A non-profit group, Consortium of Civil Society Groups Advocating for Reforms in the Downstream Sector of the Oil & Gas Industry, has called for removal of fuel subsidy and privatisation of refineries, among other reforms in the oil industry.

After deliberations on the developments in the petroleum industry, the group recommended major reforms that it believes will bring about positive changes in the oil sector.

“As a matter of urgent national importance, we strongly support the call for the privatization of the country’s four refineries in their present condition to avoid further revenue losses. We suggest the adoption of a transparent merit-based model for privatization either considering the NLNG for part privatization or an outright sale.

“We encourage the government to adopt favourable fiscal terms that bring about a renewed investors’ confidence and also help fast track the proposed 29+ refineries, which still have valid operating licenses.

“We enjoin the Presidency and the Minister of State of Petroleum Resources, Department of Petroleum Resources, and PPPRA to publicly support the declarations made by the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, on the removal of fuel subsidy through an official public statement on April 8, 2020 signed by the signed by the GMD-NNPC in various media appearances in recent times,” the group said in a statement.

It entreated the Federal Government to lay out defined processes and regulatory guidelines to support the announced removal of fuel subsidy, adding that these should be pushed forward and announced by the Presidency to give the policy an official seal of affirmation to all Nigerians that we are not in another false expedition.

It also called on the Federal Government to commit to the sustainability of the no-subsidy regime by entreating it in law, either through a stand-alone legislation, or through appropriate clauses integrated into the Petroleum Industry Bill (PIB) will allow for the sustainability of the no-subsidy regime.

“We require the government to clarify the role of the Petroleum Support Fund in the new no-subsidy regime. Clarity is required about how that fund is being managed, whether the over-recovery sums were deposited there and how they are expected to be spent.

“We encourage the government to transition the PPPRA and PEF into new roles to ensure the sustainability of the proposed ‘non-subsidy policy’. Repeal of the PPPRA and PEF(M)B Act and transit them into efficient and competent institutions to support the reforms encapsulated in the proposed PIB are possible options to consider.”

The consortium urged government to prepare for a post-price regulation era by prioritizing consumer protection to ensure that when the downstream sector of the petroleum industry is liberalized, the interests of the people would not suffer exploitation in the hands of profiteering marketers.

According to it, “We suggest anti-trust or competition propositions using the Federal Competition and Consumer Protection Act 2019.

“We encourage the government to consider providing varied options for Nigerians in terms of transportation systems in the country when inevitably, increases in price of crude oil increases result in the rise of the price of refined petroleum products.

“We suggest that the NNPC as the National Oil Company should not be given any advantage, whether comparative or competitive, over other petroleum products marketers in terms of access to foreign exchange to handle their importation of products activities to create a level playing field for all players. If the NNPC must remain a player in the market, it must strive to operate under the same conditions and rules as other players in the sector regulated only by the prevailing market forces and competition.

“While we await the conclusion of work on the PIB, we urge the government to take steps to delineate the roles of policy formulation, regulation and enforcement as well as operation in the industry. We suggest policy directions should be left under the purview of the Minister of Petroleum Resources, with the Presidency and Minister of Petroleum Resources and Minister of State for Petroleum Resources lending their support to the declarations by the GMD of NNPC, to give weight and establish trust between the government and the people.”

The group stated it arrived at resolutions following the recent outbreak of the novel Coronavirus pandemic and the resultant twin shocks on the global economy and the impact on crude oil prices at the international market.

“To reduce the pressure, we note the few policy measures by the government to optimize available revenues, including the review of the Federal Government 2020 budget benchmarks and cut of the overall approved appropriation Act by N1.5 trillion and the proposal to remove subsidy.”

While acknowledging the decision by the Federal Government to adopt a modulation mechanism to regulate petroleum products prices, dictated and moderated by the interplay of market forces, it commended the step taken to reduce the pump price of Premium Motor Spirit (PMS), from N145 per litre to N125 per litre as a positive step in that direction.

“We note further that since the announcement by the Minister of State for Petroleum Resources, the Petroleum Products Pricing Regulatory Agency (PPPRA) has released a price band for petrol put at between N125 (Upper Limit) and N123.50 (Lower Limit), effective April 1, 2020.

“We note the subsequent pronouncement by the GMD of NNPC that subsidy payment by the government on petroleum products has been removed with immediate effect from the pricing template by the PPPRA, in essence the end to fuel subsidy in the country.

“While we note that these difficult policy decisions align completely with our aspiration and advocacy for the reform of the downstream sector of the petroleum industry, we commend the Federal Government for the courage to tread this path at this time in our national history.

“We wish to draw the attention of the government to the important point that more still needs to be done to effectively lead the industry on a path of sustainable regulation based on globally accepted standards and practices. Consequently, we believe there are yet more issues that would require the urgent clarification by the government to bring every stakeholder on the same page and ensure all Nigerians are carried along on these important issues.”

The statement was signed by Civil Society Legislative Advocacy Centre (CISLAC), BUDGIT, Spaces For Change (S4C), Youth Forum Of Extractive Industry Transparency Initiative (EITI), Centre For The Study Of The Economies Of Africa (CSEA), Nigeria Natural Resource Charter, (NNRC), Media Initiative For Transparency In Extractive Industries (MITEI)

Order Paper Advocacy Initiative, Women In Extractives (WIE), Connected Development (CODE), Africa Network For Environment And Economic Justice (ANEEJ), Centre For Transparency Advocacy (CTA), Koyenum Immalah Foundation (KIF), African Centre For Leadership Strategy And Development (CENTRELSD).

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