Mixed reactions trail FG’s deregulation of downstream oil sector

Some experts in the Oil and Gas sector have expressed concern over Federal Government’s pronouncement of deregulating the downstream oil and gas sector without a law backing it.

The Minister of State for Petroleum Resources, Chief Timipre Sylva and the GMD of NNPC, Mallam Mele Kolo Kyari on Peace Mission to Niger Delta.... Commission Development Projects in Kula Kingdom, Rivers state. [Twitter/@NNPCgroup]

Deregulation has to be backed by dissolution or discontinuation of an existing regulation or law.

The Petroleum Act 1969 as amended, empowers the Minister of Petroleum to set the price and the Petroleum Products Pricing Regulatory Agency (PPPRA) Act is the enabler as from the name.

He noted that when the downstream oil sector was properly deregulated, it would be in the gazette for full implementation.

“To deregulate, there must be a regulation gazette not implied from executive order or in the front pages of the newspaper.

“You cannot have an unstructured PPPRA and Petroleum Equalisation Fund (PEF) and claim to have a deregulated downstream,” he said.

Mr Joseph Nwakwue, the Chairman, Society of Petroleum Engineers (SPE) Nigerian Council, argued that the government was yet to deregulate the downstream, especially as there was yet to be an amendment or change in the existing legislative framework.

Deregulation? That is a tall one. Do you fix prices in a deregulated market?

“To deregulate, the downstream would require change in the existing legislative framework and market structure in my humble opinion.

“We may have set the pump price at cost recovery levels but have not taken the necessary steps towards deregulating the sector.”

Meanwhile, Dr Billy Gillis-Harry, the President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) said government should make open the terms of the deregulation to enable marketers carry out their functions in line with the guidelines.

“There is no hard and fast rule as to how a particular policy can be reviewed. Most policy is mostly an executive exercise or order.

“If the Minister of Petroleum Resources, which is President Muhammadu Buhari, is speaking through the Minister of State for Petroleum Resources, Chief Timipre Sylva to say that deregulation has started; we cannot fault it.

“The only thing we can say is that, what are the rules? What are the extant laws backing it? What are the situations that would make sure that this deregulation stands?

“What would be the role of the PPPRA then? What would PEF be doing? Those are the questions,’’ he said.

According to him, the minister is not wrong if he says that deregulation has started.

“The only thing I will request him to do is to engage PETROAN and other stakeholders.

“This is because in the petroleum sector, PETROAN is a very critical stakeholder because we are the last mile in the distribution chain before the consumers get the products for their vehicles or get gas in their cylinders to cook,’’ he said.

NAN reports that Sylva had on May 14 announced that deregulation of the downstream oil sector took effect on March 19, with the reduction of the pump price of the Premium Motor Spirit also known as petrol.

He said the PPPRA would continue the pricing modulation of petroleum products to protect the interest of consumers and not allow profiteering among marketers.

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