Yar'Adua won't budge on petroleum industry deregulation
President Umaru Musa Yar'Adua said yesterday that there was no going back on the planned deregulation of the downstream sector of the petroleum industry.
The policy also received the backing of the House of Representatives as the Lower Chamber asked the Federal Government to sell the refineries.
Speaking while receiving the British Secretary of State for Africa, Baroness Glenys Kinnock, at the State House, Abuja, Yar'Adua said his administration is currently holding consultations and dialogue with all stakeholders to explain the necessity of the action.
“We are committed to deregulation, because we are convinced that subsidy distorts the system, encourages corruption and creates more problems than it solves. We are aware that initially, there will be pain, but these will be temporary and the whole nation will be the better for it,” he stated.
Yar'Adua said the Petroleum Industry Bill (PIB), now before the National Assembly, was aimed at repositioning the Nigerian National Petroleum Corporation (NNPC) to become a transparent, accountable and profitable business concern, existing without any budgetary provisions from government, and freed from its regulatory functions.
The President assured Kinnock that after ongoing negotiations with international oil companies about the Bill's fiscal regime, investors will realise that the interests of all stakeholders in the oil sector are protected.
Responding to Kinnock's concern about electoral reform in Nigeria, Yar'Adua said political parties need more internal democracy, while all participants in the process must discharge their responsibilities according to law.
The President said: “Electoral reform is necessary and is within the capacity of the National Assembly to amend the Electoral Act, but we must also realise that the role of political parties can be more devastating than the umpire's failings.”
He added: “We need internal democracy in the political parties, development of a culture of putting national interests first, as well conscientious discharge of functions by all officials involved in electoral jobs.”
The President also briefed the British Minister about the progress of the post-amnesty programme, and requested assistance in building capacity of those managing the programme and the electoral reform process, as well as funding to execute these programmes.
Earlier, Kinnock had commended President Yar'Adua for the success of the amnesty programme, the banking reform and offered British assistance to ensure these programmes succeed.
Meanwhile, Special Adviser to the President on Petroleum Emmanuel Egbogha has assured Nigerians on the workability of deregulation.
Egogha who blamed the opposition to deregulation on inadequate information on the principles said its implementation would lead to the reduction in petroleum prices.
“Of course deregulation will work, the problem is that most people don't understand the meaning of deregulation, they take it that deregulation is to increase prices whereas it is the opposite,” Egbogha said. According to him, "It is deregulation that will bring down prices because when we have full deregulation and completion is introduced into the business and people will be under cutting themselves and everyday prices will be going down and eventually it will reach the bottom.”
He said: “At the beginning maybe the price will be high but this competition is what is going to drive prices down. This is what happens everywhere in the world. Many don't understand, they think that deregulation is only in the oil and gas industry, meanwhile the food you buy day-to-day is being regulated and the prices move according to demand and supply.
“This is something we should have done long ago but for the survival of our industry this must be done. It will bring down prices and everyone will enjoy its benefit.
“The refineries will work and they are being fixed, it is a part of the deregulation programme because the refineries must be able to work to provide ample supply of products just like many other factors that we are now bringing on stream the compressed natural gas system, it will provide the products that are even at half the rate that we are giving them today.”
The House of Representives yesterday canvassed the sale of the nation's refineries, insisting that the only way to get the facilities to work is if they are managed by private entities.
The House also sanctioned Federal Government's plan to deregulate the downstream sector of the petroleum industry as a way of addressing the problem of fuel scarcity in the country.
Chairman, House Committee on Downstream Sector, Hon. Clever Ikisikpo, who made the call during a fact-finding mission of the House on the allegation of N75 million fraud by a cabal in the NNPC, said at the moment, all the four refineries in Kaduna, Warri and Port Harcourt are down as efforts by the NNPC to fix them have not yielded result.
According to him, if the downstream sector is deregulated and private investors are allowed to run these refineries, they will surely work and this will put a stop to this issue of fuel importation.
“The issue of the refinery is a long-time issue. The reason why we have been importing day in day out is because the refineries are not working. If somebody is claiming that Nigerian refineries are working, it is not true. That is why to us, we believe that if the refineries have not been able to, the only solution is for government to make sure that these refineries are privatised, because no single company will like to run its company down.
“If you allow the government to have the refineries in the next four years, the situation will be the same. Look at now if you go to Kaduna Refinery, they are doing Turn Around Maintenance (TAM), for how long can we continue to do TAM? We have spent hundreds of millions of naira in doing TAM and at the end of the day, these refineries will not work. So what is the solution? The solution is to deregulate. When we deregulate and allow private investors to run these refineries, they will work. It will not be like the bureaucratic kind of government that will not allow these refineries to work.
“We have been to the refineries and as I am talking to you today we have just wasted several hundreds of millions of naira on the refineries. Contrary to impression in some quarters, none of them is working as I am talking to you now because we have been there to see things for ourselves,” he said.