26 December 2016, Sweetcrude, Lagos — Former Minister of Interior and Chairman of Integrated Oil and Gas Ltd, Capt. Emmanuel Iheanacho has reiterated that full deregulation of the downstream sector remained the best option to attract investors for market development.
Iheanacho stated this in an interview with Energy Editors in Lagos against the backdrop of the huge debt being owed marketers by Federal Government and the absent of subsidy payment in the 2017 budget.
“We should note that there is no provision for subsidy payment in the 2017 budget, which calls for the government to fully deregulate the downstream sector to attract investors.
“We need full deregulation of the downstream sector. We do not need partial deregulation. I do not understand the so-called price modulation we are seeing and how it can work because presently, it is not working.
“Government should move from uncertainty to certainty. We have a situation where prices are capped on one hand. Market prices in Nigeria and international market prices are outside the control of our local policy.
“The current international market on imported petroleum products price template does not conform to the physical landing cost on the products when plunged into the country’s template, ‘’ he said.
Iheanacho appealed to government pay outstanding subsidy funds owing marketers for the importation of petroleum products, a figure which he refused to disclose.
He noted that amount been paid as interest to banks has accumulated into huge amount due to delay in subsidy payment.
“For instance, a marketer is being owed over N5 billion but pays about N3 million to service his loan on daily basis. This attracts an additional interest from the banks to the importers. This is because we borrowed money from banks on specific terms which must be met.
“The painful aspect is that the Federal Government does not consider such accrued interest when paying the subsidy after several months of delay,’’ he said.
In the 2017 Iheanacho expects the government to urgently resuscitate the country’s refineries to improve and increase local refining of petroleum products for local consumption.
According to him, “in going forward, we need to put more efforts in locally- refined petroleum products which called for policy action to resuscitate existing refineries to create an enabling environment for Nigerian private sector entrepreneurs to be able to invest in the reefing capacity.
“In 2016 expenditure, nearly 70 per cent of forex required for running the economy went into the importation of the products.
“If we need to turn our economy around from consuming economy to a productive one, we have to deal with exporting of crude oil by creating the opportunity that local entrepreneurs can build private refineries.
“So that Nigeria can become a net exporter of refined petroleum product rather than being a net consumer’’ he said.