Downstream Deregulation: ‘We Are Addressing Governance Aspect of the PIB’ – Sen. Marafa
The Chairman, Senate Committee on Petroleum (Downstream) sector, Senator Kabiru Marafa, has stated in an interview at the 16th Nigeria Oil and Gas conference in Abuja, that the Senate had given its nod to the total deregulation of the petroleum downstream sector, but with the passage of PIB as a tool to curbing corruption in the system. He spoke with newsmen, having Orient Energy Review in attendance. Excerpts:
Tell us what Nigerians should expect from the planned deregulation of the downstream sector by the Federal government, as endorsed by the Senate committee under your watch?
This 8th National Assembly decided to give Nigeria a sense of direction as far as the downstream sector is concerned. What the downstream sector requires actually, is total deregulation, and the PIB is under consideration as of now. We are currently considering the government aspect of the PIB, intending to make it like a one-stop shop, where investors can have access to know the industry and the activities of the body that regulates the industry. We are going to work on the PIB in order to make it stronger for investors’ delight.
Can you expatiate more on the reality of this aspect of the PIB which we all know failed under the past leadership?
Let me go a little down memory lane. We all know that the previous administrations contributed a lot to some of the woes that befell petroleum industry. Also, that the PIB has suffered a lot of setback from two or three National Assemblies, and it failed to see the light of the day; discussions, deliberations went on for years, yet no success. But this present NASS has decided to do it with a different approach. God willing, it will be fulfilled in the next couple of weeks, after which we will go to the Fiscals, on how the monetary aspect will be championed. Thereafter, we’ll go to the Communities and social issues. I will say, as far as the Senate is concerned, we are doing everything possible, under the leadership of Dr. Bukola Saraki, who took it upon himself by assuring Nigerians that this Bill will see the light of day; and when that is done, the downstream sector will have a fresh breath of life.
Sir, do you mean that PIB will completely be passed this year?
I wouldn’t understand what you mean by completely, but what I said is that, the three aspects from the bill will be accented to this year by God’s grace. The Governance aspect will be done in the next couple of weeks, maybe by the end of March or early in April. Meanwhile, the Community aspect has already gone through first reading, and is already coming up for second reading; if that is done, maybe we will give it another three to four months or lesser. But before the actual passage of the Governance Bill, the Fiscal Bill would have gone through the first reading, and of course, we shall give it all the attention it needs.
You just mentioned that deregulation is the way out of the problems in the downstream sector, but over time, past governments have made attempts, but the coalition of labour and the civil society always kicked against it. What is the NASS doing to forestall such resistance?
As a nation, we have to make deliberate and conscious decision on what we intend to achieve as a people and as country. Just few hours ago, the Senate ordered a probe into issue of subsidy again. The NNPC alone collected over Five Trillion Naira (N5tr) of subsidy from 2006 to 2015; so subsidy is actually a cancer. Labour union, Civil Societies and others need to ask questions as stakeholders. What is subsidy all about and what value are we getting out of subsidy compared to the amount of funds injected into it. Now if you want to consider the actual amount collected by NNPC and the Independent Marketers and so on, it is over Nine Trillion Naira (N9tr) within the scope of ten years. That is alarming because it is over our national budget. It is only in 2017 that our budget rose up to N7tr. In previous years, when we had budget range of between five and six trillion, what NNPC gulped have been double of Nigerian national budget, all on subsidy! The question here is, does common man on the street get the value of N10, N20 or N30 deductions from their transactions from the sector? But, if such amount of money is pumped into other sectors like health, mining, agriculture, railway system and what have you, will there not have been value addition to the lives of common man on the street? So, these are wagging questions that we must seat down and analyse. Each time, Labour would come with the agitation of improving workers’ salary, where would the money for salaries comes from?
Just few months ago, the Automotive Gas Oil (AGO) sector subsidy was removed, did heaven fall? Are we not better-off now? We have to look into things like this and ask ourselves, “who does the status quo favour?” Maybe, less than 0.0001% of the population! And it is this subsidy issue that is behind the failure of our refineries. People are feeding fat on subsidy, just like the problems of Power generators merchants and the epileptic electricity supply. If we put together all the monies used in buying power generators, it’ll be enough to fix our Power sector problems, but because we are sentimental about it, we end up robbing Peter to pay Paul. So, that is also what is applicable to the Oil and Gas sector. We need to take a look at it as a people and to educate the common masses on what values they derive from the so-called subsidy compared to what they would benefit from paying, say N200 per litre on PMS in order to have infrastructures fixed, such as: roads, airport maintenance, agriculture and many more. The man on the street should be able to differentiate which one is better.
Still on the deregulation, do you think the refineries would be better off with the deregulation as you are canvassing?
You don’t need to be an engineer to know that the refineries will work. Which one will be more convenient: to refine in London or to refine in Kaduna? Which labour is cheaper? Why we keep importing is simply that some people are feeding fat on subsidy. By virtue of taking your products abroad to be refined, you take out your employment generation. Consider the numbers of people working in Port Harcourt, Warri, and Kaduna refineries, because you need to know how much employment is lost from Cleaners to the level of Managing Directors when you take your crude outside. So, everyone needs to know how many problems will be solved by the time you do the arithmetic.
You appear optimistic about it; tell us how best government could fast-track and achieve the unbundling?
All we need do is to allow the market force to determine these prices; number one, the prices will crash! Number two; you will have competition, people will come and build these refineries and ensure that they work because the market is here. We are a nation of almost two hundred million people. Even with the fear of prices soaring up, doesn’t really count. We have seen it in the Communication sector. At the time GSM came on board, SIM card was N20,000, but today it is almost free of charge. We were paying per minute at the time but today, we pay per second, under a stiff competition. So, I don’t know why we are pessimistic of imminent changes. I want to maintain that, Nigerians need a proper understanding as regards both sides of the coin as far as subsidy in the oil sector is concerned in order to make their decision. I don’t think the hypocrisy surrounding arguments on deregulation is healthy for the nation, and that is my view.
Can you tell us more about the 3 to 5 years waiver that the Federal government is planning for investors coming to invest in the nation’s refinery?
Unless you allow the market forces to determine prices in whatever you are doing, I don’t think whatever waiver you are going to give will work. Rather, allow the deregulation of the sector; let market forces work, while government face other problems, and take their taxes. The waiver would be great if you are going to give it as incentive, not neglecting the other recommendations, otherwise, that won’t make sense.