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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