Business

Marketers, Refiners Demand Total Subsidy Removal

Petroleum marketers, refiners, and depot owners in Nigeria have urged for the full deregulation of the downstream oil sector, advocating an end to government price controls stemming from subsidies.

This call was made by the Major Energies Marketers Association of Nigeria, in collaboration with the Depot and Petroleum Products Marketers Association of Nigeria, Crude Oil Refiners Association of Nigeria, African Refiners and Distributors Association, and Petroleum Products Retail Outlets Owners Association of Nigeria during a webinar on Wednesday.

The event, titled ‘Optimising the Nigerian Oil and Gas Industry’, gathered key stakeholders from various sectors to discuss challenges, opportunities, and strategies for improving the sector’s efficiency and sustainability.

In a communique released by MEMAN on Wednesday, participants addressed the impact of recent fuel price increases and underscored the necessity of full market deregulation.

“A market-driven pricing mechanism was advocated to promote competitiveness and operational efficiency. The removal of government controls on pricing was seen as essential to fostering a more dynamic and responsive industry.

“The call for complete deregulation and market liberalisation was reiterated. The benefits include improved efficiency, enhanced product availability, and increased private sector participation,” the communique read partly.

There was a strong focus on supporting local refineries to reduce reliance on imported petroleum products. Stakeholders called for the freedom for marketers to source crude oil from both local and international markets, and for refineries to establish processing agreements with retail companies.

The discussions also highlighted the need to transition towards cleaner energy sources, such as Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG).

Additionally, stakeholders proposed the creation of a new committee structure for the petroleum sector, modeled after Nigeria’s Bankers’ Committee. This structure would include a Midstream and Downstream Industry Coordination Committee, led by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, aimed at improving collaboration in these sectors.

They also suggested an Industry Interface Committee to oversee interactions between the upstream and downstream sectors, and a Petroleum Industry Consultative Assembly, chaired by the Minister of State for Petroleum Resources, to bring together stakeholders from across the oil and gas industry.

“These committees aim to foster collaboration, ensure regulatory compliance, facilitate conflict resolution, and provide strategic oversight, akin to the role played by the bankers’ committee in the banking sector.

“The creation of industry-wide consultative committees was suggested to enhance collaboration, innovation, and conflict resolution, addressing supply chain inefficiencies and infrastructure deficits was deemed crucial for long-term sustainability,” the communique said.

Investors in the oil sector also pushed for substantial investment in infrastructure to improve the distribution and storage of petroleum products.

They advocated for the adoption of advanced technologies to optimize supply chains, curb smuggling, and prevent product adulteration.

Similarly, the business owners highlighted the importance of sustainable practices, such as reducing gas flaring, promoting renewable energy, and investing in carbon capture and storage technologies, to align with global sustainability targets.

They also emphasized the need for a clearer, more supportive regulatory environment, referencing the Petroleum Industry Act. They stressed that better policy implementation is crucial for facilitating smoother licensing, investment, and refinery operations.

“The webinar also highlighted Nigeria’s potential to become a significant producer of plastics and petrochemical products. Stakeholders discussed leveraging the country’s abundant natural gas resources to develop a robust petrochemical industry. “This would reduce imports, create jobs, and support the local economy. Emphasis was placed on establishing the necessary infrastructure, such as petrochemical complexes, and adopting policies that encourage local manufacturing and value addition. The shift toward producing plastics domestically aligns with the broader strategy of industrial diversification and economic resilience.

“The webinar concluded with a commitment from all stakeholders to work collaboratively toward optimising the Nigerian oil and gas industry. Emphasis was placed on the need for strategic investments, policy reforms, and innovative practices that align with global standards and sustainability goals.

“The proposed establishment of the petroleum committee will serve as a key platform for fostering collaboration and guiding the sector through its ongoing transition,” the communique stated.

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