Only deregulation will end fuel crisis, govt insists
From Madu Onuorah, Abuja
AS the ongoing fuel crisis takes its toll on Nigerians and the economy, the Federal Government yesterday maintained that only the deregulation of the petroleum industry would restore sanity to the sector.
Ministers, who spoke on the matter yesterday after the Federal Executive Council (FEC), declared the journey to stable fuel supply with the enactment of the energy reform bills now before the National Assembly.
Minister of Petroleum Resources, Dr. Rilwan Lukman, along with Minister of Information and Communications, Prof. Dora Akunyili, Minister of Labour and Productivity, Mr. Adetokunbo Kayode, Ministers of State for Petroleum (Odein Ajumogobia) and Information and Communications (Ikra Bilbis) told journalists at the end of the meeting that "everybody is conscious to have this bill passed as soon as possible. It is a major development in the oil and gas industry and therefore it has to be done properly."
Lukman said the way to destroy the cartel holding the sector hostage is to allow for free importation of petroleum products into the country.
"If we allow free importation of products and allow people to sell at going market prices, there will be no cartel. There will be full competition in the market. There will be no cartel because we intend to give licence to anybody who is competent to import the products. The question of cartel will not arise because there will be no chance for anybody to form such," he said.
The minister said there were elements within the marketing fraternity who would prefer the situation to continue. Definitely some of them are making a lot of money and if there is free importation of products and free movement of prices, they will be making profits. But the kind of huge profit they are making now will not be there. It will be normal profit that anybody in the business will be expected to make. Right now they are making abnormal profits. Therefore they will prefer the status quo to remain."
Lukman said President Umaru Musa Yar'Adua's pronouncement that the queques at the petrol stations would fizzle out in two weeks was feasible, adding that "we hope it doesn't take that long. If you know what is going on in the field, the fact of the matter is there is a shortage of petroleum products mainly of PMS. For other products, there is no problem. This is part of a larger problem. The real problem the government is facing is to deregulate the supply of all petroleum products. It makes it possible for people to freely import in the quantity that are required and once that is done, independent marketers, the small marketers, the Nigerian National Petroleum Corporation (NNPC) is allowed to import freely and to sell at the market price, there will be no shortage of petroleum products. In the whole world, there is no shortage of petroleum products.
"If you are ready to pay the right price, you get any amount you need. What we want to do is to remove these impediments that are created by the facts of subsidy. A lot of the corruption and the difficulties we have arising from the marketing of petroleum products are due to deregulation. The removal of the subsidy is the key to the future viability of the oil and gas industry and also giving service to the people. There is no argument about this. All the stakeholders have agreed that this is the way to go," he stated.
On why the refineries have not been able to fill the gap in the supply chain, Lukman said the plants have not been maintained for eight years. "And because they are not being maintained you can't expect them to perform. Some of them are producing at half of their installed capacity while the others are not operated for a number of reasons. We couldn't get crude to some of the refineries because of what is happening in the Niger Delta.
"As I said this is not a question of apportioning blames but what we have to do is to get our refineries to acceptable level of performance. That is to say we have to maintain, repair and manage them well. This we have not done in the past. That is why we have to import over a long period of time. It is unacceptable that with a capacity of 450,000 barrels per day that we have to import massively when the bulk of what we need can be produced locally."
On the Petroleum Reform Bill, Lukman said the National Assembly was working to ensure that the bill was expeditiously passed.
The Council also approved a draft Employees' Compensation Bill designed to give workers in the country hope of a fair deal in the event of injury or the unexpected in the cause of their work.
Akunyili said the draft bill was approved "following a memo presented by the Minister of Labour and Productivity. On the proposal for the enactment of the Employees' Compensation Bill, council during deliberation noted that the present workers Compensation Act is obsolete and out of tune with international standard. It therefore approved the draft Employees' Compensation Bill in other to align it with international best practices. The bill, if passed into law, will benefit not only government but workers in particular as it allows for long-term follow up to ensure that an injured worker is treated and rehabilitated if necessary."
Kayode, explained that what "we had in the country in the past was Workmen Compensation Act. Today, the Federal Government has approved a new law to put an end to that primitive regime which the law represented. We have approved Employees' Compensation Bill, which will be forwarded to the National Assembly. There is a wall of difference between the workmen compensation law and the employees' compensation law. The bill, if passed, enables every Nigerian worker get a universal insurance coverage for compensation and rehabilitation, if he is injured or when he dies in the course of his work. Under the new bill, compensation is automatic."
However, as Labour is warning against plans by the government to deregulate the downstream oil industry, the Nigerian National Petroleum Corporation (NNPC) yesterday insisted that the only way Nigeria could get out of the cycle of fuel crisis is full deregulation of the sector. The corporation also rejected that the Petroleum Resources Minister, Dr. Rilwanu Lukman, was acting too slowly to address the energy crisis in the country.
In a remark at the opening of the 10th Group Public Affairs Department Communication conference in Abuja yesterday, the Group General Manager, Public Affairs of the corporation, Dr. Levi Ajuonuma, noted that the government's position was in realisation that the current trend in the sector was no longer in tune with the modern ways of doing business.
Besides, he said it had been realised that the private sector had become the driver of the economy in most of the world, noting that because the private sector had not been participating in fuel importation, the NNPC had to increase its importation quota to 70 per cent from the 40 per cent allocation to it.
Speaking on "The Group Public Affairs in the New Corporate Architecture and Strategic Re-Positioning", Ajuonuma reaffirmed the corporation's determination to co-operate with the new deregulation committee to be raised by the Presidency in achieving its set objectives, noting that Lukman, as the architect of the ongoing restructuring in the oil and gas sector, would make it to succeed.
According to Ajuonuma: "Until we have new refineries complementing the existing ones built, we will continue to import fuel. What we need at the moment is to create the enabling environment. We can do that only if the environment is fully deregulated.
At the moment, he said Nigeria imports more than what is required given the fact that the refineries in Nigeria were not operating at optimum capacity. "Kaduna Refinery is on the verge of complete turnaround, and very soon, we will perform the commissioning ceremony of the refinery.
"Warri Petrochemical Company is back, fully assisting in the distribution of fuel. At least, about 200 trucks of PMS are loaded daily, while Port Harcourt Refinery is also doing well too."
He added that the major marketers had agreed to bring in 10 new cargoes, hoping that, that would complement the existing distribution pattern.
In his remark, a member of the Oil and Gas Implementation Committee (OGIC), Dr. Mohammed Ibrahim, said the import of the ongoing re-organisation of the sector was to make it more beneficial to the people of Nigeria, rather than the current situation, where outsiders benefit more from the resources of the country.
He also denied that there was a rift over the procedures of implementing the reforms, stressing that Lukman had the assurances of the lawmakers to corporate with him. "You may not know this, the Honourable Minister, being an elder statesman, has been receiving tremendous support of the National Assembly to the process."
