Deregulation: Mixed Signals.

There seems to be some kind of confusion between the NNPC and the government on exactly what their plans are for the downstream oil sector. On the one hand the federal government seems to be focusing only on the removal of the subsidies on the importation of crude oil products as a kind of cure-all for the system. The NNPC seems to think deregulation means being given a free hand to have more control over the oil industry. Both ideas are not good. The NNPC cannot successfully handle the oil industry and will continue to under perform for the same reason NITEL under performed for decades and NEPA ( now known as PHCN ) continues to under perform. Government run businesses cannot compete. The removal of subsidies is a step in the right direction but that alone will simply translate to higher prices. More important than the removal of  subsidies is the easing of the restrictions on participating in the oil industry as well as ensuring that participants don’t engage in anti-competitive behaviour. With that in mind the real future of the oil industry will be determined by what the National Assembly do with the petroleum industry bill. That is where the focus should be.

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