Nigeria Content Online

The newly appointed group managing director of the Nigerian
National Petroleum Corporation (NNPC), Shehu Ladan, has joined his predecessor
to state that NNPC is fully in support of the planned deregulation of the
downstream sector of the petroleum industry by the federal government.

While presenting a paper, titled, “Downstream Petroleum Sector:
The Imperatives of Deregulation,” before a coalition of legislators at the
National Assembly in Abuja, on Wednesday, Mr. Ladan, said the speedy implementation
of the deregulation policy would go a long way in encouraging inflow of private
sector and international investment in the downstream sector.

“Without mincing words, let me join my predecessor to state that
NNPC is 100 per cent in support of deregulation, not just because it will
support our business, but because this is the only way that majority of
Nigerians will derive fair deal from the abundant petroleum resources in the
country. With deregulation, consumers will enjoy fair product prices and
operators will be in a position to recover full cost and reasonable margins on
their operations,” he said.

The NNPC boss argued that implementation of the policy would
give rise to efficiency in product usage, product availability and effective
competition among investors, hence putting an end to the “NNPC monopoly.”

Investors’ fear

Mr. Ladan said it is only when a deregulated regime is put in
place that the private refineries that have been licensed can really take off,
noting that investors who have been given licenses to build refineries are
scared of venturing into the multimillion naira project because of the
regulated regime in Nigeria.

“Clearly there is the need to move away from the current ad hoc
pricing to an automatic price adjustment mechanism that is truly
de-politicised. In the transition to full market liberalisation, the regulator
has the responsibility to monitor and check anti-competitive behaviour such as
price gouging and predatory pricing,” he explained.

The Corporation head further explained that complimentary
measures have been included in the 2009 supplementary and 2010 budgets to
cushion the likely effects of the policy, adding that the measures included the
provision of intra-city rail transportation in six major cities: Lagos, Kano,
Port-Harcourt, Jos, Enugu and Maiduguri, as pilot projects. He also said plans
were underway by the federal government to commit N373 billion to massive road
rehabilitation and new construction interventions across the entire country in
addition to the procurement of 25 railway locomotives.

“Part of the complementary measures to cushion the effect of
deregulation on the low income and the poor household include the provision of
low income housing scheme and civil servants mortgage scheme and N10 billion
revolving mass transit scheme in 2009 supplementary budget,” Mr. Ladan said.

The Chairman of the Coalition, Bassey Etim Bassey, said the
corporation head was invited to outline the merits and demerits of deregulation
to members of the National Assembly, to enable them to take an informed
position about the policy.