CSOs make demands for the sustainable deregulation of the downstream petroleum sector

A consortium of Civil Society Organizations (CSOs) has asked the federal government to entrench the deregulation drive of the downstream sector of the petroleum industry by enacting appropriate legislation or embedding it as part of the Petroleum Industry Bill (PIB) expected to be submitted to the National Assembly soon. The consortium also demanded that the government commences moves to repeal the laws establishing the Petroleum Equalization Fund and the Petroleum Products Pricing and Regulatory Agency (PPPRA) to signal its commitment to the full deregulation of the sub-sector.

The consortium, which took the positions at the end of a one-day webinar held on Thursday, 10th September 2020, also asked the relevant authorities, especially the Central Bank of Nigeria (CBN) to ensure a level-playing field for all importers of Premium Motor Spirit and not place the Nigeria National Petroleum Corporation (NNPC) at an advantage over others. The CSOs also called on the NNPC to “take urgent practical steps to reverse the fortunes of the loss-making refineries as revealed in its published 2018 Audited Reports of its Subsidiaries,” noting that “the refineries remain cost centers that the Nigerian government can ill afford given the impact of Covid-19 pandemic and other fiscal pressures on its economy.

The Nigerian government should create an enabling environment for the private sector to contribute to the efficient running of the refineries so that Nigerian can reach its domestic refining goals.” The group further called on the President and the Minister of Petroleum Resources to “demonstrate his honest commitment to the deregulation efforts by expunging the laws that entrench the potential of returning to a subsidy regime and pre-deregulation state,” adding that: “the government repeals the PPPRA Act, the PEF(M)B Act and the Price Control Act specifically, section 6(1) of the Petroleum Act, Schedule 1 of the Price Control Act, all acts that ensure a potential of returning to a price-fixing regime and demonstrate to the Nigerian people that the ‘declaration of full deregulation’ is merely a statement of intent and not yet honored.”

According to the consortium, there is a need for the Federal Government to “commit to the sustainability of the deregulation regime by entreating it in law, either through stand-alone legislation or through appropriate clauses integrated into the Petroleum Industry Bill (PIB) will allow for the sustainability of the no-subsidy regime. “While we await appropriate legislation, we require the government to clarify the role of the Petroleum Support Fund in the new deregulation regime. Clarity is required about how that fund is being managed, whether the over-recovery sums were deposited there and how they are expected to be spent.”

It also urged the Ministry of Petroleum Resources to “back up its deregulation policy statement by empowering appropriate agencies including the Federal Competition and Consumer Council to take over the consumer protection interests of Nigerians that may be adversely taken advantage of in a deregulated downstream sector to protect the interests of the people would not suffer exploitation in the hands of profiteering marketers.” On the issue of ameliorating the immediate effects of the removal of petrol subsidy, the group entreated the government “channel the revenues used for subsidy to improve the lives of its originally intended beneficiaries; impoverished Nigerians and not the rich, by investing in enablers of economic growth and development such as the development of rural roads, education, health services, and agriculture.”

According to the group, “if the NNPC must remain a player in the market, it must strive to operate under the same conditions and rules as other players in the sector regulated only by the prevailing market forces and competition.” While commending the government for “providing initial regulation to support the deregulation efforts in June 2020,” the CSOs noted that the “government’s engagement with the public on the effects of the deregulation leave a lot to be desired. We encourage the government to ramp up its engagements with the public to improve their awareness and understanding of the deregulation process and all it portends for the Nigerian people.”

Recall that it had earlier issued a 10-point recommendation in May 2020 in a bid to support the government’s attempt to achieve sustainable deregulation of the downstream sector. The consortium, formed in April 2020 and spearheaded by the Nigeria Natural Resource Charter (NNRC) is comprised of the following civil society organizations: Civil Society Legislative Advocacy Centre (CISLAC), BudgIT, Connected Development (CODE), Media Initiative for Transparency in Extractive Industries (MITEI), OrderPaper Advocacy Initiative, Women in Extractives (WiE), Extractive 360, Centre for the Study of the Economies of Africa (CSEA), Youth Forum on Extractive Industry Transparency Initiative (Youth Forum on EITI), Publish What You Pay (PWYP), Africa Network for Environment and Economic Justice (ANEEJ), African Centre for Leadership Strategy and Development (CentreLSD), Centre for Development Support Initiatives (CEDSI), Centre for Transparency Advocacy (CTA) and Koyenum Immalah Foundation (KIF).