The Civil Society Legislative Advocacy Centre, CISLAC, has called on Nigerian government deploy multi-stakeholder approach to address issues in the downstream sector.
This is contained in a statement by the executive director of the centre, Auwal Rafsanjani made available to ASHENEWS on Friday.
According to CISLAC, “Nigeria has faced recurring incidences of instability and insincerity in the administration of the downstream sector scarcity of petroleum products, with its attendant hardship on the citizens.”
Rafsanjani added that the undefined subsidy regime within the downstream sector had posed issues at different times and are still prevalent till date as well as widened the trust gap between government, the organized labour, as well as with civil society and other Non-State Actors.
Read the statement below:
That Nigeria’s economic is sustained 95% by oil and its allied products is unarguable; hence, the near total socio-economic dependence on oil these allied products.
Since the early 1990s Nigeria has faced recurring incidences of instability and insincerity in the administration of the downstream sector scarcity of petroleum products, with its attendant hardship on the citizens.
This has led to industrial unrests within the country at different times. Many other issues including the undefined subsidy regime within this sector had at different times posed issues which unfortunately are still prevalent till date and has been left unattended to or the responsible government at different times had played lip service on how to solve this hydra-headed issue that had widened the trust gap between government and the organized labour, as well as with civil society and other Non-State Actors.
Several interventions have been made, but without much results in terms of sustainable solutions and hence leaving the country even worse off. This calls for worries judging from the fact that Nigeria do not lack experts in any field, Economics of the oil and Gas sector governance is not an exception.
CISLAC therefore calls on the government to deploy a more holistic approach by not just looking at the solutions, but also the causes and the prospects through a multi-stakeholder approach involving all relevant government and non- governmental stakeholders to consider the perennial status of issues involving petroleum products in Nigeria, and the non-availability of any sustainable solution to date. Roundtable is apt. That this Roundtable is being organized by the House of Representatives Committee on Civil Societies and Development Partners, is a bold statement of the commitment of the legislature towards finding a sustainable solution to this challenge. The outcomes of this roundtable would be shared with relevant government and non government partners, and would also feed into the legislative process.
CAUSES IDENTIFIED AND DISCUSSED
The roundtable identified the following as some of the major causes of the perennial petroleum scarcity in Nigeria:
- Demand supply pull where increasing local demands are not being adequately met by corresponding supplies of petroleum products
- Decay in critical infrastructure like refineries, depots, pipelines, roads, jetties, power, etc
- Leakages caused by corruption in the value chain.
- Militancy in the Niger Delta Region including vandalism and outright destruction of oil facilities, which have led to about 50% drop in daily crude production.
- Weak institutional and regulatory frameworks for monitoring efficiency in the overall downstream sector.
- Policy inconsistency
- Lack of effective coordination among the various stakeholders in the downstream sector
- Low level local production output occasioned by non functional and insufficient refineries.
- Difficulty in accessing credit and scarcity of foreign exchange for importation
- Lack of synergy among the various players in the downstream sectors, which usually leads to conflicts.
- Multiple taxation from different government and civil society unions add to the high cost of distribution of products.
- Haulage and other logistics challenges affect distribution of products.
- Weak legal frameworks and governance structures (Obsolete laws still govern the operations of the downstream sector)
- Sabotage like pipeline vandalism, leakages and wastages encourage scarcity of products.
- Unavailability of innovative technology to encourage and increase local refining capacity.
- Ineffective management of the subsidy policy leading to leakages and wastages.
- Existence of middlemen in the value chain increases the pricing of products; NNPC deals with associations instead of individual companies in allocation of products, to the detriment of the sectors overall performance.
- Lack of high quality and reliable data for strategic planning.
- Global instability in oil prices puts Nigeria at a comparative disadvantage because the high cost of production raises prices, thereby making buyers look towards Asia and other parts of Africa for cheaper offers.
OBSERVATIONS
The following observations were made during the dialogue:
- The preponderance of opinions indicated genuine concern of stakeholders about the perennial scarcity of petroleum products and a shared desire to defeat the menace.
- Disharmonious relationships which often verge on mutual antagonism and distrust among critical stakeholders and industry leaders leave the sector a lot more vulnerable.
- Instead of synergistic engagement, there appears to be isolated efforts by individual stakeholder-groups within the industry which amount to very little in terms of measurable outcomes.
- That absence of patriotism and sincerity of purpose seem to contribute to the lingering problem of perennial scarcity of refined products.
RECOMMENDATIONS
From the various paper presentations, panel discussions and questions and comments with responses, the following actionable recommendations were made:
- Improve capacity for local refining to compliment imports and meet the local demands.
- Improve maintenance of critical infrastructures like refineries, pipelines, depots, jetties, power facilities, roads and other inputs to effective downstream operations.
- Improved monitoring and evaluation, as well as surveillance to block all leakages and other forms of malpractices in the sector.
- Strict sanction for depot owners who engage in malpractice like manipulation of price and diversion of products
- Strengthening institutional framework for monitoring of the downstream sector to minimize leakages.
- Policy enhancement and consistency to address challenges in the sector.
- Holistic approach to effective coordination of the downstream sector,
- Easy access to credit and Foreign Exchange facilities for importers of petroleum products
- Greater collaboration among various stakeholders in the Petroleum sector to improve efficiency.
- Immediate passage of the Petroleum Industry Bill to correct the lapses in the present management of upstream and downstream petroleum sectors.
- Improve technology and automation in the management of the downstream sector.
- Effective management of subsidy to minimize corruption in the value chain.
- Effective management of logistics related to distribution.
- Granting of incentive and wavers to reduce the cost of importation
- Effective information and communication among various stakeholders in the downstream sector.
- Need for NNPC to sell products to individual companies
- Complete deregulation of the downstream sector to make it attractive to investors.
- Closer understudy of technology used by illegal refineries operators with a view to adopting it to increase volume of local production.
- Maintenance and use of pipelines for effective distribution of Petroleum products
- Reduction in the number of regulators to reduce the barriers to effectiveness of the sector.
- Explore alternative sources of energy
- Encourage global standards and best practices
- Invitation of an investment bank in the future
