Richard Ginika Izuora
The Chief Executive Officer, CEO, of the Center For The Promotion Of Private Enterprise, CPPE, Dr. Muda Yusuf, has said that investment in the Nigerian oil and gas sector have been low due to challenges posed by insecurity, oil theft, unstable policies and inappropriate fiscal regimes.
Particularly, he said the downstream sector have continued to be weighed down by the pricing regimes and the regulatory environments which have continued to dim the growth prospects in the sector.
In its half year economic report, the CPPE, said that the subsidy regime continues to be a major burden on the oil and gas sector, especially the downstream sector where there are issues of transparency, absence of level playing field, weak corporate governance and poor competition framework.
The Center, commended the decision to make the Nigerian National Petroleum Company Limited, NNPC, an independent, autonomous organization.
This proposition in the view of report would unlock the huge investment opportunities in the oil and gas sector for the benefit of all Nigerians.
“It is hoped that the models of Saudi Arabian Oil Company [Saudi Aramco] and the Petrobras of Brazil will be replicated with this transformation. This is a good initiative which deserves the support of all Nigerians. The take-off may not be perfect, but we should see it as a work in progress. We should see the initiative as a major step in the transformation of our oil and gas sector.” Yusuf added.
The report also proposed a business model that would dilute the ownership of the NNPC with the onboarding of institutional and individual investors and decoupling of the management from political interference and controls, adding, “The company should ultimately be listed on domestic and international stock markets. This is the vision that we should have and we should support the NNPC to achieve this goal.”
The report further pointed to growing concerns of investors across sectors in the economy to the high and increasing energy costs especially the cost of diesel which has gone up by over 300 per cent.
The investors are also challenged by the high cost of aviation fuel which has gone up by another 300 per cent the cost of gas which has increased by over 100 per cent.
However, he noted that the cost of Premium Motor Spirit, PMS also called petrol, is still moderately tolerable because of the subsidy regime that is still currently being provided by government.
According to the Center, the frequent collapse of the National Grid makes it even more difficult for many businesses to continue to sustain their operations, creating serious business sustainability concerns among investors. “Costs have become elevated, profit margins are being eroded, purchasing power are weakened and business sustainability is at risk.
“The cost of transportation has reached unprecedented levels especially the cost of haulage because of the escalating cost of diesel.” CPPE said in the report.