The Independent Petroleum Marketers Association of Nigeria (lPMAN) believes that deregulation remains the answer for normalcy to return to the downstream sector of the oil industry.
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“Total deregulation remains the best solution to ending fuel scarcity. The deregulation of the downstream sector remains the only potent and lasting solution to scarcity. But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product,” National Operations Controller of lPMAN, Mike Osatuyi, has said.
Osatuyi, while responding to inquiries on the recurring fuel scarcity, said it is glaring that payment of subsidy is no longer sustainable and that the earlier Nigerians realize this the better for everybody.
The outspoken IPMAN official was emphatic that the subsidy regime is a major bane that has led to an increase in the country’s budget deficit, and which is also serving as an encouragement for the smuggling of petrol to other countries as a result of the huge profit margin.
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“Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives the government of huge revenue; subsidy does not allow competition and this may be the reason the Nigerian National Petroleum Company (NNPC) Limited has continued to enjoy the monopoly of being the sole importer, manager, and distributor of petrol in the country,” Osatuyi said.
Though the IPMAN National Operations Controller advocated for the stoppage of the subsidy, he, however, appealed to the government to put in place all necessary palliatives to cushion the negative effects of the imminent increase in the price of petrol before removing the subsidy.
For instance, he cautioned that the Central Bank of Nigeria (CBN) should ensure that foreign exchange is available to prospective oil marketers at the government official rates to able to import the commodity once deregulation kicks in. Without this, he warned, importers of the product will be forced to source forex from the parallel market, and this will in turn lead to an increase in the pump price of petrol to between N650 to N700 per liter.
