Operators insist transparent import financing outlay would incentivise investment in downstream sector
Operators in the Nigeria downstream sector of the oil and gas industry says the only approach to guarantee continuous investment across the value chain of the sector is for government to encourage a transparent import financing outlay in conjunction with Nigerian Central Bank.
They observed that with the infrastructural imbalance we have in refining capability, Nigeria can never get in right by way of attracting the needed investment despite continuous federal government promises that there is a quick fix to the issue at hand.
“The fact on ground is that Nigeria requires in the neighbourhood of 40-45 Million liters of refined petroleum products daily but we are scarcely supplying up to half of the requirement currently”. They observed.
Statistics has shown that proceeds from the crude oil sales contributes in the neighbourhood of about 88 percent of the total revenue accruable to the Federal government of Nigeria. This trend has remained so in the last five decades without any significant infrastructural development in the downstream.
The impact of government’s over interference throughout the value chain brought in lot distortions in the business space says Kenneth Abazie, Chairman of the Petroleum Downstream Group of Lagos Chamber of Commerce and industry.
He said that Government must systematically dis-engage from undue participation and rather strengthen its regulatory function of the business.
According to him, “Government as a matter of urgency must declare emergency on the refining of petroleum products in Nigeria. It is a big shame that after over 55 years of the commencement of drilling of crude oil in Nigeria, we don’t have a functional refinery. Government should go out of its way to get investors to invest in refinery in the country. Nigeria should be able to refine all its 45 million litres daily requirement and even export”.
Abazie said that gross decadence in infrastructure is the bane of the crises that Nigeria is currently going through, especially in the Oil & Gas sector. “The fact that the all the Refineries are producing at an epileptic average of less than 15 percent of its installed capacity is a shame”.
Analysts observe that the gap in supply has been due to the policy somersault of the successive administration which has been fuelled by the attempt by the government to supply all the needed petroleum products of the country without private marketer’s participation.
Industry close watchers said the time has come for the government to only set the rules and allow the private sector engage in the operations.
The current situation whereby government is the regulators, importers, distributors, marketers have never worked and will not work. Government does not have the capacity and the will power to stem the enormity of the challenges confronting the industry alone.
Level playing ground must be set for genuine investment in the industry to be attracted. This is only the minimum expected to engender growth.
The continued effort whereby government tries to moderate petroleum product pricing across the regions by way of subsidising or equalisation fund policy is a drain to the lean public treasury.
KELECHI EWUZIE