Mr. President, save the downstream sector from total collapse, By Odita Sunday

President Muhammadu Buhari
President Muhammadu Buhari

As a Nigerian, I am perturbed at the alarming rate of job loss especially in the down stream sector of the oil industry. The effect of the ‘shaking’ in the downstream sector has also triggered of massive job loss in the banking sector and others.  Recently, a company sacked a neighbour of mine who has spent all his youthful age working for a popular major oil-marketing firm following ‘downsizing’ of workers.  The worst hit in the workers sack jamboree are companies owned by Independent oil marketers. Over 10,000 Nigerians have lost their jobs due to the resolve by the Nigerian National Petroleum Corporation (NNPC) to starve independent marketers of petroleum products.

The Independent Marketer Programme was a result of the petroleum products shortage of the 1970s, which was partly attributed to lack of sufficient investment by the major oil marketing companies in petroleum retailing outlets, especially in the rural and more distant areas of the country. Consequently, in 1979, the indigenous independent marketers scheme was established to increase the number of outlets, particularly in the rural areas and to permit the direct participation of Nigerians in the petroleum marketing and distribution business (Medo, 1996).As at date, over 1,500 independent marketers spread all over the country are registered with the PPMC to lift products from all the depots.

Today, most, if not all the independent marketers have been complaining bitterly about this sad development whereby unlike previous Governments should recognize that Independent marketers have the largest number of Retail outlets (petrol stations) when compared to the Major marketers, this present regime heavily favours the majors in product allocation for inexplicable reasons.  Unfortunately for the independent marketers, the umbrella body that represents their interest Independent Petroleum Marketers Association of Nigeria (IPMAN) has broken into two factions and the dis-unity is adversely affecting their primary role and taking up this unfortunate development forcefully. The past few months have been terrible for the independent oil marketing community.

Most Independent marketers have reduced their staff and some have closed down their stations thereby increasing the number of unemployed Nigerians thrown into a job market. How could the president feel unconcerned when his fellow countrymen are loosing their source of livelihood? To compound matters, there are Independent marketers that accessed and used Banking facilities to develop their outlets and do their business that are now in default with the affected banks harassing them for their loan repayments. It has been observed that the on going restructuring of NNPC appears to be in consonance with the provisions of the Petroleum Industry Bill (PIB) which provides for amongst others, the ‘unbundling’ of the Corporation and creating autonomous legal corporate entities that will be allowed to operate purely as Companies in the private sector.  This is a very positive development.

However, in so doing the Hon Minister of State for Petroleum/GMD, NNPC should also adopt and follow the true spirit of these Industry reforms by creating a more level playing field for all participants in the downstream sector generally.  That Policy direction will allow for a more positive outlook going forward, since there is no way NNPC through PPMC can ever solely cater for adequate supply of Petroleum Products efficiently and effectively to the Nation taking into consideration the realities on ground.  That is why the Fuel scarcity is biting harder presently. His Excellency, President Muhammadu Buhari has always stressed that he hates adopting any policy that would end up creating hardship and sufferings for Nigerians generally.  Unfortunately, the insistence by the Federal Government to hold on to the Fuel Subsidy Regime and artificial pricing controls of petroleum products (PMS & DPK) has exactly that avoidable deleterious effect on practically all Nigerians.

With the massive over 60% drop in the cost of Crude oil prices since last year, which prices have a direct relationship to the cost of refined petroleum products, our Federal Government (FG) has an excellent opportunity to completely Deregulate the market now before Crude oil prices shoot up again. In addition, the Mr. President must as matter of extreme urgency address the immature and confused Foreign Exchange Policy which has scared away Foreign investors willing and eager to capitalize on the huge and growing opportunities in a market adjudged only recently as the largest economy in Africa.  Such Foreign exchange Policies must allow for unfettered inflows and outflows of legitimate foreign currencies that would allow forces of supply and demand to inevitably impact the current exchange rates positively.

Once the above twin issues highlighted immediately above are addressed, all interested Marketers with the capacity shall be better placed to import products directly and sell to the Nigerian Public at prices moderated by PPRA in a way to avoid the creation of pricing unfavourable distortions.  With this, the Nigerian public shall have easy access to refined petroleum products at reasonable prices without the hardship and suffering currently experienced by the Nigerian motoring public. The way things are going, if not checked, the entire downstream sector of the Nigerian Oil and Gas Industry may be tottering on the edge of imminent collapse and if that happens along with the financial exposures of the local upstream companies, the Nigerian Banking sector shall be adversely affected.  As the saying goes “A stitch in time saves nine”.    Mr. President, act fast.

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