The Lagos Chamber of Commerce and Industry (LCCI) has commended the decision of the Nigeria National Petroleum Corporation (NNPC) to reform the downstream sector of the country’s oil and gas sector, saying ending the subsidy regime was a welcomed development.
The LCCI also noted the move would be a game changer for the oil and gas sector in particular and the Nigerian economy as a whole.
The chamber, in a statement signed by the Director General of the LCCI, Dr. Muda Yusuf, said the impact of the reform on the economy would be invaluable.
“However, it is vital to ensure that this new policy direction will be entrenched so that there will be no contemplation of any form of reversal. We are aware that similar attempts to undertake this crucial reform in the past have not been successful.
“However, we are confident that in the current dispensation, this will not be the case,” the chamber said.
The LCCI therefore requested that urgent steps should be taken to consummate the reform process with an appropriate legislative framework that would reconcile the initiative with some extant laws, such as legislations setting up the Petroleum Subsidy Fund (PSF), the Petroleum Product Pricing and Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF).
“It is imperative to ensure clarity on access to foreign exchange for petroleum marketers to import petroleum products. Operators (who are currently in a quandary on this matter) are eagerly awaiting guidelines from the central bank of Nigeria on this critical aspect of access to foreign exchange for the importation of petroleum products,” the chamber said.
It also commended the NNPC’s pronouncements on the future involvement of the private sector in the operation of the countries moribund refineries, describing it as another laudable initiative that would ensure that these national assets are put to use for the growth and development of our economy.
The chamber said the advantages the reform of the downstream oil and gas sector would create include the release of resources for investment in critical infrastructures such as power, roads, the rail systems, health sector, education sector etc., and the unlocking of the huge private sector investment potentials in the downstream oil sector especially in petroleum product refining.
“This will ultimately reduce importation of petroleum products and ease the pressure on the foreign exchange market as well as the burden on our foreign reserves.
“It will eliminate the patronage, rent seeking activities and corruption that currently characterise the downstream oil sector.
“It will create more jobs for the teeming youths of the country in the downstream oil sector as investment in the sector improves,” the chamber said.
The LCCI noted that the investment opportunities in our oil and gas sector are huge considering the country’s crude oil reserves and the even bigger prospects in respect of the country’s gas reserves.
But, it noted that investors were constrained by the policy, governance and political environments and slowed down the pace of development in the sector.
“Nigeria has been in the business of oil for over 50 years, but we don’t have any private refineries operating on a commercial scale. This is a big issue. No oil producing country imports refined petroleum products on a scale that we do in Nigeria. It is inexcusable.
“Pipelines are very critical infrastructure for refineries and for the sector, but the current ones are ageing and have deteriorated due to poor investment and maintenance. Again, this is because the pipelines are in public sector space. The story of the petrochemicals and fertiliser plants are not different, although the latter has witnessed some measure of privatisation,” the LCCI said.