As excitement around the removal of petrol subsidy declines amid concerns with the delay of the Petroleum Industry Bill (PIB), stakeholders in downstream petroleum have faulted the existing arrangement on the basis that it lacks a legislative foundation.
The industry operators also espoused concepts of self-regulation, discipline and standard-setting as important components of the new dispensation which can be driven by consultations between industry associations and the industry regulator.
According to Marine and Petroleum Nigeria, major concerns for the operators border on how business, laws and policy converge to deliver value to all stakeholders in the industry. This includes thoughts on competition, selfregulation, the market itself, issues of pricing, and aspirations of the PIB transiting into the Petroleum Industry Act.
Offering insights into the “Post-deregulation Agenda for Nigerian Downstream Petroleum”, chief executive officer, OVH Energy, Hubb Stokman, raised doubts as to the sincerity of government’s intention to deregulate the market as advocated in the PIB.
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“While the government has categorically stated its intention to deregulate the market, removal of subsidy is not the same thing as deregulation, as deregulation has to be backed by law”, Stokman said.
He said that to have effective downstream deregulation, three building blocks comprising Fair Market practices; Consumer Protection and sound Legislation are required.
According to Hubb, “The existence of a fair interest credit market is all about operating on a level playing field to avoid market distortion. Elements of fairness in this case include market driven pricing based on operators’ structural efficiencies; equitable and transparent access to foreign exchange and access to infrastructure such as pipelines, jetties and depots on equal terms.”
He continued “Deregulation must be built on the bedrock of legislation as the law needs to remain valid into the future. The legislation needs to be an Act of Parliament that will eliminate government interference and ensure that price regulation cannot be introduced under any guise.
Propagating the concept of self-regulation in the new dispensation, Chairman, Major Oil Marketers Association of Nigeria ( MOMAN) said the industry’s vulnerability to corruption and sharp practices also contributed to calls for deregulation.
Tunji Oyebanji warned against the erroneous notion that deregulation does not mean lack of regulation. “On the contrary, self-regulation is the best form of regulation to encourage best practices and build confidence and trust in the industry. To be driven by industry associations, selfregulation must brace up over and beyond what is provided in the PIB and develop based on industry operations”, he said.
Oyebanji noted that in a deregulated market, industry associations would be required to consult and contribute to guidelines provided by the official regulator.
He referenced the activities of vibrant industry associations such as the South African Petroleum Retailers Association ( SAPRA); the Petroleum Institute of East Africa and the American Petroleum Institute (API).
Oyebanji outlined some action points for industry associations among which include promoting HSEQ, attracting investment, regulating standards and advising on global policy issues such as climate change.
In a review of provisions of the National Petroleum Policy ( NPP) in view of Nigeria’s ambitions in the petroleum industry, Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong reiterated the significant role of industry associations in a deregulated market.
