This is the second time in about one month that we will be focusing on the apparent crises in the down stream sector of the oil and gas industry. Just as we said in our 24th edition, we have gradually become a reliable source of information about the all-important sector of the nation’s economy. Week in-week out, we have (at least, since we started the oil and gas page) been devoting ample attention to issues concerning the oil and gas sector.
When in January this year, we decided to devote attention to that sector, it was based on our conviction that the relationship between the maritime sector and the oil and gas industry is too symbiotic to be ignored. And since the ports were concessioned about three years ago, a lot more visibility is enjoyed by the oil and gas sector as more ships ( or tankers) that are loaded with petroleum products now dominate activities at the dedicated terminals so much so that more than 60 per cent of ships that come into Lagos pilotage district are laden with petroleum products.
But, with these activities, it is shocking that acute scarcity of premium motor spirit (or petrol) has been the lot of Nigerians for more than one month; at least in Lagos and some parts of the South Western part of this country.
After failing twice to deliver on its promises of making fuel available at filling stations, the Federal Government is said to be cleverly warming up to embrace full deregulation of the down stream sector and this entails removal of subsidy on petroleum products.
At the moment, government subsidises petrol based on the template prepared by the Petroleum Products Pricing and Regulatory Agency (PPPRA).
To address the perennial problem of scarcity, government had set up a Presidential committee which is headed by Bauchi state governor, Malam Isa Yuguda to come up with a workable solution to the problem. It is the committee that recommended full deregulation.
Presently, the PPPRA says that it costs N85 to import a
litre of petrol while the official pump price is N65. But the Yuguda committee says that the template price is unrealistic. It has therefore proposed that the price should be N77 per litre of petrol. If deregulation comes on stream, it will cost a lot more than N77 to buy a litre of petrol.
In calling for the reduction in the template price, the Yuguda committee had alleged that there were leakages in the template that was being used by PPPRA and that the figure was not realistic.
The celebrated template comprises of: products landing cost, a ‘small’ margin for marketers, dealers and even transporters. These are in addition to provision for jetty or depot throughput, taxes as well as provision for demurrage.
What is currently being experienced in all parts of the country has been restricted to some parts of the nation until it crept to Lagos and became a national problem.
At the moment, petrol sells for between N75 and N100 per litre in Lagos, it goes for as much as N150 in some parts of the country.
Nigerians are beginning to lose fate in the ability of the present government to fix the problems of the oil and gas sector; a problem which culminated in the tacit endorsement of deregulation by the government. This may eventually lead to removal of subsidy. It may also eventually signal the death of the PPPRA; a creation of former President Olusegun Obasanjo.
Listening to President Yar Adua last week, one is tempted to believe that once the so called oil cartels are removed from the chain of local petroleum production or importation and marketing, the problems are going to be over and fuel will be available at all filling stations and at a reasonable cost.
One thing stands out here and that is that the prevailing problems in the down stream segment of the oil and gas sector can not be solved simply by embracing deregulation hook line and sinker.
Before deregulation, Nigerians will appreciate it if the federal government can fix the refineries. Or else, the poor will be at the mercy of the shylock called marketers whose obsessive love for profits have been explained away by some people as just pandering to the natural forces of demand and supply.
It is very uncharitable and a clear demonstration of total disconnect from the people to romance a policy which has the tendency to further impoverish the people.
We insist that rather than deregulate and further strangulate the people, government should declare a state of emergency in the oil sector and focus squarely on repairing the refineries to produce at installed capacities.