Major Oil Marketers Association of Nigeria (MOMAN )has warned that both the multibillion-dollar Dangote Refinery and the refurbished Nigerian National Petroleum Company refineries will not survive with the refining margins at the current pump prices.
It, therefore, urged the government to begin the process of complete deregulation of the downstream to reduce this inefficient subsidy.
The unattractive pump prices have been responsible for the lack of investment in the sector and those that are investing currently must be encouraged to do so by allowing total deregulation of the sector. By so doing they would be able to recoup their investments.
“Lack of investments contributes in no small measure to fuel distribution inefficiencies and high costs. Neither the new refineries nor the refurbished refineries will survive with the refining margins at current pump prices”
The association in a statement issued during a workshop organized to improve the energy correspondent’s understanding of how the petroleum downstream sector operates, also, explained why Nigerians always experience ripple effects and queues at the slightest disruption to any part of fuel supply chain in the country.
According to the association, Nigeria, having subsidized premium Motor Spirit (PMS) or petrol for so long, its institutions now have a diminished capacity to deal with the current local energy crisis. “A disruption in any part of the supply chain causes ripple effects and results in queues at stations.”
It stated that as a country, we must begin the process of price deregulation to reduce this inefficient subsidy. “If the country wishes to implement a subsidy, it must be in areas targeted to help those it should help such as in agriculture and transportation to reduce food price inflation and generate more jobs for Nigerians.”
In tandem, we must find a way to liberalize supply. We must bring transparency and competition into supply to ensure steadier, more efficient supply at optimum prices.
Imported products it said must compete with locally refined products to find a meeting point between the need for local refining and competitively low but cost-recovered prices for Nigerians for sustainability.
“The dialogue with the Nigerian people needs to begin to identify, negotiate and agree these areas and begin implementation to save the downstream industry which has been in degradation freefall due to a lack of investment to maintain, renew and grow assets and facilities such as refineries, pipelines, depots, trucks, and modern filling stations”
The exploration, production, refining of crude oil and the distribution of refined products is an international business with ebbs and flows and has specific models, guidelines, rules, and norms designed to protect and sustain consumers of this type of energy and populations impacted by its supply chain.
The Government and the industry in Nigeria must demonstrably apply these accepted health, safety, environmental protection, and quality norms to be seen to care for its local populations, the association stated.
“To cut corners would be irresponsible, unaccountable, and unsustainable. MOMAN continues to work with other key stakeholders to ensure that we ramp up supplies to our retail sites and return to normalcy as soon as possible. We envisage a rise in demand during the yuletide season and are prepared to work round the clock to keep our stations running.”
As always, MOMAN said, full deregulation of the petroleum downstream sector in phases to cushion the effects of the impact of a sharp rise in PMS prices on the long-suffering, hardworking citizens of Nigeria is the way to go.
