The Lagos Chamber of Commerce and Industry (LCCI) has urged the National Assembly to urgently consider and pass the Petroleum Industry Bill (PIB) in order to solve the recurring problems of fuel scarcity and other challenges of the downstream petroleum sector.
Addressing a press conference in Lagos recently, the President of LCCI, Mr. Babatunde Paul Ruwase, said the fuel crisis once again underscores the need to urgently review the current policy framework for the petroleum downstream segment of the oil and gas industry.
According to the chamber, the key issue is the pricing policy, and the consequences of the current policy regime include the following: Disincentive to private investment in the downstream sector, especially in refineries and fuel importation, resulting from the pricing policy; Recurring and protracted fuel scarcity, Considerable loss of man-hours as a result of long fuel queues and associated traffic issues on the highways; Transparency issues in the petroleum products supply chain; Humongous financial commitment to subsidy payment, even at a time of high infrastructure deficit, among others.â€
LCCI frowned on the reluctance of government to liberalise the sector and open it up to private sector participation. â€œThe concentration of petroleum products supply in the NNPC remains a major cause for concern. The arrangement is an inherent entrenchment of state monopoly in the NNPC to the detriment of private investors.
â€œThe midstream and Downstream petroleum sector currently suffers from regulatory regime which is negatively impacting growth, investment and job creation in the sector.
â€œThe current model of managing the downstream petroleum sector is not sustainable. It is at variance with the present administrationâ€™s vision to diversify the economy and create jobs. It perpetuates the phenomenon of rent economy and detrimental to economic competition. The truth is that the citizens are the ultimate beneficiaries of a competitive market environment.
â€œThe weak compliance with the regulated price of PMS in parts of the country is largely a symptom of much deeper problems and distortions in the petroleum products supply chain. The Department of Petroleum Resources [DPR] has been spending valuable time and energy fighting the symptoms of a problem, rather than addressing the fundamentals.â€
It therefore recommended that the PIB needs to be speedily considered and passed. This, it said, will give effect to the much-needed reforms in the oil and gas sector.
The LCCI added: â€œThe government needs to urgently liberalise the downstream petroleum sector for unfettered private sector participation and investment, subject of course to an appropriate regulatory framework. There should be a level playing field for all operators, including the NNPC. This would put an end to the perennial problem of fuel scarcity in the country and the hardships suffered by citizens to fuel scarcity. This would also attract more investment, generate more jobs and reduce the pressure on the countryâ€™s foreign reserves.â€