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IPMAN: Deregulation is the answer to fuel scarcity

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Ibekimi Oriamaja Reports

For the umpteenth time, the Independent Petroleum Marketers Association of Nigeria (lPMAN) has stated that deregulation is the only way to restore normalcy to the oil industry’s downstream sector.

“Total deregulation remains the best solution to ending fuel scarcity.” The only effective and long-term solution to scarcity is the deregulation of the downstream sector. However, the policy’s cost implications will make petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product, according to Mike Osatuyi, National Operations Controller of lPMAN.

In response to questions about the recurring fuel scarcity, Osatuyi stated that it is clear that subsidy payment is no longer sustainable, and that the sooner Nigerians realize this, the better for everyone.

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The outspoken IPMAN official was emphatic that the subsidy regime is a major blight that has led to an increase in the country’s budget deficit and is also encouraging petrol smuggling to other countries due to the huge profit margin.

“Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives the government of huge revenue; subsidy does not allow competition and this may be why the Nigerian National Petroleum Company (NNPC) Limited has continued to enjoy the monopoly of being the sole importer, manager, and distributor of petrol in the country,” Osatuyi said.

Though the IPMAN National Operations Controller advocated for the removal of subsidies, he also urged the government to put in place all necessary palliatives to mitigate the negative effects of the impending increase in petrol prices before removing subsidies.

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For example, he warned that the Central Bank of Nigeria (CBN) should ensure that prospective oil marketers have access to foreign exchange at the government’s official rate in order to import the commodity once deregulation is implemented. Without this, he warned, importers of the product would be forced to source forex from the parallel market, raising the pump price of petrol to between N650 and N700 per litre.

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