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8/6/2019 Deregulation of Energy Sector in Nigeria
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PRESENTATION FOR
THE LAGOS CHAMBER OF COMMERCE & INDUSTRY
ON
NIGERIAN PETROLEUM INDUSTRY
DR DIRAN FAWIBE
CHAIRMAN/CEOINTERNATIONAL ENERGY SERVICES LIMITED
OCTOBER 21 2009
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WHAT IS DEREGULATION
e ova o gove e co o
Withdrawal of state interference
Encouraging free market operation Sim lification of overnments rules and
regulation for greater market forces
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GAINS OF DEREGULATION
ea y co pe o
Higher productivity
Lower prices Increased investment
Availability of products
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PROBLEMS OF DEREGULATION
due to market forces
Little allowance for low-key players
ncrease n consumers comp a n s
Reduced quality of service delivery,espec a y w en governmen regu a on s aminimum
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DEREGULATED SERVICES IN NIGERIA
e eco u ca o
Aviation
Banking and Finance Trans ortation exce t Railwa s
Agriculture
Petroleum (Diesel)
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Histor of Dere ulation In Ni eria
ge a ope a e a e egu a e o p ceregime from 1960-1973
AGO-Diesel oil price was fully deregulated in2007
Many private refineries licensed to operate
over 8 years ago but none has fully taken offbut high promises on one or two within thenext one year.
All regimes/administration in Nigeria hasattem ted oil sector dere ulation
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PROBLEMS OF DEREGULATION
ac o pu c suppo : c ze s seedomestically produced oil as an abundant
a o a esou ce w c s ou e c eap yavailable
Perceived as IMF/World Bank programme
which lack local source. Satisfaction with status quo (cynical
disinterest)
Expectation of increase in prices: deregulationis associated with rice increase
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REASONS WHY GOVERNMENT WANTTO DEREGULATE
Strain of financing Nigerians state-ownedetroleum businesses
Intra & trans ECOWAS smuggling of Nigerian oilproducts
Relative market prices of oil in the ECOWAS
sub-region Inability to attract investment in midstream while
licensed refineries could not operate.
g cost o ma nta n ng t e re ner es
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POSSIBLE OPTIONS
Maintain the status quo
Phased deregulation
Complete deregulation
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PRE-DEREGULATION SCENARIO
reflected in the domestic prices.
recoveries since price adjustments would require
Entry of new investors was discouraged, thereby
minimizin com etition
Significant shift in the use of engines using oil withlower rices
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POST-DEREGULATION SCENARIOS
c ease o e g ves e
Increase competition
Availability of products Predictable rices of roducts
End of Price-fixing Regime
Reduced corruption in the sector
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FOR A SUCCESSFUL DEREGULATION
levels
Power supply must be stable for business to
thrive Local industries must be encouraged to grow
Stakeholders must be involved in allnegotiation
New refineries must be established andrunn ng
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FOR A SUCCESSFUL DEREGULATION
deregulation
Unions, Transport Unions, Civil SocietyOrganizations and those likely to beadversely affected in the implementationprocess
-prevent price escalation and profiteering
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FOR A SUCCESSFUL DEREGULATION
- The President and/or Ministers musten a e Ni erians on this fundamental
Policy- Undertake measures that will alleviate
suffering of Nigerians
- Diversif in the ener roduct mix toencourage substitution of energyalternatives to petroleum products
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THANK YOU