PIB generates fresh crisis as products import takes the centre stage

By Akpobor Jirue

As the dust of controversy and opposition that trailed the passage of the Petroleum Industry Bill (PIB), especially the host communities trust fund and the frontier basis allocation is yet to settle down, the bill now has a fresh crisis to deal with.

This time, industry stakeholders, specifically, local operators whose interests the bill is assumed to have addressed are picking holes in the provision of Section 205 of the bill.

Interestingly, the section has to do with ‘importation of petroleum products.’ As usual stakeholders have taken to the pages of newspapers and electronic media to vent their anger on the law makers over perceived bias in the law in favour of some groups at the detriment of others.

For the purpose of clarity, section 205 of the bill removes price control on petroleum products, however, the senate version of the bill has a clause that constrains market competition by restricting importation of products to only players with local refining capacity.

The point of contention therefore has been that the clause contradicts the provision of 205(1), which states,
“Subject to the provisions of this Section, from the effective date, wholesale and retail prices of petroleum products shall be based on unrestricted free market pricing conditions.”
Expressing concern over the provision, Jerry Lazarus, an oil industry analyst described the situation as an attempt to create a duopoly in a price deregulated environment thereby destroying the Nigerian downstream industry as we know it today.

According to him, “It limits importation of all petroleum products, including PMS, diesel, aviation fuel, lubricants, base oil – products which are already deregulated, to only players with local refining capacity. In the near term, only NNPC and Dangote will have domestic refining capacity for PMS for instance, so they will be the only importers. This takes the industry back and could not have been the intention of the bill.”

On its part, Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) in a joint press statement objected to the clause, saying, it restricts the issuance of license to import all refined products into the country to a very small number of local refiners.

The statement signed by Clement Isong, CEO and Executive Secretary, MOMAN, and Olufemi Adewole, Executive Secretary, DAPPMAN, cautioned that the provision which allows only refiners to hold import licenses for refined petroleum products is inimical to the growth and development of the industry.

Justifying the group’s opposition to the section of the bill, he said, “the provision poses a monopoly risk that must be avoided. It is imperative that a level playing field is set for all operators across the value chain. Anti-competition and monopolistic overtures and breaches must be avoided.
“Any provision that does not guarantee a free and open market will give room to price inefficiencies and eventually kill off small businesses in the downstream sector.

“This provision will stifle price competition and leave pricing to be solely dictated by a few local refiners. If Nigerians are to pay higher international prices at the pump, we should also benefit when the prices go down internationally – this is not guaranteed unless there is healthy competition.
“We position that 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.”
Similarly, workers Unions in the industry has joined the league of opposition to the section.

The Trade Union Congress of Nigeria (TUC) described the planned move to limit fuel imports to only owners of refineries as monopolistic and a deliberate attempt to frustrate the challenges the Petroleum Industry Bill (PIB) is intended to solve

The TUC President, Mr Quadri Olaleye and the Secretary General, Mr Musa-Lawal Ozigi, said the country could not afford to continue to toy with the oil and gas sector as it remains the only major source of foreign exchange.

“The labour chiefs are surprised, dismayed and irritated by the conspiracy to waste another opportunity to fix the sector, noting that from the lawmakers’ position and body language, one could infer they are serving the interest of some few individuals to the detriment of the over 97 per cent of the country’s population but the congress will not allow that to happen.

“The labour leaders urge the lawmakers to rise up and provide true leadership instead of serving the interest of few capitalists. It is high time ‘these principalities and powers’ removed their knees from the neck of Nigeria and Nigerians,” TUC said in a statement jointly issued.

In their reaction, the leadership of PENGASSAN and NUPENG, which appreciated the National Assembly for the passage of the PIB to unlock the fortune of oil and gas industry, called for removal of the clause restricting importation license to few operators.

“As we intensify effort to make our refinery work, we should ensure that the PIB does not monopolies the importation of PMS as currently provided in the senate version of the bill. This is to ensure that there is competition in the downstream oil and gas industry.

“Leaving this national security issues to few individuals will shortchange the larger Nigerian populace. We should avoid running from one ugly scenario to an uglier situation that is avoidable,” the NUPENGASSAN said in a statement jointly issued by Mr Lumumba Okugbawa (PENGASSAN General Secretary), Mr Festus Osifo, (PENGASSAN President), Mr Olawale Afolabi, (NUPENG General Secretary) and Mr Williams Akporeha (NUPENG National President).

According to the group, inclusion of PENGASSAN and NUPENG on the board of the industry regulator(s) is crucial for the attainment of one of the key objectives of this bill, which is to ensure accountability and transparency in the industry.

“All Civil societies and labour strongly clamoured for the inclusion of the two Unions in the sector to be on the board of the regulators for reason of global best practice currently being practised in most climes.

“The needs and justification for this are many and enormous as it will also ensure that the regulators are further strengthened in ensuring that issues bordering on the welfare of workers would have been championed from the cradle of the bill,” the NUPENGASSAN said.

While the debate for and against the clause in Section 205 of the PIB continue to generate is ongoing, the pertinent question that comes to mind is why should the National Assembly and industry stakeholders focus on the possibility of our local refineries not working? Is this a ploy to continue the reign of subsidy in the new future? Why can’t the law makers insist that at no point the proposed NNPC Limited fail to ensure that her refineries are in working condition. Why didn’t they make provision for financial support for local operators to expand products refineries rather than giving window of importation to licensees?

Interestingly, available evidence indicates that the country got into the current messy situation of petroleum products importation when those saddled with the responsibility of managing the NNPC refineries saw that it was more benefiting for them to grant important license rather than produce locally. Is the long awaited PIB programmed to take us back to the dark days we are trying to run away from? The answer most be NO at least for the sake of the future generations let make things right for once.

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