The Central Bank for Nigeria, CBN has been urged to support the Deregulation of the Downstream Petroleum Sector in the Country by providing access to foreign exchange at official rates to all the importers.
The CEO of Dankiri Farms and Commodities Limited, Bello Rabiu, who is also the former Group Executive Director and Chief Operating Officer, Upstream, Nigerian National Petroleum Corporation, NNPC, gave this charge in Lagos while speaking at the Stakeholders forum on Deregulation of Nigeria’s Downstream Petroleum Sector.
“The CBN must provide access to foreign exchange at the official rates to all the importers. The regulators should allow the market to determine the price of Petroleum products and services in the medium to long term”, he said.
He maintained that full Deregulation of Downstream Petroleum Sector was a critical National economic and strategic endeavor requiring the support and cooperation of all stakeholders to implement.
“All hands should therefore be on deck to ensure the attainment of transparent, competitive, efficient, and sustainable liberalized downstream petroleum sector in Nigeria”, he added.
“Encourage competition PEF and NTA charges should be removed from the PPPRA template. In establishing the true cost of importation of products, PPPRA should resume the publication of key elements of its templates such as FOB Costs and FX rates. If NNPC remains a sole importer of PMS, the total cost of importing the product should be publicly disclosed and the imported product should be shared to all eligible wholesalers at cost. NPSC should be repositioned and adequately funded to operate as a neutral entity”, he added.
“To minimize actual cost of importation, government should carry out a benchmark audit on the current DSDP arrangement to determine if it is still cheaper than cost incurred by other Oil Marketing Companies, OMCs.
Speaking further on the Medium Term, he said expanding the port capacity to receive liquid fuels in greater quantities or increasing the speed of discharge, increasing fuel storage capacity, and enabling cheaper transport of petroleum products (by pipeline or rail rather than road transport) to lower landing costs and petroleum pump prices.
“Passing the PIB into law and ensuring it is not ambiguous and clearly states that the regulatory Authority has no power to set prices with respect to petroleum products and must distinguish this from the power of Authority to develop and enforce tariff methodologies for regulated activities”, he stressed.
“Repeal the PEF Act, PPPRA Act and the 2020 Regulations. The regulator should no longer play a role in fixing prices and setting price ceilings. Under a deregulated regime, focus of the regulator, working with the Competition Regulator is to ensure that industry players are not involved in anti-competitive practices such as collusion and abuse of market share in establishing prices of petroleum products”.
On the long term, he said there should be effective operation of the network of pipelines and depots will depend on the continuous operations of the four refineries. He also stated that private sector investments into these critical infrastructures when reinforced with appropriate ownership and governance structures operating under a transparent and open access regulatory environment will guarantee sustainable development of a liberalized downstream petroleum sector.
“The decision to privatize or enter concessions with respect to the assets is a strategic one based on what the government perceives its future role in the sector to be and the market appetite for partnership with the Government. The recent pronouncement from National Assembly that Government Plans to engage Strategic investors this year with majority equity of 51 per cent is a welcome development. Strengthening of the Competition Commission by ensuring it includes close monitoring of market behavior and using the Competition Law framework to ensure fair competition within the deregulated industry”, he maintained.