Stakeholders prescribe solutions to downstream challenges

Tank-farmAs in most developing countries, the super-abundance of crude oil deposits in Nigeria has not translated into improved standard of living. This has been attributed to the high level inefficiency, corruption, bureaucratic bottleneck; and existence of a distorting subsidy regime.

Burdened by this menace, stakeholders at the just concluded Oil Trading Logistics (OTL) Africa emphasised the need for total reform of the oil and gas sector.

Speaking at the forum, former Minister of Interior and Chairman of Integrated Oil and Gas Limited, Capt. Emmanuel Ihenacho blamed the Nigerian Maritime Administration and Safety Agency (NIMASA) for usurping the roles of the Nigerian Navy in the protection of the country’s coast.

Ihenacho said the job of NIMASA was not to buy gunboats to protect the country’s coast but to ensure seaworthiness of ships and competence of crew men on board the ships.

Ihenacho spoke at the session titled “West Africa Tanker Forum: Managing Risks and Securing the Oceans for Efficient Shipping of Petroleum Products,” which was chaired by a former Chief of Naval Staff, Admiral Dele Ezeoba.
“There seems to be a misunderstanding on the part of NIMASA as to what their real roles are. If you recall that NIMASA used to be the National Maritime Authority but prior to that, it was the Office of the Government Inspector of Shipping. So, you want to ask yourself, what really is the role of NIMASA? NIMASA is supposed to look after the safety and sea worthiness of ships; not mainly to be running around offshore, defending the coast. That is not its job; that job belongs squarely with the Navy,” he explained.

Ihenacho blamed the situation on the appointment of people, who had no maritime background and who did not understand the roles of NIMASA as the head of the agency.

According to him, instead of making sure that ships were seaworthy and properly equipped and that crew on board those ships properly certificated, NIMASA had opted to buying little gun boats and pretending to be defending the country’s coast, thus usurping the functions of the Nigerian Navy.
“That is not what it is supposed to be. One problem that I also like to identify is that the navy has found itself between the rock and the hard place.

The Chief Executive of Ghana Petroleum Authority, Moses Asaga, advised Nigeria to follow the Ghana example of deregulation of the downstream sector.
According to Asaga, Nigeria has a lot to learn from Ghana about the management of the petroleum downstream sector. He noted that deregulation policy will take away the sole right of the national petroleum company to determine the prices of fuel products in the country.

Asaga said deregulation also allows the various bulk oil distribution companies to determine how much they would want to charge for fuel to their customers. He said Ghana had always seen Nigeria as a big brother and had learnt a lot from Nigeria in respect to management of the petroleum industry. “But this time around, I think Nigeria needs to learn about managing the downstream sector from Ghana. We have been able to deregulate our downstream sector of the petroleum industry”.

Managing Director of Mobil Oil Nigeria Plc, Tunji Oyetunji, said that Nigeria’s lubricant industry remained the only vibrant sub-sector of the oil and gas industry, which is still attracting investment despite the challenges facing the downstream sector.

According to him, despite the huge investment in the sector, activities of adulterators of lubricant and base oil may cripple their efforts if not checked by the Federal Government.
He said that in spite of the sub-sector’s contribution and potential to the nation’s economy, Nigerian lubes market is also a dumping ground for substandard and off-specifications imported lubes of questionable quality.

The Managing Director of LUBCON, Taiye Williams, lamented that the country has continued to import base oil since Kaduna Refinery base oil plant has not produced since 1995.

He stated: “We import 100 percent of our base oil need in the country because Kaduna Refinery is unable to produce the product. There is a lot of fake base oil in the market, which are destroying car engines. Most of the base oil in the market has very high sulfur content, which is capable of causing damage to your engine.”

He stated that the lubricants imported with undervalued invoicing, deluge the markets and were sold at a cheaper rate than genuine locally-produced ones. This is despite the fact that locally- produced genuine lubricants go through further process of manufacture; consequently, selling at a higher cost than their foreign counterparts.

He stressed the need to train personnel of regulatory agency to enable them effectively carry out their duties.
Williams was of the view that sustainable growth of the sector could only be achieved if government reduced import tariffs, implement sound fiscal and stable monetary policies and maintain stable and lower interest rate regimes.

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