Sunday Magazine

Oil sector deregulation’ll revolutionise Nigeria’s economy, says IPMAN President



Elder Chinedu Okoronkwo is the National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN). He spoke to PHILIP NYAM on the deregulation of the oil sector, recent hike in prices of petroleum products and other related issues



The oil and gas sector has witnessed some reforms in the last few months especially despite the hardship occasioned by COVID-19, including hike in the prices of petroleum products. What’s your take on the matter?



I think the word increment should not be there, because within the time under review, Nigerians also experienced a downward trend in the prices of petroleum products. Government has decided to remove her hands totally from the sector and we are now in a regime of market fundamentals.


The word increment shouldn’t be there because by tomorrow depending on what happens in the international market, it will also reflect on the price here and it may come down again. It is like any other commodity.


The better word for what has happened is the deregulation of the oil sector and it is expected that the prices of products would change.


Nigerians have raised a lot of concerns on the decision to deregulate at this COVID-19 period, when the economic fortunes of most citizens have declined or collapsed completely. Why should government implement this policy at this time?


You remember, before now, we were getting products at a N145 per litre. And during the period of the lockdown, we started having the product at the cost of N125 per litre because of the market forces. This government is one administration that is telling the people the truth. If you don’t let the people know what the reality on ground is, you will be deceiving yourself.


The government has looked at every angle and there is paucity of funds and the only way is to let the people know that government can    no longer continue with subsidy and what was going on. There are benefits accruing to the decision of the government to deregulate the sector and these benefits are what we should fixate our minds on.


Those benefits will translate into economic emancipation, into creation of wealth, more job opportunities. Today, one refinery is been commissioned in Imo State, Waltersmith and many others are coming up; one is coming up in Bayelsa State, Dangote is also warming up.


We also the Niger Delta Refinery already running, but they are expanding it; BUA has also said they are going to do a 200,000 barrels refinery. Akwa Ibom is also doing it. These are benefits that are coming up based on the deregulation that we are talking about. We cannot decimate some of these benefits. Are we talking about the jobs that will be unleashed on our teeming population?


People keep talking about hardship without alternative and now the alternative has come but unfortunately it has to come with some pains.


And that is the pain we are going through right now. But very soon, we will start seeing a lot of activities in that oil and gas sector and that is what will reflect eventually. For now, it is painful to everybody, including independent marketers because we have not been allowed to increase prices giving the template of PPPRA.


You make N10 at the time you are buying it less and the same N10 when you’re buying it at a high cost. A lot of our members cannot even operate but we must let everybody know that this is the time for solution, when all hands must be on deck. It does not matter the party one belongs, we must be sincere with ourselves. When this sector eventually opens up, a lot people will have an improvement in their standards of living because things will begin to work. Then we can begin to export the product and raise foreign exchange.


There is a value chain in the crude, but we only sell the crude without harnessing over 21 by-products in crude – hospitals, pharmaceuticals, paint industries and a host of others will now grow because they will find cheaper and affordable raw materials. I think what is going on now is a revolution that will bring something better for this country.


You’ve mentioned many refineries coming up, but what has become of the nation’s refineries? Can’t they be revived or government has abandoned them?


Government has seen that business should be allowed in the hands of entrepreneurs. Most businesses do not work in the hands of government in most countries and Nigeria is a typical example. Remember the era of NITEL; at that time people said if they deregulated the sector, phones will be the exclusive reserve of the rich, but you can see what has happened in the telecommunication industry.


Then, people argued that if they allowed NITEL to go, majority of the people will not be able to afford telephones. But now, people beg you to come and take sim cards or even dash them to subscribers; you buy airtime for a particular amount and you are entitled to some bonus.


We now have a better and cheaper communication. This is what is going to happen in the oil sector. So, sell some shares at NNPC, allow investors to come in and the same thing happening in the telecommunication industry will take place in the oil industry.


And I think that is what the NNPC is poised to do. Local participation should be encouraged and this will remove the burden on government. If you do this, the refineries will work very well. I believe by the time they achieve this and go that route, all these refineries will also be revived because there will be competition.


So, with the deregulation, do we still need NNPC and its subsidiaries such as PPPRA, PEF, PPMC etc?


Yes, you know NNPC has a lot of subsidiaries but when this takes off fully, within their confines, they will decide which of them is no longer relevant in this era. And those that are relevant will be allowed to function. For now, NNPC being an oil company where the federal government has 100 per cent stake, they can begin to reduce their stakes and inject private hands into it, there is nothing wrong with that.


The Eleme Petrochemical Company is running 100 per cent because of private participation; government has reduced its participation in its refinery and they brought in Indorama, which has brought a lot of new ideas into the company.


That place is now working. So, government can still replicate this in NNPC, but I would like government to retain the major stakes, so that it can control certain things.


They can also replicate that but we still need government to have some stake. But those things that will no longer be useful with deregulation, they will close them down.


How do you see the case for modular and incorporation of illegal ones into the modular regime?


You see, the group of investors that you met here was discussing modular refineries with us. We are putting our heads together on this. What those illegal refineries are doing is not good because it is causing environmental degradation- after oil, what next?


But government in its wisdom through the Ministry of Environment has waved the olive branch and asked them to put themselves into clusters and then government would see how it can incorporate them into the modular refinery arrangement.


And IPMAN being the major uptake of some of these products have also been consulted. So we are work-    ing with NESREA to see how we can achieve this process.


We have been mandated by the Federal Government to stop all the unwholesome activities and we have started doing that. We are now calling our brothers from the creeks to come because there are better ways of doing this.


There are refineries that are mobile that you can just begin to refine properly in a container without endangering the system- that we are also doing right now. I had a meeting with some of our brothers in the creeks and they have given me their word that they are happy and excited and we have started profiling them.


We are working with the Army, Navy, Air Force, and Police on how to stop it and when you stop it, you must give them succor. This is what we are also planning now with a group representing some companies in Germany, which are doing these modular refineries.


There are allegations that IPMAN is guilty of hoarding petroleum products. Why is this so?


IPMAN is made up of entrepreneurs, businessmen so how will you hoard products when you are selling. If you are company A and you hoard and company B sells, you will not make any sales.


So, that idea of IPMAN hoarding may have existed in the past when you had instances of fuel scarcity. But now the product is everywhere, so why should one be hoarding because with time, you will even be begging people to come and buy. So, the idea that IPMAN is hoarding should be discarded because that era is gone.


When this government came in in 2015, it promised to implement the UNEP report and clean up Ogoniland and five years on it seems nothing has been achieved in that area. As a stakeholder, are you not bothered?


That is why we are trying to discourage these areas that are not fully impacted right now. It is better you nip this in the bud now. Look at Ogoni, it is a huge amount of money that will be sunk into it to clean the place.


But they have started and are working there, so the contention that government has not done anything may not be true. Maybe the level the work should have reached, it is not there yet.


A lot of companies are working in Ogoni clean up and that is why all hands must be on deck to discourage further environmental degradation and that is where IPMAN is playing a major role on how to bring in these modular refineries to partner with those agencies of government and our brothers who are into this business by telling them come this is the better way to do this rather than killing the environment. I think that is what we are doing right now.


Earlier, you listed some benefits that will accrue to the people from this deregulation, how long will it take for these benefits to start manifesting or trickling in? How long should Nigerians wait?


I told you that one refinery is being commissioned today in Owerri and you know the benefits start immediately because a lot of people will be employed and will start getting some of these products that we were using hard earned dollar to import.


We can now begin to access them here locally. The benefits are immediate and they have started coming in.


Nigerians would like to know when the pump price of petroleum products will start going down. How long should Nigerians bear this cross?


Like I said earlier, the pump price will start dropping immediately some of these refineries start operating.


And I told you that one is being commissioned today. If for nothing, the person will start removing the cost of freight because you know freighting the goods, the person can look at a lot of factors and say since I got this crude locally, he can use that to reduce margin.


And when other refineries begin to spring up, the competition will also make them to face the reality. If you are selling at N30 and another person is selling at N25, people will rush to the lower price and you will be forced to reduce your price.


This is what is happening in the GSM sector, which I have told you. You see some providers tell you, if you buy recharge card of N5000, we will give you bonus airtime and those things happen because it is natural in marketing.


And as more of those refineries and gas production starts coming up, we won’t even know that there was a time we were paying so much. Now government is talking about CNG, LPG and LNG, which are a better alternatives because they are environmental friendly and have economic value of time that is the mileage you gain using gas is more when you compare it to AGO or PMS. And the environment is cleaner with these ones and all these areas will begin to grow and those benefits you ask will begin to manifest.


Like the Minister of State for Petroleum, Chief Timipre Sylva has said, by next month, a lot of people will begin to drive their cars with gas those who changed. You will now have option to say, I need PMS, CNG or whatever.


And with those alternatives, the price of gas from what we worked out will not be more than N97 and it has better opportunity and advantage. Therefore, a lot of people will now begin to go to gas as another energy source. Those are the benefits that will accrue in the long run.


With this deregulation, do we still need that PIB?


The bill is very important because it will give us a roadmap on how oil and gas in its entirety will be run that is talking about upstream, midstream and downstream.


All these things are encapsulated in that bill. But people are only looking at the downstream sector now and we are not concerned about the upstream and midstream. But this bill will address all those issues of host communities and everything that is needed.


Like you said, the previous assemblies could not pass the bill; God has a way of doing his own things. If not for COVID-19, we wouldn’t have said a time will come when you buy products at a cheaper price. So, this is the best time a lot of things should be done, not planning for short measures but making long term plans, instead of today you are happy and tomorrow it is sadness.


We have to be thinking for generations yet to come; we should be thinking about our children’s children. I think by the time we begin to think what is going to happen in the next 50 years even if we are not going to be there, let the system work. Oil is a fixed asset and by the time it is finished, we won’t bring it again. However, there are other renewable      assets that can be encouraged now that we have the oil.


For example, in agriculture, the value chain in palm oil alone is huge, that of cassava etc. if we are producing them, we can export and make money. Some countries do not have oil but they are rich. If we do not get it right now, a lot of energy sources such as solar, the wind etc are coming up, so we need to gear up.


Is it right to conclude that subsidy was a waste because it did not add value to the life of the common man but was basically for marketers?


It is a misnomer to say that it was for the marketers.


You would have said it was for some rich Nigerians who had many vehicles in their fleet. So, how does IPMAN gain in this? Our profit will never change. Government was doing this subsidy to maintain a few Nigerians, but IPMAN never benefited, rather we paid a lot of sacrifice to remain in business, except those who did not do it the right way, and are facing the EFCC now.


There is a general impression that the NNPC stinks of corruption. So, what should be done to curtail the alleged massive corruption at the NNPC?



I think with this subsidy removal and deregulation, water will begin to find its level. Competition will spring up and people will no longer be fixated in getting products only from one source.


You can see that recently, the NNPC is beginning to declare her books, which had never happened. We must give the current GMD, a pat on the back for being bold to say this is what we have gained and this is our loss. This never happened before.


But I think technology is beginning to play a big role so that within the comfort of your car you can check and know what you are doing. If a lot of technology and efforts are geared towards NNPC and other areas, a lot of corruption on itself will reduce. We must apply technology, which is a major component that will reduce corruption.





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