In other to pave way for accelerated growth of the oil and gas sector, the Managing director of Financial Derivatives Company Ltd, Bismarck Rewane has called on government to urgently deregulate the downstream sector.
Making this announcement yesterday during an interactive section with our correspondent, in Lagos Rewane said, "on the challenges facing local oil companies listed on the Nigeria Stock Exchange is strangulating the sector, noting that deregulation would would open up the market".
"The imposition of a price ceiling on petroleum products which affect the margins of the operators will not attract the volume of investments required to scale up their operations and explore the opportunities in the value chain of the industry".
“A factor affecting the operators is that they do not have control of the pricing of their products, which shouldn’t be as they are at the mercy of others”, he added.
The financial expert admitted that subsidy as a social policy requires sensitive management. He, however, said the government must make up its mind to take the bull by the horn to free the industry of its current strangulation.
In his words, the "International Monetary Fund (IMF) had recently urged Nigeria and other countries subsidizing fossil fuel to put an end to it, noting that the policy benefits the rich more than the poor.
Though the IMF, which stated this in a blog post titled: ‘Fuel for Thought: Ditch the Subsidies’ did not name any country, it is believed that the message was directed to countries like Nigeria whose fuel subsidy has become an avenue for siphoning public resources.
A recent World Bank report said Nigeria spent N731 billion to subsidise petrol consumption last year.
He further implored Nigeria’s government to emulate other countries who have deregulated their downstream sectors if it hopes to reposition the industry to truly serve as growth catalyst.
Also at the interactive section was the face of the Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Mr.Tunji Oyebamiji, called for the liberalization of the sector to make it attractive for investments.
He said: “Well, we are a competitive industry. We believe in competition. We believe that when you give players in the industry a free hand to go into the market and to compete effectively, it brings out the best in them.
“Many of our facilities are out-dated and getting older. We believe that government needs to free up the industry just like it has done in so many other industries. We have seen the massive development in sectors that have witnessed deregulation which can be replicated in Nigeria," he added.
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