Kingsley Ndubueze Ayozie is a strong advocate for the complete deregulation of Nigeria’s petroleum downstream sector. Recently, the country faced alarming shortages of petroleum motor spirit (PMS), commonly referred to as petrol, causing long lines of vehicles and jerrycans to crowd the streets of major cities such as Lagos, Abuja, and Port Harcourt. This chaos led to panic buying whenever fuel was available, revealing the community’s deep frustrations.
The ongoing fuel shortages have serious repercussions for both citizens and the government. Currently, fuel prices have surged, with the cost of a liter now exceeding N1,000 at the pump and black market prices soaring above N1,500 per liter. This financial burden is becoming unbearable for many. Rising petrol prices are driving up transportation costs across urban areas, which subsequently increases the prices of food and services. Furthermore, young entrepreneurs and small to medium-sized enterprises (SMEs) rely heavily on PMS for their operations, which is vital for job creation, poverty alleviation, and overall economic growth.
The persistent fuel shortages have also raised significant concerns about the efficacy of the Nigerian National Petroleum Company Limited (NNPCL) and the government’s failure to establish new refineries, despite old commitments. It has been over 15 months since President Bola Ahmed Tinubu announced the complete removal of subsidies on petroleum products, leading many to expect that the fuel scarcity crisis would finally be addressed.
In response to this ongoing challenge, there is a renewed call for the liberalization of the oil sector as a potential solution. Deregulation would involve reducing government oversight in the oil industry to foster private sector involvement and enhance competition. This would include allowing price and trade liberalization, as well as creating investment opportunities. By deregulating the sector, the government could release control over fuel pricing and make the market more appealing to investors.
Additionally, this strategy would enable companies and individuals to import petroleum products by adhering to certain regulations and paying necessary tariffs, thus increasing market competition. The advantages of liberalization are manifold; it could stimulate competition, attract investments, ensure a consistent supply of petroleum products, diminish NNPCL’s monopolistic influence, and ultimately lower operational costs within the oil sector.
In the long term, liberalization could energize broader economic activities, generate jobs in refining, distribution, and logistics, and potentially reduce consumer prices. Deregulation is a global trend that is crucial for any developing economy, and Nigeria is no exception.
Ayozie emphasizes the urgent need for the government to revive national refineries and bring them back to optimal production levels. While he recognizes the steps the government has taken to tackle the fuel scarcity issue, he urges decisive action to ensure the full operational capacity of these refineries. With the recent entry of the Dangote Refinery into the market, there is a glimmer of hope that this long-standing issue of fuel shortages may soon be resolved.
As Ayozie puts it, our economic future depends on confronting these challenges directly.
