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 Daily Independent Online.
* Wednesday, August 11, 2004.
‘Subsidy in
downstream sector no longer feasible’
By Charles Okonji
Senior
Business Correspondent, Lagos
Nigerians, hoping
for the possible return of petroleum products subsidy in the country, may
have to purge themselves of such expensive thoughts.
Reason: Group Managing
Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Funso
Kupolokun, has emphatically said that the era has gone, as the
corporation would not venture into such an act anymore.
Kupolokun stated that the
present situation in the downstream sector of the petroleum industry,
where NNPC continues to subsidise the products, could bring about a major
crisis in the petroleum distribution sub-sector of the industry.
He pointed out that currently,
the corporation spends N500 million daily to subsidise petroleum
products, stressing that the downward review in fuel prices could
undermine the gains of liberalisation, a situation, which would likely
result in the boycott of product supply by private marketers.
He explained that it was
uneconomical for the NNPC to continue to engage in unprofitable ventures,
adding that the idea of operating a subsidy in the downstream sector was
no longer acceptable.
Kupolokun said: “Even, if NNPC
is provided with funds to service subsidy, it just cannot work, as NNPC
does not possess enough distribution facilities.”
According to him, no matter
how much effort was made, “as long as NNPC remains the sole supplier of
fuel and operates as a monopoly without a competitor, there is bound to
be problems in products supply.”
The deregulation of the
downstream sector, he stated, would not only bring competitiveness and
effectiveness in the industry, it would also reduce sharp practices and
bring efficient distribution of the products that would meet domestic
consumption.
It would bring about public
participation, establishment of more refineries, sufficient supply of the
petroleum products to the rural areas and making Nigeria to become a net
exporter of the products through the various refineries, he added.
Besides, he said the
industries would also operate at full capacity with the meeting of their
energy needs, which would ensure more employment opportunities for
Nigerians and lead to
saving of variable foreign exchange that could increase the foreign
exchange base.
“Liberalisation of the
downstream sector would also bring diversification of the industry
through the development of Nigeria’s vast petrochemical potential. It
would minimise refinery waste and expand industrialisation by providing
the much-needed raw materials,” he explained.
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