Operators in the downstream arm of the Nigerian oil and gas sector have blamed its dwindling fortune on the lack of access to loans, inconsistency in government policies, infrastructural decay, and political interference.
If the challenges are tackled, they are optimistic that the sector will attract more investments.
The Managing Director, Emadeb Energy Service Limited, Mr. Adebowale Olujimi, blamed the challenges of petroleum product distribution in Nigeria on the low capacity utilisation of Nigeria’s state-owned refineries and petrochemical plants; thus increasing the cost of sourcing products.
Olujimi also identified limited access to funding as a result of the huge gap suffered by oil marketers after devaluation, thus resulting in non-performing loans, as one of the biggest challenges facing the sector.
Other challenges are frequent changes in government regulations, such as introduction of Petroleum Equalisation Fund, administrative charges on local cargoes, bureaucracy and bottlenecks in government agencies.
To him, these result in delays, increased cost of doing business, and continuous drop in margins, thus making it difficult for operators to remain in business.
He said, “For oil marketers to fully take advantage of the opportunities in the sector, funding has to be made available at a competitive rate, preferably at a single digit repayable over a longer period, depending on the nature of the transaction.”
He also noted that international funding was the most competitive option, saying specialised local banks could also focus on such credit facilities in order to boost economic development.
Chairman, House of Representatives Committee on Petroleum Resources (Downstream), Mr. Joseph Akinlaja, explained that the Nigerian National Petroleum Corporation must be run as a profitable entity if the government was determined to address the challenges of the sector.
He said, “We must begin to move the market to a point where private sector operators are more involved. If the country achieves that, everybody will compete and have a longer term view of the market from an investment standpoint.
“When 50 per cent or more of products are being brought in by marketers, there will be more activity in the sector; jobs will be created and more taxes will be paid to the government.”
He observed that the occasional struggles between the executive arm and the legislature, when handled with the interest of Nigerians at heart, could be a healthy rivalry capable of unlocking the potential of the nation for prosperity, good governance and democratic excellence.
The Chairman, OTl, Mr. Emeka Akabogu, said that recent market tendencies in Nigeria had shown an appetite for some categories of investment in the downstream value chain.
He added that there had been considerable investments in retail outlet development, marine, logistics platforms and storage facilities across the country, while several refinery projects that aim to balance the discrepancy caused by inadequate refining capacity on the continent are currently underway.
Akabogu also touched other issues bordering on the industry regulation and independence, adding that policy development and implementation have not kept pace with the urgency of industry needs and the appetite of market operators.
