Stakeholders Seek Creation of Independent Regulator for Downstream Sector

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By Ejiofor Alike

Stakeholders in the downstream subsector of Nigeria’s oil and gas industry have called for the setting up of a strong and independent regulator to oversee activities in the subsector.

In a communiqué at the end of the 2016 Oil Trading and Logistics (OTL) conference held in Lagos, the downstream operators argued that a strong regulator would implement open and transparent rules for the industry.

The communiqué also advocated the need for the full liberalisation and deregulation of the downstream oil sector, “with removal of all hindrances and bottle necks is needed for the improvement of private investment and market competitiveness; whilst a mitigating policy that will best serve the public and cushion the effect thereof is put in place.”

It also stressed the need for governments and private investors to explore and undertake shared infrastructure to ease movement of products particularly trans-regional pipelines and rail connections.

To minimise or eliminate oil theft, the communiqué recommended the implementation of security measures such as the Oil and Gas Protection Squad, together with full deployment of technology and observance of international monitoring standards.

The downstream players also canvassed support for quick passage of the Petroleum Industry Bill (PIB), which should cover full deregulation of the downstream sector.

In the maritime sector, the communiqué recommended that the Cabotage Act as well as well as the Local Content Law should be optimised by NIMASA and other regulatory bodies in the downstream sector to ensure more participation of Nigerians.

“Payment of charges in foreign currencies by indigenous operators to agencies like NIMASA, NPA, DPR and others should be stopped forthwith and the Naira prioritised as the means of exchange to maximise the value to ship owners and improve competitiveness at the ports,” said the communique.

To address the liquidity challenges facing the subsector, the stakeholders stated that financial institutions “should be encouraged to develop special lending arrangements that will allow players in the downstream sector access funds at single digit interest rate to facilitate and sustain growth.”

The communiqué, which was signed by the Chairman of OTL Africa Advisory Board, Mr. Reginald Stanley and the Chairman of OTL Africa Downstream, Mr. Emeka Akabuogu also requested the government to prioritise enthronement of a stable and predictable foreign exchange policy.

They also called on the Central Bank of Nigeria, the Federal Ministry of Finance and Ministry of Petroleum Resources to jointly address this as a matter of urgency to encourage increased local and foreign investment in the downstream,

“There is need to urgently review the administration of the current ineffective foreign exchange intervention in the downstream sector in view of the timing gap between the offer of forex and the opening of Letters of Credit, which often erodes the value and usefulness of the offer. There is need for government intervention by way of policy on LPG to facilitate its growth and make it easily available and accessible,” the communiqué added.