PIB: Marketers kick against clause restricting importation of petroleum products to refiners

Minister

PIB: Marketers kick against clause restricting importation of petroleum products to refiners

July 13, 2021

Oil marketers on Tuesday kicked against the restriction of licence to import petroleum products to only owners of refineries.

The conditionality is contained in the draft of the Petroleum Industry Bill passed by the Senate on July 1.

The oil marketers said in a statement issued in Lagos that the insertion of the clause in the Bill would create a monopoly that would exploit ordinary Nigerians.

The statement was signed jointly by Mr Olufemi Adewole, Executive Secretary, Depots and Petroleum Products Marketers Association (DAPPMAN) and Mr Clement Isong, Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN).

Section 317(8) in the Senate’s version of the Bill states that licence to import any product shortfalls shall be assigned only to companies with active local refining licences.

The import volume shall be allocated between participants based on their respective production in the preceding quarter.

The two associations noted in the statement that the restriction extended to products like diesel, kerosene, liquefied petroleum gas and base oils that had long been deregulated.

They also noted, however, that “as industry stakeholders and professionals with heavy investments in the downstream sector, we welcome the entry and participation of local refineries.

“We believe that local refining ultimately benefits Nigerians and our economy. We also commend the government’s plan to repair all existing refineries boosting our refining capacity,’’ they stated.

They stated also that their opposition to Section 317(8) was based on the premise that it posed monopoly risk that must be avoided.

The marketers said that it was imperative that a level playing field was set for all operators across the oil and gas value chain.

“Any provision that does not guarantee a free and open market will give room to price inefficiencies and eventually kill off small businesses in the downstream sector.

“This provision will stifle price competition and leave pricing to be solely dictated by a few local refiners. If Nigerians are to pay higher international prices at the pump, we should also benefit when prices go down internationally,’’ they stated

They argued that this was not guaranteed unless there was healthy competition.

“Prices must be kept competitive at the pump for the benefit of the average Nigerian whose income is constantly being eroded by inflation.

“Allowing imports by major players across the supply chain will protect consumers by ensuring that local pump prices are not higher than regional and international prices.

“MOMAN and DAPPMAN remain committed to the sustainability and institutionalisation of a viable downstream petroleum industry for the social and economic growth of Nigeria,’’ they stressed. (NAN)