By Obas Esiedesa
FOLLOWING fears that Nigeria may have returned to the era of petrol subsidy payment, the Federal Government has been accused of lacking policy clarity in the deregulation of the downstream sector of the petroleum industry.
The immediate past Chairman of the Society of Petroleum Engineers, SPE Council Nigeria, Engr. Joe Nwakwue in a chat with Vanguard on Monday said Nigeria needs to urgently implement a full deregulation of the sector.
Following the rise in crude oil price to $56 per barrel last week, the landing cost of premium motor spirit (petrol) has also risen from N143.60 per litre in December to N158.53 per litre.
Additional costs in throughput, wholesaler’s margin, storage, administration, transportation, bridging, and retailers’ margin bring price at pump to about N181.69 per litre. Petrol is presently sold at N163 per litre which leaves a difference of N18 per litre.
There is no provision in the 2021 budget for subsidy payment but the Nigerian National Petroleum Corporation, NNPC, has in the past termed previous differentials as under-recovery and absorbed them as part of its cost of operation.
The situation has left Engr. Nwakwue unsatisfied and he has warned the government against going back to subsidy regime.
According to him, “I will say there is one major challenge in the downstream presently and that is lack of policy clarity. It is not clear to me what the policy is….I am yet to see a strategy or plan for subsidy removal.
“I hope they commit to and deregulate the market. It is imperative for the survival and sustainable development of the downstream. We should pursue sector reforms without being distracted by politics,” he added.
He expressed hope that the National Assembly will pass the Petroleum Industry Bill, PIB, this year to remove uncertainties from the industry.
“I see an active year in very many fronts. I hope we are able to pass the PIB and commence implementation this year. That, no doubt, will be lots of work for the industry. It will also boost investor confidence and hopefully we should see projects taking off.
“The PIB is extremely important as it seeks to reduce uncertainty in the sector. Uncertainty in the sector has been rather too expensive. The industry also needs the reset that PIB offers”, he added.
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