Lokpobiri: Deregulation of Downstream Oil Sector Was Tough, But Nigerians Now Reaping Benefits

Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, on Tuesday, maintained that the decision of the President Bola Tinubu administration to fully deregulate the downstream segment of the oil industry had started benefitting Nigerians.

Speaking when the leadership of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) visited him at his Abuja office, Lokpobiri stressed that although it was a very difficult decision, the president had the courage to implement the liberalisation of the sector.

The minister said the benefits to Nigeria as an oil producing country will not be felt by Nigerians without the petrol retailers, explaining that in most cases, 90 per cent of Nigerians buy fuel from the retailers to generate their own energy.

Pledging his commitment to working with the organisation to deliver more value to Nigerians, the minister said the group also served customers as far as Chad, Niger Republic, Cameroon, among others.

He said, “It was a very difficult decision to get the sector fully deregulated. It was something that no leader had the courage to do. But today, everybody can agree that we are getting the benefit of full deregulation.

“Before now, if we look at different parts of this country, products were either not available or the prices were very disproportionate. But with deregulation, the price is finding its level in different locations in the country. And it has also opened new vistas of opportunity for investments to come into this sector.

“We are looking forward to the day when all fuel stations will also have components for Compressed Natural Gas (CNG). Since we have adopted gas as our transition fuel, we believe that very soon the outlets will also have a component for CNG.

“And we believe that any support that could be needed from the government to be able to actualise that rapid expansion of distribution outlets for CNG is something that we’d be very glad to partner with you.”

Lokpobiri also reacted to several important issues raised by PETROAN, led by its President, Dr Billy Gillis-Harry, and promised to work very closely with the group, going forward, to ensure that government addressed any concerns.

On the rumoured plan to end the naira-for-crude oil swap initiative, Lokpobiri stated that there was no plan like that, explaining that being a pilot scheme, what the government is doing is to rejig and rework it to the benefit of Nigerians.

He said, “Government is not cancelling it. What was taken to council was a pilot scheme, where they said they should be selling crude in Naira to Dangote refinery. We’ve always encouraged people to buy crude in whatever currency.

“Even if you buy in Naira, it’s going to be at a prevailing exchange rate. And I do know that people have been buying crude to refine in their respective local refineries in Naira. The dispute has always been, what is the exchange rate, which government is not involved in.

“It is purely the private sector. If you are upstream and you have a modular refinery next to you and the man wants to buy crude, it’s between the two of you that would negotiate and agree on what price. And the person may decide to pay you either in dollars or in Naira. We’ve always done that. So it is not true that the scheme is cancelled.”

Though owned by Nigerians, Lokpobiri stated that in order for the Nigerian National Petroleum Company Limited (NNPC) to operate like the Petrobras and Aramcos of this world, the Petroleum Industry Act (PIA) decided to make the national oil company a private sector-driven company.

He stated, “This is so that we can maximise the opportunities that exist in the industry. And so NNPC now makes decisions that they feel is best for Nigeria in the industry with limited government interference. That doesn’t mean that we can’t call them to order from time to time because they are a national oil company.

“But the point I’m making here is NNPC has a measure of independence now so that they can make proper business decisions that will be best for Nigerians.”

Earlier, Gillis-Harry stated that Lokpobiri had overseen significant developments in the country’s oil and gas sector, such as increase in crude oil production, strengthening of the fight against crude oil theft, attracting investment in oil production, among others.

Presenting an award to the minister, Gillis-Harry stated that the leadership skills and commitment of Lokpobiri had made the commencement of production and loading of petroleum products at the Port Harcourt and Warri refineries possible.

He stated that under Lokpobiri, bureaucratic bottlenecks in the licensing process had been eliminated, ensuring that Nigeria gets the best value from its oil wealth.

Gillis-Harry requested that a member of PETROAN should be allowed to join the board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

He argued that although the benefits of local refining were enormous, supply from all sources, including importation, should be allowed to flourish.

He said, “The benefits of the local refining of petroleum products are enormous. PETROAN supports the local refining of petroleum products and requests that local refineries be encouraged to continue sustained production of refined petroleum products.

“We advocate for multiplicity of petroleum products supply sources. Dangote Refinery is doing well and NNPC is also doing well and coming up. Other modular refineries, like Azikel Refinery in Bayelsa, are coming up and we are very happy about that development.

“And also importation of products should no longer be ruled out because we want to be able to compete favourably in a fully liberalised economy, where every source of petroleum products is allowed.

“So, we want to advocate that refineries should work and importation also should be considered as one of our sources of getting products.

“This will drive healthy competition and guarantee that our domestic prices will not be above import parity, thereby ensuring the best possible affordable products. So, we in PETROAN believe in fair competition.”

Emmanuel Addeh

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