How NNPC is killing
deregulation, by experts
By LOUIS IBA
Monday,
November 19, 2007
 |
The
Kokori flow station of Shell Petroleum Development Company
Photo: Sun News Publishing |
| |
The continuous domination of the petroleum importation business
by Nigerian National Petroleum Corporation (NNPC) has been
described as one of the factors marring government efforts
at ensuring proper deregulation of the sector with more private
sector participation in the downstream end of the oil and
gas business.
This submission was made by experts at a Focused Group Discussion
(FGD) organized by the World Bank and the Nigerian Economic
Summit Group held in Lagos recently.
The FGD was convened with the aim of discussing the status
of Nigeria’s petroleum downstream sector and options
for the sector’s reform.
Some of the experts at the FGD include the former Group Managing
Director of the NNPC, Mr. Funsho Kupolokun; Lead Economists,
World Bank, Mr. Volker Treicher; Chief Strategy Officer, Oando
Plc, Mr. Abiola Lawal; Consultant, Task Policy Division of
the International Monetary Fund (IMF), Mr. Charles McPherson;
Former Minister of the FCT, Mr. Nasir el-Rufai; Former GGM,
Corporate Services of the NNPC, Mr. B. A. Soyode; and the
General Manager, Business Value and Relations for Shell, Mr.
Don Boham.
In a communiqué issued at the end of the FGD, the experts
deplored the crisis in the downstream sector of the Nigerian
oil business especially the decay in some of the infrastructure
and the epileptic state of the four refineries managed by
the NNPC.
It also decried the dominant role of the NNPC in the importation,
marketing and distribution of petroleum products, noting that
it has discouraged the participation of other private establishments.
The experts, therefore, demanded that the NNPC limit its role
in the importation and distribution of petroleum products.
They also said it should create a level playing field for
the private sector, it was important that the downstream sector
be fully deregulated.
To facilitate this deregulation, the experts said key institutions
such as the Petroleum Inspectorate Commission and the Petroleum
Products Distribution Authority should be strengthened and
refocused with a view to enabling them perform their regulatory
functions properly.
They further stated that the privatization of the refineries
would be the most effective way of ensuring the recovery of
the sector.
The experts also stated that the contracts for the privatization
of the refineries should entail clearly spelled-out performance
benchmarks, and provide the private management firm with assurance
that the funds required for essential maintenance and operations
are available.
“Government should avoid large-scale capital expenditure
aimed at full rehabilitation of the refineries before privatization
as such programmes have not proven effective in the past.
And for the reform programme to be effective, it will be essential
that the government works closely with all stakeholders and
conduct extensive outreach with the public to inform them
about the causes of the decline in the sector,” the
experts also said. |
