Government should deregulate the petroleum downstream sector
Like a recurrent nightmare, the notorious fuel scarcity saga descended on Nigerians again from nowhere. What started like a child’s play is now in its sixth week. Even though the queues may be getting shorter in Lagos and Abuja, there are indications that this problem may persist. What is more, all the relevant agencies connected with the provision of petrol appear clueless about long-term solution. As usual, all that the newly established Nigerian National Petroleum Company (NNPC) appears to be interested in is distancing itself from what has become a perennial national disgrace.
For the last six decades, oil has continued to be the hope and despair of Nigerians. That explains why few people can understand how the sixth largest producer of oil in the globe cannot find the product for its domestic use. As Nigerians groan daily at filling stations, the stark irony of this predicament is one they cannot fathom. It is as confusing as it is frustrating. Yet, resolving the logjam is not a mystery. After all, countries like Ghana and Niger, who are not in the same category as we are, seldom witness fuel scarcity.
Meanwhile, Nigerians have not been told the whole truth about the current fuel scarcity. Is it as a result of imported bad fuel or the unresolved subsidy palaver? Or is it due to the fallout of the invasion of Ukraine by Russia? Whatever may be the excuse, numerous productive hours are being lost. People’s savings are getting ruthlessly depleted. The patience of the citizenry – recklessly ignored and abused by those in positions of authority – is ebbing fast.
The question that remains unanswered is whether Nigerians would ever see an end to the perennial scarcity that has come to define the management of the downstream sector of the petroleum industry. This should worry the current administration, especially since there seems to be no coherent policy in place to deal with the issue in a holistic and lasting manner. For years, the falling price of crude was the “saving grace”. But the country is now badly exposed at a time of high crude price occasioned by the invasion of Ukraine by Russia.
Meanwhile, the refineries have continued to fail in terms of satisfying the essence of their establishment, given that the importation of petroleum products has become a major and running routine in the economic management of the country. The reason, as often adduced by the industry experts, is that the refineries have either all broken down due to poor maintenance culture or that the installed production capacity cannot meet the ever-growing local demand for petroleum products. Yet, hundreds of billions of Naira are pumped into them every year. While it makes no sense that Nigeria continues to import finished petroleum products at huge cost to the economy, experience has also shown that the government is not adept in the efficient management of businesses. If anything, the tales of corruption, ineptitude, sabotage and other sharp practices in the oil and gas industry have continued to confirm this widely held opinion.
As we stated recently, no sector exemplifies regulatory failure in Nigeria more than the oil and gas industry. Aside having to contend with wasting billions of Naira on importing toxic fuel that damaged several vehicles, consumers are unfairly made to bear the brunt of product scarcity. A resurgence of fuel queues in some major cities across the country has exposed the mess in the sector and there is need for accountability. The expectation now is that a full deregulation of the downstream sector (with implication of high fuel price) could guarantee fuel availability and free the funds hitherto used in subsidy payment for other development.
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A resurgence of fuel queues in some major cities across the country has exposed the mess in the sector and there is need for accountability
