Oil sector News-1:
‘Deregulation key to oil sector development in Nigeria’
By the Editor
The petroleum downstream sector of Nigeria’s economy can experience optimum growth like what obtains in developed countries, if the Federal Government put measures in place to fully deregulate the sector.
Full deregulation in pragmatic approach implies that the market forces of demand and supply determine appropriate prices for petroleum products in the country. As such, government should not fix the prices but allow the market forces.
Moreso, government’s intervention in the business by fixing prices of petroleum products and dominating investment space, have been identified as some of the factors militating against tangible growth in the sector.
The reason being that, government’s role in the sector hinders influx of Foreign Direct Investments, FDIs, making it extremely difficult for private investors in the country to make sound investment decisions, capable of increasing capacity utilisation in the sector.
Financial Business on examining the National Petroleum Policy 2017 documents, approved by the Federal Executive Council, FEC, learnt that the policy emphasizes creating a market-based economy with equal opportunity for private investments to thrive and market driven oil and gas industry in the country.
Therefore, going by this policy, full deregulation remains sustainable solution to recurring fuel crisis in the country.
Also, total deregulation would attract more investments to the oil sector and paves the way for establishment of private refineries at strategic locations in the country. For instance, if government deregulates the oil sector fully, more investors would be willing to come and invest not only in refineries, but also in transportation and depots.
As such, the oil sector would experience sustainable growth with multiplier effects and tremendous economic benefits in other segments of the economy, as well as increase in revenue for government now and in the long-run.
(Oil sector News is a regular report by Financial Business, to enlighten the public on economic benefits of full deregulation of the industry.)