Fuel subsidy removal: ‘Most fundamental aspect of PIA 2021 not yet implemented’ – Oil firms

Amid growing reports of moves by the Federal Government to remove subsidy on imported petroleum import, some oil and gas operators in the country, have raised concerns over the non-implementation of what they described as the most critical aspect of the Petroleum Industry Act (PIA 2021).

According to the stakeholders, the full deregulation of the sector is a key segment of the PIA, which was yet to be implementation, even as they demanded that the Federal Government ensure the industry is fully deregulated before commencement of a subsidy removal.

The sixth edition of NIES, took place in Abuja from April 16 to April 20, and had as theme; ‘Global Perspectives for a Sustainable Energy Future.’

Speaking during a session of the just-concluded 2023 Nigeria International Energy Summit (NIES) in Abuja, the operators who included representatives of the Major Oil Marketers Association of Nigeria (MOMAN), Lagos Chamber of Commerce and Industry (LCCI), as well as Shell Nigeria, Exxonmobil Nigeria, posited that government needed to create a free market ‘where prices are determined by the forces of supply rather than by law.’

The NIES session was tagged; ‘Africa at Heart of the Global Energy Mix: What’s Ahead in Nigeria,’ which focused on sustainable system for downstream, midstream and upstream and roadmap for the incoming administration.

Making his presentation, Chief Executive Officer, Ardova PLC, Mr Olumide Adeosun, decried the fact that deregulation, the most fundamental aspect of the Petroleum Industry Act (PIA 2021), has not been implemented.

Adeosun, who is also the Chairman, Major Oil Marketers Association of Nigeria (MOMAN), frowned at the way the deregulation was being suspended in terms of regulations in Nigeria.

“And specifically it is around the creation of a free market where prices are determined by the forces of supply rather than by law.

“We also represent a professional association of major oil marketers association of Nigeria. So we have done a lot of the work but the challenges we face are very well documented.

“Deregulation must happen in full and it must happen immediately. We can no longer have a situation where there is a single supplier. As we are deregulating, we must make sure we have excellence execution,” Adeosun explained.

The MOMAN chairman, therefore, appealed to the Federal Government and relevant agencies in the sector to ensure that deregulation is ‘done in a transparent and sustainable manner while the public and relevant stakeholders are included.’

According to Adeosun, deregulation, when implemented would reduce oil smuggling, increase investments to the downstream and redefine cash durability.

Also, Chairman, Petroleum Contractors Trade Session (PCTS) LCCI, Mr Tayo Akinwunmi, in his presentation, tasked government on deploying technology to improve storage system to ensure affordability and sustainability.

Executive Director, Deepwater, Exxonmobil Nigeria, Mr Oladotun Isiaka who also spoke on deregulation, expressed dissatisfaction over significant misalignment and overlapping roles in view of PIA implementation between agencies in the sector.

The anomaly, he said, has given room for gaps and lapses and equally made opportunities less attractive.

In his presentation, Chairman, Shell Companies in Nigeria, Mr Osagie Okunbor, tasked the incoming administration to fix the insecurity challenges in the industry.

“The new administration should not come in to delay on the PIA, rather they should find a will power and focus on making it work effectively,” Okunbor advised.

Federal Government is reportedly moving to announce the removal of fuel subsidy in the country, said to commence with a 40 per cent increment in the salaries of its workers from the month of April.

Permanent Secretary, Ministry of Petroleum Resources, Amb. Gabriel Aduda, who confirmed this while briefing newsmen, Thursday at the end of NIES 2023, in Abuja, however, said government was committed to subsidy removal but could not be too specific until all indices were considered, to ensure that the effect would not be harsh on average Nigerians.

Aduda said although subsidy removal had been in focus for sometime, but President Muhammadu Buhari, who doubles as Minister of Petroleum Resources, was taking it very seriously, including everyone in the industry.

“We totally understand the importance of removal of subsidy but we also understand the greater importance of the citizens in the scheme of things.

“As we speak we are still taking a very close look at how best to achieve subsidy without disrupting the entire ecosystem of livelihood in Nigeria.

“Because that is our responsibility as government. We have to ensure that the buffers are in place and forex is made available for imports.

“We have to ensure that supply is available for a minimum of six months to make disruption minimal,” he assured.