Stakeholders outline strategies for sustainable petrol subsidy removal

LAGOS, Nigeria – Stakeholders in Nigeria’s midstream and downstream sectors have urged the Federal Government to address key challenges and outline strategies for a sustainable future in the petroleum downstream sector. 

The appeal was made during a virtual online workshop with the theme “Deregulation of the Nigerian downstream sector: The day after,” organized by the Nigerian Petroleum Downstream Industry in collaboration with the African Refiners and Distributors Association (ARDA) held in Lagos.

The Authority Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory (NMDPRA), Farouk Ahmed, set the tone for the workshop with a goodwill message stating that the Authority shall allow free market pricing once the sector was fully deregulated.

The Executive Director, DSSRI NMDPRA, Ogbugo Ukoha and the Director, Policy Coordination, NPA Ghana were on hand to give insights on the role of the regulator in pricing, safe operation and enforcement in their presentations at the workshop whilst the Managing Director, CITAC Africa, Mr Gary Still touched on market liberalization or elimination of subsidies.

The ES, ARDA, Anibor Kragha shed light on products specifications – ARDA roadmap, regional initiatives (AU / ECOWAS). DAPPMAN, IPMAN, PETROAN, NARTO and MOMAN shared their perspectives on risk management, best practices, and market expectations.

Alhaji Lawal Yusuf Othman, National President of the Nigerian Association of Road Transport Owners (NARTO), in his presentation, warned that the full deregulation of the downstream sector and complete removal of petrol subsidy will introduce a mix of opportunities and challenges into the operating environment.

 The ES of DAPPMAN harped on sharing best practices. Mr. Gary Still, MD CITAC Africa, in his presentation explained that market liberalization means the removal of government subsidies and price controls on petroleum products, and allowing market forces to determine the price and supply of petroleum products.

National President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Elder Chinedu Okoronkwo, who was represented by Mr. Mike Osatuyi, IPMAN’s National Operations Controller, revealed that the marketers are in full support of the government’s plan to embark on full deregulation of the downstream sector.

He warned Nigerians to prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal, adding that the pump price is likely to drop to around N500 if the Government encourages the Central Bank of Nigeria (CBN) to provide forex to marketers at the official rate.

Osatuyi also urged the government to channel savings from subsidy provisions to provide palliatives to the masses. He charged the government to be alert and sensitive to resentment from Nigerians.

Industry stakeholders at the workshop called on the government to implement appropriate palliatives in the form of public transportation, freight of agricultural produce, ensure transparent and effective communication, improve access to foreign exchange, trade finance, guarantee strategic stock, and provide access to crude oil for refineries ahead of the plan to embark on the total removal of petrol subsidy.

The workshop offered the industry regulator and all players across the midstream and downstream value chain the opportunity to deliberate on measures that needed to be put in place ahead of the full implementation of the Petroleum Industry Act (PIA) in Nigeria.

Participants at the online session also focused on the need for operators in the industry to institutionalize the professionalization of the midstream and downstream petroleum sectors ahead of the take-off of full deregulation.

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Huub Stokman, MD NRL highlighted what needed to be in place for a successful transition while Olufisayo Duduyemi, 2nd Vice President-Elect, NGA talked on the role of gas as a transition fuel.

Mr. Taiwo Oyedele, the Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers (PwC), in his presentation, charged the government and the regulator to identify potential pitfalls that could trigger resentment from citizens before, during, and after the removal of the petrol subsidy.

According to him, deliberate public sensitization, industry engagement, and collaboration with civil society organizations are needed to aid public buy-in during the implementation of full deregulation by the government.

 He said that in the course of implementing the policies, the government’s interpretation of its strategy must be issues-based and not confrontational.

Mrs. Morayo Adisa, Technical Consultant to the Executive Vice Chairman/CEO of the Federal Competition and Consumer Protection Commission (FCCPC), who represented Mr. Babatunde Irukera, EVC of FCCPC, in her presentation, emphasized the need for the industry regulator to establish quality and safety standards for petroleum products, including fuel quality standards, safety regulations for storage and transportation, and environmental regulations.

Francis Ogaree, ED, Hydrocarbon Processing Plants, Installations and Transportation Infrastructure, NMDPRA touched on the impact of local refineries post deregulation.

 Mr. Anibor Kragha rounded off with an insightful presentation on the availability and accessibility of financing investment & infrastructure for Africa.

The Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Olumide Adeosun, who doubled as the facilitator, stated that the virtual workshop aimed at addressing key challenges and outlining strategies to ensure a sustainable future for the petroleum downstream sector. He added that safeguarding consumer interest in a deregulated environment was also underscored.

The workshop provided data-driven insights into the sector’s growth potential. Stakeholders emphasized the need for continuous industry engagement, collaboration, and public sensitization to aid public buy-in on new policies by the government.

The importance of connecting to regional markets, positioning Nigeria as the regional refining hub, and fostering relationships with international service providers, including rating agencies, finance and governance institutions, and aligning with the goals of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP), was reiterated at the workshop.

Ultimately, this collaborative workshop provided a platform for stakeholders to share knowledge and develop strategies to ensure the Nigerian Petroleum downstream Industry remains a strong, competitive force while transitioning to a more sustainable future.