Oil and gas industry stakeholders, as well as financial experts who gathered at the 2016 Second Business Clinic organised in Lagos at the weekend by the Petroleum Downstream Group of the Lagos Chamber of Commerce and Industry (LCCI) have called for the scrapping of the bridging claims paid by fuel marketers under the Petroleum Equalisation Fund (PEF) and the streamlining of the operation of the Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).
The stakeholders, who insisted on full deregulation, lauded the removal of petrol subsidy by the federal government, which was necessitated by the liquidity problems experienced in connection with the collapse of the crude oil prices.
Speaking at the Business Clinic with the theme: ‘Petroleum Products Pricing and Foreign Exchange Liberalisation: Its Implication and Sustainability,’ the Chairman of Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho who described the subsidy removal as a good development, however noted that the upper price cap decreed on petrol by the federal government would have been removed to allow free competition.
Ihenacho argued that the removal of the upper price cap would result in the lowest possible prices for product supplies arising through keener competition between the oil marketers.
“The continued imposition of PEF payments is a tax on trade, which will ultimately be borne by the product consumer. As PEF payments are not chargeable against any particular logistic services rendered, they should be discontinued in the light of the need to minimise the market price of the products to which they relate,” Ihenacho said.
He also argued that PPMC should reduce its involvement in the downstream sector and gear itself to intervene only occasionally to stabilise fuel supply.
PPMC, he said, cannot match the independent marketers in competitive cost and product pricing supplied to the Nigerian market.
Also speaking, the Guest Speaker and Managing Director of Economic Associates, Dr. Ayo Teriba said the upward review in petrol price and electricity tariffs, coupled with the devaluation of the foreign exchange at the parallel market, had led to inflation.
He said though inflation was rising as a result of these factors, the fear of its implosion was exaggerated.
Also in his speech, the Group Managing Director of Access Bank Plc, Mr. Herbert Wigwe said the country had been standing in front of a moving train in the previous 12 months by not allowing market forces to determine the foreign exchange rate and also how trade was done.
Wigwe, who was represented by the Executive Director of the bank, Mr. Roosevelt Ogbonna however acknowledged that no country would allow free floating exchange rate, adding that exchange rate is managed everywhere in the world.