PIB: Lack of free, open market lead to price inefficiencies, kill off small businesses — DAPPMAN, MOMAN
By Uthman Salami
The Depots and Petroleum Products Marketers Association (DAPPMAN) and Major Oil Marketers Association of Nigeria (MOMAN), have said that absence of free and open market in the downstream sector will end up killing off small businesses and ultimately lead to price inefficiencies in the sector.
This was made known through a statement that was jointly signed by the two Secretaries of DAPPMAN and MOMAN, Olufemi Adewole and Clement Isong early hours of Tuesday.
Petroleum products marketers refused the restriction of licence to import products to only owners of refineries.
The Petroleum Industry Bill (PIB) that was recently passed by the Nigerian Senate had given sole right of licence to only those who own refineries.
The groups do not only frowned at this restriction, they believed such clause will not give room for open playing fields to all stakeholders in the downstream sector.
The oil marketers explained that the insertion of the clause in the Bill would create a monopoly that would exploit ordinary Nigerians.
The statement read, “Section 317(8) in the Senate’s version of the Bill states that licence to import any product shortfalls shall be assigned only to companies with active local refining licences.
“The import volume shall be allocated between participants based on their respective production in the preceding quarter.”
The groups noted that the restriction extended to products like diesel, kerosene, liquefied petroleum gas and base oils that had long been deregulated will not augur well for the sector.
The statement partly added, “As industry stakeholders and professionals with heavy investments in the downstream sector, we welcome the entry and participation of local refineries.
“We believe that local refining ultimately benefits Nigerians and our economy. We also commend the government’s plan to repair all existing refineries boosting our refining capacity.
“Any provision that does not guarantee a free and open market will give room to price inefficiencies and eventually kill off small businesses in the downstream sector.
“This provision will stifle price competition and leave pricing to be solely dictated by a few local refiners. If Nigerians are to pay higher international prices at the pump, we should also benefit when prices go down internationally,” they stated.
They argued that this was not guaranteed unless there was healthy competition.
They said “Prices must be kept competitive at the pump for the benefit of the average Nigerian whose income is constantly being eroded by inflation.
“Allowing imports by major players across the supply chain will protect consumers by ensuring that local pump prices are not higher than regional and international prices.”
The two groups further stressed that “MOMAN and DAPPMAN remain committed to the sustainability and institutionalisation of a viable downstream petroleum industry for the social and economic growth of Nigeria.”
