Another round of monopoly and investment apathy is being anticipated in Nigeria’s downstream subsector of the oil and gas following what industry operators consider as secret insertion of certain clauses in the Petroleum Industry Bill (PIB) by the Senate.
In a collective response, the major oil marketers association of Nigeria (MOMAN) and depot and product marketers association on Nigeria (DAPPMAN) warned that the provision poses a monopoly risk that must be avoided.
In a joint statement signed by chief executive officer of MOMAN, Clement Isong, and executive secretary of DAPPMAN, Olufemi Adewole, the marketers advised that it is imperative that a level playing field is provided for all operators across the value chain.
Specifically, the marketers observed that the clause restricts the licence to import all refined products into the country to a very small number of local refiners.
This restriction extends to products that have long been deregulated such as Diesel, Kerosene (HHK and ATK), Liquefied Petroleum Gas (LPG) and Base Oils.
Though as industry stakeholders and professionals with heavy investments in the downstream sector, they applauded the entry and participation of local refineries, but urged that anti-competition and monopolistic overtures and breaches must be avoided.
“We believe that local refining ultimately benefits Nigerians and our economy. We also commend the government’s plan to repair all existing refineries boosting refining capacity”, they said.
The marketers strongly cautioned that such a provision that allows only refiners to hold import licences for refined products does not guarantee a free and open market and will give room to price inefficiency and eventually kill off small businesses in the downstream sector.
They also averred that the provision will stifle price competition and leave pricing to be solely dictated by a few local refiners, adding that if Nigerians are to pay higher international prices at the pump, they should also benefit when the prices go down internationally.
This they argued will not be guaranteed under the suggested provision unless there is healthy competition.
In their opinion, price must be kept competitive at the pump for the benefit of the average Nigerian whose income is constantly being eroded by inflation.
“Allowing imports by major players across the supply chain will protect consumers by ensuring that local pump prices are not higher than regional or international prices.
“MOMAN and DAPPMAN remain committed to the sustainability and institutionalisation of a
viable downstream petroleum industry for the social and economic growth of Nigeria.” they said.