Oil and Gas expert says lack of maintenance, vandalism of pipelines big challnge; wants deregulation of NNPC’s fuel importation monopoly to solve Nigeria’s fuel scarcity

Oil and gas expert, Ademola Adigun, has stated that deregulation of NNPC’s fuel importation monopoly and price stability are the keys to solving Nigeria’s fuel scarcity issues.

He said this in an interview with ARISE NEWS on Monday while speaking on the current fuel scarcity issue in the country.

Addressing the claims from the Nigerian National Petroleum Corporation (NNPC) that logistics problems are to blame for the scarcity, Adigun agreed but expanded on the complexities involved. “The NNPC is actually correct, that’s actually the problem. While it sounds suspicious, it’s the reality,” he stated.

Expressing his dissatisfaction with the degradation of the pipeline infrastructures which are supposed to be help in the distribution of fuel due to various factors, he said, “Our lack of maintenance, vandalism, and poor culture have destroyed the whole pipeline. Of the 1,530 kilometres of pipelines built, I don’t think more than 200 kilometres are working currently, despite the annual announcements of millions to be spent on pipelines and other repairs. This is a big challenge.”

He stressed the need for a shift from a monopoly to at least a duopoly in the fuel importation sector. “We need to start asking when we will move from Monopoly to at least duopoly. Because of the monopoly, we are at the mercy of NNPC. I believe that anybody under the PIA should be allowed to import petroleum. This is one of the failures of regulation, so the culprit in the session is the policy people.”

Adigun criticised the NNPC’s current approach, which he believes is unsustainable. “Because NNPC only imports for short periods, as soon as one disruption happens, everything collapses,” he said, calling for better strategic planning.

Questioning the relevance of the NNPC’s monopoly as the sole importers of petroleum in a diversified economy, Adigun pointed out the role of policy in the current situation. “NNPC is a victim of policy because, under the Petroleum Industry Act (PIA) law that was passed, they are a commercial entity. They are the only ones bringing petrol for the past seven years into the country? Since deregulation, anybody can bring diesel in.”

He explained the lack of interest from other companies in trying to import fuel by pointing to economic disincentives. “The main issue is the pricing structure. No one is willing to invest in a venture where the selling price is below the cost price,” he explained.

Addressing the issue of black market fuel sales, Adigun criticised the inefficiency of regulatory bodies. “Black market is a function of scarcity in any economy. What is expected is that NNDPRA will be releasing press releases. It’s lack of visibility, which portrays the lack of not being yet on top of their job.”

Adigun discussed the potential impact of involving Dangote refineries in the sector.

“What will change is we will conserve money on exports and have enough security. But it’s not enough for Dangote refineries to join NNPCL. The key to our problem is to deregulate properly and find a way of ensuring price stability.”

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