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‘Deregulation is only solution to recurring scarcity’

Femi Olawore

The Executive Secretary, Major Oil Marketers Association of Nigeria, Obafemi Olawore, in this interview with KINGSLEY JEREMIAH, discussed germane issues in the downstream sector of the petroleum industry in Nigeria.

The problem of fuel scarcity in the country is very old and it has defied any logical solution. What do you think should be done to solve the problem permanently?
The lasting solution lies in National Assembly passing the Petroleum Industry Bill (PIB). What they have passed is the ‘governance’ bill. They should pass the PIB itself and that would lead to deregulation of the sector. Once the sector is deregulated, nobody is going to depend on government. Right now, everybody depends on government. We depend on NNPC to bring in product. There is need for deregulation. I don’t know how long it will take, but we can all sit down and talk about it. It may be one year or six month or two years, but we must take the bold step to deregulate. The major marketers are asking government to summon political will to deregulate. We all know that we are going into the election year, and it is very tough to take such a decision, but that is the decision that will lift the sector.

There has been allegation of fraud in the payment of fuel subsidy, what is your take on this?
I can’t judge anybody. They are politicians and can say whatever they want to. But what I can tell you is that there is subsidy and the only entity importing is the one absorbing the subsidy. How they are being paid, I don’t know. But the truth is that, as we speak, there is subsidy. If you import, there is subsidy. And somebody is absorbing it.

A committee has been formed to find a lasting solution to the crisis , what’s your view on this?
Let us analyse the options. One is that NNPC would import and private marketers will import and NNPC will sell at N145 per litre, while private marketers will sell at the price that will make their products profitable. That is one of the recommendations. For me, it won’t fly. During the military regime, we had what was called two-tier pricing in Nigeria. It is not a new idea. In the two-tier pricing, one was meant for commercial vehicles and the other for private vehicles. And it failed, because if you have dual pricing or multiple pricing of the same commodity in the same economy that depends on only one commodity, there is going to be failure, so, for me, I don’t support it. The dual pricing or multiple pricing of the same commodity by government won’t work.

If the stakeholders initiate it, it can work, because there won’t be that wide disparity. If it is going to work they are saying that NNPC is going to sell at N145 per litre and private marketers will sell at N171 per litre, won’t that bring corruption? Won’t people find any means at all to buy at N145 and sell at N171? Is the gap not wide enough to be attractive or be an incentive for bad behaviour in the market? Why should people think of that. The other option I remember is that Central Bank will give dollar to marketers at a very low rate that will enable them import and sell at N145, that looks a bit attractive, but there must be stringent control and monitoring so that it is not abused as it was abused in 2011. If deregulation is the last option that is what I advocate. The only option is deregulate, let the market forces drive.

There are allegations that the associations in the supply chain, like yours, are hoarding products and sabotaging government’s efforts, why this?
It is a lie. I have told you that the problem is supply. It is not a matter of hoarding. Ask if there are people selling in jerry cans in Lagos. The answer is no because the product is now available in Lagos. If product is not available you can’t stop people from misbehaving. I don’t accept that excuse. The truth is that if the supply is equal to, or higher than demand, all these people will not misbehave. Last two or three weeks ago, you find people selling in jerry cans along Ikorodu road but now you don’t see that because people can drive into petrol stations and buy. Why are people emphasizing that point? The truth is that somebody is not doing it work. I don’t know who the body is, but the fact is that NNPC did not bring enough products to the market that is why there are queues everywhere.

In 2016, there was no fuel shortage; can you compare the supply in 2016 with what you had in 2017?
In 2016, there was enough supply because marketers were also importing. That is why there was no problem in 2016. NNPC was importing, major marketers were importing and the depot owners so we had enough product. That is the bottom line. Tell whoever that is ready to hear you that major marketers insist that it is because supply is not enough.

In this article:
NNPCObafemi OlaworePIB


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