What is the Role of Petroleum Equalization Fund in PIGB?
By Chineme Okafor
Abuja — Some stakeholders in Nigeria’s oil industry have asked the National Assembly to expunge the Petroleum Equalisation Fund (PEF) from the recently legislated Petroleum Industry Governance Bill (PIGB).
According to them, the PEF would be useless in a deregulated downstream petroleum sector.
They made this call at the just concluded 2018 edition of the annual Oil Trading and Logistics (OTL) Africa Downstream.
They argued that retaining the PEF – an agency of the government which settles bridging claims for petrol supplied across Nigeria, would signal continued price regulation in the fuel market.
They equally asked the federal government to immediately privatise fully the refineries of the Nigerian National Petroleum Corporation (NNPC) in order to return them to optimal operation.
The OTL is a Pan-African initiative dedicated to the promotion of business, policy and stakeholder relationship in downstream petroleum markets across Africa.
It equally achieves its goals through strategic government and business liaison, research and advocacy.
According to a communique at the end of the conference in Lagos, which obtained by THISDAY, experts at the OTL Africa Downstream Week, stressed the need for countries in the continent to initiate market-based policies to make the most of the opportunities available in its downstream oil and gas sector.
“Determined to achieve optimum efficiency from market potentials, industry stakeholders are advised to embrace synergy within and beyond national boundaries as a means of fully optimising their operations across the downstream value chain,” said an excerpt of the communique.
It further stated with regards to Nigeria: “Acknowledging the recurring losses resulting from sub-optimal refining operations, stakeholders call on government to fully privatise the refineries to return them to profitability.
“Worried that retention of the Petroleum Equalisation Fund (PEF) in the Petroleum Industry Governance (PIG) Bill signals continued price regulation in the fuels market, operators call on the legislature to expunge all provisions from the PIGB that constrain market freedom to ensure development of downstream petroleum in Nigeria.”
They explained that they were convinced full deregulation could catalyse development of the downstream petroleum sector across the continent, and urged African governments to fully deregulate the market from price caps and all forms of control.
The stakeholders equally noted their concerned about environmental hazards posed by fuels currently imported into the continent, and West African sub region, and thus asked its governments to enforce policies on desulphurisation of fuels imported into West African countries and direct that only petroleum products with 50 parts per million (PPM) or less can be imported into their countries.
Furthermore, on other aspects of the continents downstream petroleum sector, they said they were desirous of establishing a virile shipping cluster in the West African region, and called on governments of member countries to consider the modalities of making the entire Gulf of Guinea (GoG) a Safe Anchorage Area (SAA), with a framework that allows cross border patrol and surveillance in the region.
“Realising the value of regional trade cooperation, industry notes a need to review the ECOWAS Treaty in light of prevailing realities to ensure ease of cross-boundary cooperation in the development of petroleum infrastructure.
“Focused on achieving regional hub status, industry encourages maritime administrations in West Africa to benchmark their rates, tariffs and levies against those obtainable in other regions in order to improve competitiveness and attraction for maritime services,” the communique added.
The stakeholders said they also wanted operators in the industry to explore increased deployment of propane gas in powering industrial and automotive machinery considering its reported benefits for industrial and domestic energy.