A Review of the Nigerian Energy Industry

How Deregulation‘ll Curb Corruption in Downstream – Alison Madueke

*As NNPC Moves to Sign TAM with original builders

10 January 2012, Sweetcrude, Abuja – The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke on Tuesday explained how the removal of fuel subsidy by the Federal Government will help curb the widely reported incidence of corruption in the downstream sector of the oil and gas industry.

Speaking in an interactive forum with journalists in Abuja, Mrs. Alison-Madueke noted that apart from providing the leeway for the re-investment of key funds to the provision of some social infrastructure, the removal of subsidy on premium motor spirit would help erase the issue of corruption wrought by the unending episodes of controversial subsidy claims and counter claims.

“It is not possible to have petrol at N65 per litre at the pump in Nigeria, in Chad as much as N200, in Ghana at N175 and in Niger at N190 and yet you expect people not to move the product across our borders? It is simple economics especially when you consider the nature of our international borders. So in the last 16 months, while we have fought so hard to keep the country wet with petroleum products despite some level of disparity in prices, some people have taken the products to other neighbouring countries where they can sell it for as much as three times the price in Nigeria,’’ the Minister noted.

“It is a matter of simple economics that when you have this massive differential in price between you and neighbouring countries, nothing can stop the smuggling of the product.”

Mrs. Alison-Madueke noted that it is impracticable for anybody to expect government to stop the incidence of corruption in the downstream sector which is largely due to the subsidy regime and yet expect government to do so without removing the incidence of subsidy which is the biggest incentive for corruption in the sub-sector in the first instance.

Mrs. Alison-Madueke revealed that in the bid to sustain the gains of the fuel subsidy removal, a massive transformation and reorganization is taking place in the Petroleum Products Pricing Regulatory Agency, PPPRA, and Department of Petroleum Resources, DPR, to ensure uniformity of prices of petroleum products in the downstream sector.

“We have put in place a much more robust and aggressive transformation in the regulatory agencies of the downstream sector. PPPRA and DPR are being reformed as we speak. Sweeping changes are beginning to go across them as we speak. We have done this so as to tighten the regulatory indices in the oil and gas sector,” she said.

The Minister sued for understanding from Nigerians and called on the organized labour to reconsider its decision on the strike and return back to work. “In fact, the policy is a transfer of negativity to positivity in such a way that funds will be put to better use. The subsidy transfer as i choose to call it will lead to a situation where international trunk a roads will be built for Nigerians. Major roads such as Abuja-Abaji,Benin-Ore- Shagamu roads have already being earmarked, major rail way lines that will help in the freighting of petroleum products and irrigations projects that will help to supply water to Nigerians have already being pencilled down.”

On the planned turn around maintenance, TAM, of Refineries, Mrs. Alison-Madueke disclosed that the formal contract or agreement for the TAM of all the traditional refineries will be signed this week by the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation, NNPC, and the original builders of the refineries adding that other Chinese investors have indicated interest to build more refineries in the country.

“In order to ensure that we get our refineries to 90 percent utilization and to show Nigerians that we are serious this time around, we actually went back and brought the original contractors that built our traditional refineries of Warri, Port Harcourt and Kaduna. Already they have given us an aggressive timetable and they have assured us that within 24 months all three major refineries will be producing up to 90 percent capacity utilisation.”

She assured Nigerians that within the next 24 months Nigeria will become a net exporter of petroleum products adding that with the removal of fuel subsidy several investors are ready to invest in the nation’s economy.

“With this policy in place, millions of jobs will be created and the economy will become very viable for investment,” Mrs. Alison-Madueke stated.

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