Deregulation and Local Production: The Path to a Competitive Petroleum Industry Without Price Fixing

The government does not fix the prices of Coca-Cola, pure water, tomatoes, etc. So, in the spirit of the PIA, deregulation is not about price fixing alone. Therefore, the government should have no business fixing petroleum product prices because deregulation involves the entire value chain of production, and the outcome of the ‘willing seller and willing buyer’ concepts should apply.

This means that prices are determined by the market forces of supply and demand, ensuring a fair and competitive environment. Government intervention will take us back, and Dangote Refinery can decide to take its products elsewhere if it is not allowed to fix its price. However, the potential benefits of deregulation, such as increased competition and local production, should be a source of optimism for industry players.

All the government needs to do is create an enabling environment for investments to thrive. With its commitment to the industry, the government finally decided to sell crude to Dangote Refinery in Naira. So, the obstacles previously encountered in sourcing foreign currency will diminish, providing reassurance of the government’s role in the industry’s growth.

With the reduction of stress sourcing for dollars and importation of petroleum products, the word “landing charges or costs and demurrage” would disappear from our mandate. This elimination, coupled with the reduced travel time from Europe and vessels’ hire to Nigeria, will lead to significant cost savings. This should instill a sense of optimism in the industry, as the process becomes more economical and beneficial for the petroleum industry’s future.

Given the above, Nigeria should no longer be burdened by “landing cost” because it is a home-brewed product. This should ultimately lead to a reduction in import pricing components, which will also reduce the price of petroleum products and sooner or later benefit consumers.

The turf should be open to all marketers who have the muscle to pay for the products and fix their prices. In this system, the NNPCL should fix its refineries, be allowed to buy its crude for domestic use in Naira and compete in the market, playing a crucial role in the proposed structure. The NNPCL’s role is not to dominate the market, but to contribute to the competition and efficiency of the industry. Subsidies must be kept from the backdoor as they have been in the last nine years.

Local production is not just a key but a solution to eliminating round-tripping, subsidy, and under-recovery. This underscores the urgency and importance of fair competition and local production in the petroleum industry, which must be upheld to ensure a thriving and competitive market. It’s not just a solution, it’s the solution.

Grace and peace!!!