

    “Our refineries are moribund. They are incapacitated. The few refineries running today cannot even run more than 20 per cent. That means this nation will continue to import petroleum products and every importation must be sold at a high rate.

    “We appeal to the Federal Government to listen to the yearnings of Nigerians that our four refineries must be working optimally before you talk of deregulation, so that the cost of living will not be too high.

    “The removal of subsidy will not solve the scarcity of the products. His Excellency can wake up tomorrow morning and say he is deregulating and also removing subsidy. But I’m sure it will be more difficult for us if we are not refining the products in the country. We cannot afford to remain importers of petroleum products as the 6th largest producer of hydrocarbon and natural gas in the world. It is shameful that Nigeria is now importing petroleum products from Niger, a country that has just discovered oil.

    “Government came up with a programme called SURE-P. It’s about one year today. What has SUPE-P achieved in this country? It is about one year that we protested the removal of subsidy and increase in the pump prices of petrol and government came with that programme saying it would alleviate Nigerians’ sufferings and I ask, is anything working today? What has worked?

    “Are we set to deregulate? Are we set to remove subsidy? The answer is no.”

    Achese dissociated his union and PENGASSAN from the report of the task force on refinery.

  • Sambo: deregulation’ll bring development

    The Vice-President Namadi Sambo has said the full deregulation of the economy would guarantee the creation of jobs and bring development to the country.

    He spoke in Lagos at the weekend at the Island Club’s Quarterly Business Lecture entitled: Nigeria’s Economic Potential- Investment for the Real Sector.

    The Vice-President noted that Nigeria’s economy had shown positive growth, based on the figures from the National Bureau of Statistics (NBS).

    He said these indicated seven per cent increase in the last three years.

    Sambo explained that with full deregulation, millions of Nigerians would get jobs in various fields.