There are strong indications that Nigeria’s downstream petroleum industry cannot achieve full deregulation in 2020 as the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA) were still performing their traditional roles.
Furthermore, the enabling factors, especially structures, institutions and the Petroleum Industry Bill (PIB) are not yet in place.
Under a regulated market regime, the prices of petroleum products are supposed to be determined by the forces of demand and supply without much intervention.
However, investigations showed that the PEF, which has the responsibility to settle the cost of bridging petroleum products from one part of Nigeria to another, under a deregulated regime, was still performing its role, despite claims that the sector has been deregulated.
Officials of the Fund did not take their calls nor respond on Monday, but information obtained from its website, stated: “The bridging scheme was originally introduced as a temporary measure during turn-around maintenance (TAM), wherein government sought to encourage and support marketers in transporting petroleum products nationwide.
Although bridging was meant to be a temporary solution until the refineries were producing back at full capacity, the state of the refineries has worsened over the years.
In addition, pipeline vandalism by militants and economic saboteurs has been on the increase, to the point where trucks have become the major source of distributing petroleum products in recent times.
The initial projection was to have a maximum of 10 percent of total petroleum products bridged while the remaining portion will be pumped through the pipelines.
However, trend analysis indicates that bridging of products have consistently increased over the years to about 40 per cent.
There is also a noticeable trend whereby products are bridged from Lagos to the South East and South-South areas of the country to address products unavailability from the refineries in Port Harcourt and Warri.”
The investigation further showed that the government would not disband PEF and the PPPRA, which also, performed pricing functions under a regulated regime, until the PIB is passed into law.
However, it was established that the legislators, expected to return from their holiday next week would start all over on the PIB, meaning that the passage of the bill would take many months, than previously anticipated.