The petroleum oil and natural gas industries does more than only supply society’s energy demands. They create jobs, help local businesses, encourage education, training, drive research and development. In any event, a sector that accounts for around 80% of the Federal Government’s revenue and 90% of Nigeria’s export revenues can only be considered as a boon to the country. It is not surprising that after 64 years of the discovery of oil in Nigeria, rather than the Federal Government earning trillions of Naira exporting refined oil it produces, it is spending trillions of Naira, purportedly, subsidizing petroleum products it is importing. The Petroleum Industry Act was passed by President Buhari and the National Assembly under Ahmed Lawan. The Act’s main purpose is to ensure that the NNPC Limited operates on a commercial basis in a profitable manner without relying on government funding, and these constraints must be stated in their memorandum and articles of association. Also, to provide licenses to capable individuals to work in the oil industry’s management. As a result, the oil business should be liberalized and commercialized, which the country sorely requires. Deregulation is a broad term for it.
David Adonri said that deregulation, not price hikes, are what Nigerians desire. Although there may be a slight increase in pricing initially if deregulation is properly implemented, prices will soon fall down as more specialists flood the petroleum business with better technological means of refining oil. Can you image how low the price of fuel in Nigeria would be if the expense of sending our crude overseas and the cost of bringing the refined oil back to Nigeria were eliminated since all of the oil required for domestic consumption would be refined domestically? This is why, according to David Adonri, a Licensed Trader, “discontinuation of fuel subsidies is an economic requirement, but the petroleum and electric power industries must first be fully deregulated.” Deregulation means that the government will no longer monopolies the management of the oil sector. It will imply that our refineries should be working in full capacity. It is in this regard that the recent decision by the current Minister of Petroleum to invest $1.5b of borrowed foreign money to the refurbishment of our refineries is an avoidable waste of resources.
The adverse effects the removal of subsidy would have on the prices of Petroleum Products (AGO/MGO/PMS) is immense, as the FG fully deregulates the sector and allows market forces play a role in prices. However, it’s an inevitable reality that the country can’t avoid, as subsidy regime has taken a large chunk of the country’s recurrent expenses.
Source: Sun Newspaper, Nairametrics, Punch News.