Players in the country’s petroleum sector, especially the downstream, are sceptical investing in local crude refining, owing to poor regulatory framework evident in the delay in non-assent to the Petroleum Industry Governance Bill (PIGB).
There are indications that some members of the Major Oil Marketers Association of Nigeria (MOMAN) are willing to venture into crude refining, but were not encouraged by the current legislation governing the industry.
Chairman of MOMAN, Adetunji Oyebanji, told newsmen in Lagos yesterday that MOMAN members were willing to invest in the petroleum value chain, but that “the state of our regulatory framework does not encourage us to do so, especially in the case that we will still have to sell the refined products at a controlled price.”
Oyebanji said the current capping of petrol price and the encouragement of petrol subsidy by government remained a disincentive to players in the downstream sector, who are in business for profit.
“Refining is a global business. It requires huge investment. Operators must be certain to get returns from it before venturing; but our current regulation does not guarantee that,” he said.
According to him, many downstream businesses are running at a loss, except for those leveraging other streams of income.Commenting on the subsidy debts owed MOMAN members, Oyebanji said the marketers were awaiting the final tranche of payments after promissory notes were issued for the first tranche.
He said: “A situation where the Nigerian National Petroleum Corporation (NNPC) is the predominant importer of petrol, we are left with no choice than to take product from the NNPC. Many of us are quoted companies, and this is seriously affecting our financial performance.”
Also speaking at the meeting, the executive secretary of MOMAN, Clement Isong, said considering that the Central Bank of Nigeria (CBN) stopped interests payable on debts owed banks by marketers from July 1, 2017, there were ongoing reconciliations between individual marketers and the Petroleum Products Pricing Regulatory Agency (PPPRA). Reconciliations are also ongoing for the second tranche, covering interests payments,” Isong added.
