Report on Projects & Project Management
in Nigeria

Deregulation of Downstream Petroleum Industry and Privatisation of Refineries

The Nigerian Federal Government on Friday, February 27th , approved the full deregulation of the downstream sector of the petroleum industry and the privatisation of refineries. This is a recognition of the failure of the existing system including the annual and regular maintenance schemes and service projects embarked on the national refineries. The deregulation should reportedly lead to reorganisation of the current system in order to attract the substantial investment capital required, and to introduce healthy competition to stimulate efficiency and effectiveness that will guarantee availability and affordability of petroleum products.

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This decision was announced by the Minister of Finance, Dr. Muhtar, when he briefed State House correspondents. He explained that this was in line with the recommendation of the Presidential Steering Committee on the global economic crisis. The minister revealed that a committee, headed by the Executive Governor of Bauchi State, Isa Yuguda, has been set up to design the Implementation plan and time frame for the commencement of the full deregulation process.

According to him, the decision has been taken because it has become clear that the huge amount of money being spent regularly by government on petroleum subsidy was actually “a case of subsidising inefficiencies in the fuel supply and distribution. The magnitude of this amount was very staggering. In the last year, we are talking about nearly N640 billion (US$4.3 billion) that has been spent in subsidies to petroleum products, with the amount running into N1.6 trillion (about US$10.74 billion) in the last three years. ”  He explained that Petroleum Products Pricing and Regulatory Agency (PPPRA) charged with regulating the pricing of petroleum products has grossly compromised its functions. He claimed that the agency’s activities were fraught with a lot of inefficiencies and corruption.

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