By Sunny Chuba Nwachukwu
Deregulation is a policy tool created to stimulate investment in the oil and gas sector. It is thought out of a set of ideas and plans towards a strategic planning that fosters an attractive and eased oil sector business operations, for private companies (both indigenous and international oil companies); enabling them to take investment decisions. In the Nigerian context, the nation’s oil industry, while remodelling its policy, strategy and programme through frameworks (mainly structural and legal) for the oil and gas subsector in the economy, should critically consider very deeply, ways or avenues to make the industry very attractive for private investors, and at the same time, make it to be economically viable for the overall interest of the national economy.
In the downstream subsector of the oil industry, a lot of ideas are presently being put across as suggestions, proposals and recommendations. The essence, of course, is to chart viable options that can have positive impacts on the economy, if the other interplaying factors (both monetary and fiscal policies) are gotten right. The importance of establishing good governance structure in whatever ramifications that is being considered, should not be overlooked, especially now that the national oil company, the Nigerian National Petroleum Corporation (NNPC), owned by the government and people of Nigeria, is being expected to emerge as a publicly quoted entity, and is being ascribed in the Petroleum Industry Bill (PIB) with a new ownership structure.
The downstream subsector having suffered terrible blows in the immediate past in the industry, which majorly resulted from corrupt practices and certain decisions taken unprofessionally, it is here posited that serious caution is vital at this present stage in the on-going reforms in the nation’s oil industry, vis-à-vis the legal framework governing the industry, without creating an overlap of the regulatory functions, amongst the three operational arms of the sector.
The major changes being presently put across to the federal government by the Presidential Economic Advisory Council (PEAC) as part of the already considered measures towards making the now long overdue and over flogged Petroleum Industry Bill (PIB) at the parliament to be more effective and beneficial to the nation, requires an extra further slight adjustment in the pricing mechanism applied to the crude oil in the downstream to be sold to local or indigenous investors; just in the same way gas supply to power plants has been arranged and as proposed to the government by PEAC on deregulated gas pricing.
As a scholar, with advanced academic knowledge in Corporate Governance and the business being discussed, one has over the years been following the trending developments on the PIB with keen interest, with special attention on the updates being reported. I must at this critical point call the attention of the PEAC, to now address this issue as pointed out (for posterity and for the economic prosperity of the nation as well). Without any strings attached, I strongly advocate for, as well as recommend that crude oil pricing ought to be deregulated for the players in the refining sector of the downstream.
It is obvious, and one is quite aware, of the impending loopholes that might be considered in the critical minds of those reading this piece, based on the fact that our flawed operational structure is neck deep in corrupt practices; which could be taken advantage of to perpetuate sharp practices, fraudulent activities and other forms of racketeering. Yes, I know of such thoughts or possibilities, but such possibilities shall be plugged ab initio (as part of the legal framework that shall guide the policy programme).
The essence of such package is to make the economic growth more robust and participatory at all stages of the value chain in this particular operation. This concept, definitely, shall be all encompassing, cutting across borders of the federal government agencies involved in active participations for revenue generation and revenue drive (including the tax returns by the Federal Inland Revenue Service) in the said suggested income generation template for prosecution, as it were, by many arms of the governmental agencies.
Is the overall essence of these ideas being proffered not for the excellent economic performance and financial prosperity of the nation’s economy? The nation earnestly yearns for prosperous economic development and growth, especially in her international business relations with other countries, considering the strengths and weaknesses of the nation’s local currency exchange rate that keeps tumbling down due to the general underperformance of the nation’s GDP profile and its growth rate. Something quick needs to be done by those involved and by patriotic individuals positioned at strategic economic windows, or else, drastic changes need to be made in the nation’s productivity profile (as a matter of urgency).
Nwachukwu, a graduate of pure and applied chemistry with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce.
Sunny Chuba Nwachukwu (FICCON, LS)