A key player in the Nigerian fuel market has tasked the new government of President Muhammed Buhari must lay the infrastructural foundation for deregulation of the Nigerian downstream petroleum sector in a measured plan that would displace huge volumes of imported petroleum products with locally refined ones.
Managing Director of Capital Oil and Gas Industries Limited, Dr. Ifeanyi Uba, declared in Lagos that the prevailing massive importation of petroleum products was sapping the lean foreign exchange earnings of the country at a time of steep fall in the prices of crude oil in the international market.
Dr. Uba who said he has a potent strategy for seamless deregulation of the domestic fuel market pointed out that the burden of subsidy regime and massive importation of key transportation fuels in the country has become too heavy for the country’s lean revenue streams.
He pointed at huge subsidy debt overhang in the market as key stress index in the subsidy arrangement and warned that the efficient deregulation of the market has become inevitable.
According to him, Capital Oil alone is still owed N11.9 billion subsidy debt since 2012 while other marketers in the country are also owed different sums of money under the subsidy scheme. He made it clear that the government debt profile in the market might continue to rise if early plans are not activated to replace importation with locally refined petroleum products.
Apart from the government’s huge subsidy bills and consequent debts in the market, Dr. Uba also pointed out that massive importation of petroleum products has continued to deplete the country’s foreign exchange reserves and negatively impact her balance of payment.
According to him, fuel imports account for over 90 percent foreign exchange demand from the Central Bank of Nigeria (CBN) as importers of other products now use fuel importation as decoy to secure foreign exchange to import other products not approved by the government.
Ending importation of petroleum products in the country and deregulating the domestic fuel market would be the one measure that would address a plethora of economic problems facing the country, Dr. Uba emphasized.
He however advised President Buhari not to attempt deregulation under the current domestic refining situation, warning that such a move would create supply gaps that might disable the key sectors of the economy.
– Sopuruchi Onwuka