The Lagos Chamber of Commerce and Industry has warned that the deregulation of the downstream oil sector will not yield the desired benefits for industry players and Nigerians given the huge dependence on the Nigerian National Petroleum Corporation for product supply.
The President, LCCI, Mrs Toki Mabogunje gave this warning in Lagos on Tuesday while addressing journalists at a press conference on the state of the economy.
While she said the chamber acknowledged the government’s resolve towards deregulating the downstream segment of the oil industry,
she urged the Federal Government and the Nigerian National Petroleum Corporation to open up the space for investors who might be interested in building refineries among others.
She said, “We acknowledge government’s resolve towards deregulating the downstream segment of the oil industry. We also note the push back to the comprehensiveness of the reform.
“We would like these measures to be sustained in year 2021.
“However, it must be noted that deregulation will not yield the desired benefits for industry players and Nigerians given the monopolistic structure of the Nigerian downstream oil industry characterised by huge dependence on the NNPC for product supply.
“We also urge the Federal Government and the Nigerian National Petroleum Corporation to create an enabling regulatory environment that encourages domestic and foreign investment in refineries to boost domestic refining capacity.”
While she called for the passage of thePetroleum Industry Bill into law, Mabogunje noted that the bill presented an opportunity for the needed reform of the Nigerian oil and gas industry.
She said its passage would create a platform not only for preserving existing government revenue but also to incentivise new projects that would increase production and revenue for government and stakeholders, thereby guaranteeing long term sustainability of the industry.
The chamber also urged the National Assembly to put in place “a law that will promote a more effective and efficient governance, administration, host community development and fiscal framework for the petroleum industry.”
While commending the government on the 2021 budget, she appreciated its resolve in reducing dependence on oil proceeds for budget funding by designing policies and strategies to improve non-oil revenue.
Mabogunje who congratulated the newly sworn in President of the U.S., Joe Biden, expressed the optimism that his administration would usher in a new dispensation for the global economy from trade, investment, foreign policy, international cooperation, environmental protection, and security.
She commended the Biden administration for lifting the immigrant visa ban placed on Nigerians, stating that the action was positive for Nigerian economy.
She added, “This reversal is positive for the Nigerian economy as it creates avenue for many Nigerians to explore diverse business, educational and employment opportunities in the United States.
“This gesture is expected to boost US- Nigeria trade relations. It would also positively impact on diaspora remittances inflows to the Nigerian economy in the medium term given that US is a major source of remittances proceeds to Nigeria.”
For businesses to survive given the coronavirus resurgence, she said businesses must maintain a flexible operational structure by embracing technology to adapt to changing market dynamics, as “this will facilitate smooth transition when implementing remote working structures.”
She stressed the need for business owners to effectively communicate continuity measures with key stakeholders, arguing that this would help to responsibly manage diverse expectations from employees, suppliers, customers, partners, etc.
“Corporate entities must constantly review their operating models to identify activities that can be discontinued during this covid-19 period in order to reduce operating costs and support margin,” she added.