Lara Banjoko, CEO, of Zone 4 Energy Limited and arguably the leading female force who holds the magic wand to turn the fortunes of any moribund petroleum sector company around has lent her voice to the total deregulation of petroleum products in Nigeria as a massive step for petroleum products availability and massive investment/increased employment in the Country.
Banjoko who is a force to be reckoned with in the oil and gas sector opined that deregulation of the petroleum products in phases is the way forward to ameliorate the suffering of Nigerians masses and enable the country implement cushions that will ameliorate the expected changes such a policy will bring to citizens…. She believes such deregulation must be carried out not in a knee jerk approach but with careful and thoughtful planning over a defined period to enable our citizens be able to accept and live with such policy direction.
Banjoko, who also agreed with Asiwaju Ahmed Tinubu on deregulation made the recommendation today in Lagos while reacting to the recurrent scarcity of PMS, also known as petrol in the country.
According to Banjoko, currently, petrol (which is the primary mover of people across the different strata of Nigeria) is being subsidized under the recovery process in two different and distinct phases…
1. On the costs of purchase
2. On the foreign exchange component of the importation and supply. The product herein is being delivered using the CBN exchange and not the parallel market for such importation….
As such, the advocacy and advice will be a consideration and push towards a phased-out deregulation of the sector…
“The first step is suggested to be on the purchase pricing option. Wherein the foreign component is retained while the product is imported and sold on the prevailing international pricing benchmark”
Furthermore, she states that the second phase will be to remove the foreign exchange component and allow importation and delivery to be at the parallel market (though the belief is that the incoming government must phase out the current regime of multiple exchange rates.
It would be recalled that the deregulation of economic activities which gathered momentum in this country in 1986 under the general programme of Structural Adjustment has been a matter of intense debate among economists, bankers, and members of the public at large.
The monopolistic tendency of NNPC to provide all the petroleum products created some features which have made justification for the deregulation of the sector. The features include a low level of competition, smuggling of petroleum products, monopolistic and sharp practices, the existence of petroleum subsidies, poor maintenance of infrastructural facilities, distortions in product supply and distribution, inappropriate pricing of products supply, and high level of fraud and corruption. According to the PPPRA, Reginald (2009) and Igbikiowubo (2011), the Federal Government of Nigeria wants to deregulate the downstream sector of Nigeria’s oil industry in order to:
• Ensure that petroleum products are made available to consumers in an uninterrupted manner.
• Eradicate waste and corruption which are consequences of a tightly regulated economy. • Ensure that the supply and distribution of petroleum products are orderly and consumer friendly.
• Channel money realized from the exercise to development projects that will be beneficial to the majority of the people.
Notwithstanding the above, the office of the Chief Economic Adviser of the president in collaboration with the NNPC and the budget office of the Federation asserted that the rationale behind the Federal Government’s plan to deregulate the downstream petroleum sector includes:
• To improve the efficient use of scarce economic resources by subjecting decisions in the sector to the operations of the forces of demand and supply.
• Deregulation will further reduce economic waste and lightens social burdens caused by government control.
• To expand opportunities for economic growth, a competitive sector and help achieve greater cost-effectiveness. Furthermore, Allison Madueke (2011) harped on the imperatives for the deregulation of the downstream sector including:
• Saving of cost in petroleum subsidies.
• Job creation opportunities.
• Downtime record in the existing refineries.
• Investment opportunities or foreign direct investment in the sector.
Lara Banjoko is the CEO of Zone4 Energy Limited. An epitome of beauty and brain, she is a successful business-woman who has worked so hard to make a name for herself.