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Arewa Kogite ♛ Profile picture
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18 Mar, 12 tweets, 4 min read
In Nigeria today, PMS pump price keeps defying the law of gravity as it continues to give credence to the saying "when prices go up in Nigeria, they never come down."

#DeregulateDownstream
This is the fate of the Nigerian oil sector. Successive regimes, different strategies & the pump price trajectory is still an upward curve (perhaps even getting steeper). This begs the question.

#DeregulateDownstream
Before any solution is recommended, we have to acknowledge the presence of a problem in the pricing mechanism for petroleum products in Nigeria.

#DeregulateDownstream
The problem of the current oil market in Nigeria majorly caused by the monopoly of the wholesale market & this has caused a lopsided price mechanism resulting in the continued increase in PMS pump price

#DeregulateDownstream
Where there is an inefficient supply system, the final customers suffer the brunt of it as they are the ones bearing the final cost. This is the case of Nigeria with forever increasing PMS pump price

#DeregulateDownstream
The oil market system in the country is monopoly (albeit pseudo) whereby the FG is a player, coach & referee. The FG is an active participant in the oil industry, they also determine the players in the same industry while also being the regulators

#DeregulateDownstream
The result of this type of system is a perpetual disequilibrium in a sector characterised by an inefficient market & an always increasing price of petroleum products

#DeregulateDownstream
This will continue to be the case until the downstream oil & gas sector is fully deregulated & the prices are not reliant on the whims of institutions & stakeholders but rather on the basic economic principle of demand & supply

#DeregulateDownstream
A fully deregulated downstream oil & gas sector will provide a level playing field for all industry players, with a strong regulator ensuring the rules are being abided by & not violated

#DeregulateDownstream
The immediate result of this is the elimination of the monopoly (as earlier mentioned) in the wholesale market & the correction of the inefficiency in the supply chain.

#DeregulateDiwnstream
Policy recommendations on how to fully deregulate the downstream oil & gas sector will be further discussed by me another day & with another thread

#DeregulateDownstream
*What is wrong?

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More from @Swaaguu_Baba

Arewa Kogite ♛ Profile picture
19 Mar
Talking about Nigeria's problem is draining, let's talk about solutions & the way towards deregulation of the downstream oil & gas sector

#DeregulateNigOil
CBN should provide access to Forex at the same rate for all importers. This cancels out the monopoly in the wholesale market & breeds a competitive market that can only benefit the final consumers

#DeregulateNigOil
The Petroleum Product Pricing Regulatory Agency (PPPRA) should publish guiding prices monthly. With PPPRA as a regulator in the industry, the monthly guiding prices should follow market trends (and be made public too) to avoid exploitation at all levels.

#DeregulateNigOil
Read 10 tweets
Arewa Kogite ♛ Profile picture
19 Mar
The Nigerian oil & gas sector is like beans & would not be well enjoyed unless you have a good complement to go with it (be it plantain or bread 😋). That complement is the Petroleum Industry Bill (PIB)

#NNPCAuditReport
Nigeria is rated as one of the top producers of oil in the world & one of the top-top producers of oil in Africa. But when it comes to profitability from this same oil, the country is nowhere to be found. This may be blamed on corruption & mismanagement.

#NNPCAuditReport
The Nigerian Oil & gas sector is (majorly) governed by the Petroleum Profit Tax (PPT) Act of 1959 & the Petroleum Act of 1969. They are outdated & archaic & should not be the law by which the oil & gas sector (which drives the Nigerian economy) operates by.

#NNPCAuditReport
Read 15 tweets
Arewa Kogite ♛ Profile picture
18 Mar
The NNPC is like a big black hole, sucking in national funds & resources, leaving institutions half dead & the country worse off.
Makes you wonder "this oil gan sef, na blessing, abi na curse?"

#NNPCBadDebts
NNPC, via the corporation’s  financial account, posted a loss of N16.3 billion in  2019 . The overall Group reported a N20.2 billion loss. In 10 years, the corporation had reported a  combined loss  of N474 billion while that of the group stands at N1.55 trillion

#NNPCBadDebts
@Dataphyte ran an analysis of NNPC's financial report & revealed that credit sales to subsidiaries worth N1.45 trillion remain unpaid. Furthermore, of NNPC's 22 subsidiaries, 12 owe the parent company trillions of Naira.

#NNPCBadDebts
Read 10 tweets
Arewa Kogite ♛ Profile picture
17 Mar
Deregulation of the downstream oil & gas sector in Nigeria is one topic that has been on for so long, you will be forgiven for thinking it's a yearly ritual in the country.

#FixOurOil
Over the years, successive attempts by various government administrations have failed in delivering a fully deregulated downstream market that should be based on the basic economic principle of DEMAND and SUPPLY.

#FixOurOil
In March 2020, downstream oil & gas sector regulators announced the implementation of the deregulated system of the sector. This meant that prices of petroleum products will be determined by the international price & the demand & supply

#FixOurOil
Read 10 tweets
Arewa Kogite ♛ Profile picture
17 Mar
Or maybe it is a case of if Nigeria doesn't kill NNPC, NNPC will kill Nigeria.
Did you know that quarter of the subsidiaries’ debts could have helped Nigeria to clean up the oil spills that plagues human & marine life in Ogoni land?
{A SADDER Thread}

#NNPCAuditReport
The United Nations Environment Programme (UNEP) estimates that the Ogoni cleanup will cost an initial $1 billion which (at the time of their report) amounts to N394.74 billion 🤯

#NNPCAuditReport
The huge amount of unpaid debts by NNPC’s subsidiaries can significantly reduce  the country’s rising debt  profile & also form a substantial part of Nigeria’s annual budgets.

#NNPCAuditReport Image
Read 10 tweets
Arewa Kogite ♛ Profile picture
16 Mar
A country like Nigeria, producing oil at 2 million barrels per day (BPD) & still having nothing to show for it is down to either bad/inadequate regulatory institutions & framework or witchery.
My bet is on the former

It's a thread

#NNPCAudit
@Dataphyte analysed @NNPCgroup financial report & discovered that credit sales amounting #1.45 trillion made to its subsidiaries are still unpaid.

#NNPCaudit
@Dataphyte went further to analyse the financial records of the 22 subsidiaries of the @NNPCgroup & revealed that 12 of them owes @NNPCgroup trillions of Naira.

#NNPCAudit
Read 11 tweets

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