How can the domstream oil sector be sanitised? It is by the removal of subsidy and total deregulation of fuel price says the Senate Committee on Petroleum Resources (Downstream).
According to the committee’s chairman, Senator Marafa Kabir Garba, the refineries are not working because some people are making a killing from subsidy.
Subsidy retention he said, would lead to job losses and also inhibit the building of indigenous capacity and expertise.
Garba told The Nation that the sector would grow when the twin problems of subsidy and non-passage of the Petroleum Industry Bill (PIB) were solved.
He said: “What the downstream requires is total deregulation and the passage of the PIB that is under consideration at the moment. We are currently considering the governance aspect of the PIB, which will deal with the regulatory aspect of the oil industry. We intend to make it like a one-stop shop where investors can have easy access to the industry without the multiplicity of bodies that regulate the sector.
“We will strengthen the Department of Petroleum Resources (DPR) and make it stronger, such that investors will walk in and go out from there with all they require as far as the petroleum industry is concerned.
“The laws governing the oil industry are old and archaic. These contributed to the failure of a lot of things that pertain to the industry. That informed the decision of the government to introduce the PIB, but after several Assemblies of the National Assembly, the bill has never seen the light of the day. Discussions, deliberations go on for four years without success. But this National Assembly said it is determined to do it. We are giving it a different approach, we have broken it into parts – the Governance, Fiscals and Community/Socials. The Governance Bill will see the light of day in the next few weeks, either at end of this month or early next month (April). From there, we will go to the fiscals that relate to monetary aspect of the industry, and from there, we go to the community and social issues.
“As far as the Senate is concerned, we are doing everything possible under the leadership of Senate President Bukola Saraki, who took it upon himself and promised Nigerians that this time around the bill will be passed. Once that is done, the downstream sector will have a breathe of life.”
On passage of the three parts of the PIB, Marafa said: “We will be able to pass the three parts of the bill before end of the year God willing. The Fiscal aspect has gone through the first reading, so it is coming up for second reading and if that is done, in the next three to four months, that aspect will be passed. Before we pass the Fiscal aspect of the bill, the community aspect would have gone through the first reading. We will give it all the necessary attention it requires.”
On the resistance to removal of subsidy and total deregulation of the downstream by labour and civil society groups, Marafa said as a nation, we had to make deliberate and precious decision on what we intend to achieve, adding that just a few days ago, the Senate ordered investigation into the subsidy matter again.
He said: “The the Nigerian National Petroleum Corporation (NNPC) alone collected over N5 trillion on subsidies from 2006 to 2015. The labour and civil society, among others, should come and let all stakeholders reason together on what fuel subsidy is all about. What value do Nigerians get from the subsidy compared to the amount of money that goes into it? If you combine the subsidy collected by NNPC with that of major and independent marketers, among others, it totals about N9 trillion in a scope 10 years, which is over and above our national budget.’’
He continued: “Does the common man really get the right value from subsidy? If such huge funds were sunk into other sectors such as health, agriculture, roads, railway systems, would it not have benefitted the common man more? It would be better and with more value addition. The labour will always fight for increased salary for workers but where is the money? Subsidy on diesel aspect of petroleum products was removed and heaven didn’t fall.
“Also, it is regulation that is keeping our refineries from working because people are feeding fat from subsidy. The same issue applies to the power sector, as long as people continue to import and Nigerians continue to buy generators, it will be difficult for the power sector to work. If you check the cost of the number of generators we buy in Nigeria, it is enough to generate enough electricity for the country. But because we as a people are sentimental about full deregulation of the downstream, we continue to lose by exporting value and jobs through export of our crude oil, import and subsidy of refined petroleum.”