Ex-labour leader seeks oil buffer to stabilise petrol prices - Punch Newspapers

Nigeria needs a mechanism to absorb exceptional increases in global oil prices while the government tackles the structural costs of petrol production and distribution, veteran labour leader and oil and gas practitioner Mustapha Wali has said. A former National Vice President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Wali, in a non-partisan policy document, ‘Beyond Petroleum Subsidy: A Petroleum Price Moderator and Downstream Transformation Framework for Nigeria,’ made available to journalists in Kano on Tuesday, proposed the establishment of a petroleum price moderator backed by a ring-fenced stabilisation reserve. He argued that Nigeria’s recurring petrol price crisis could not be sustainably addressed by restoring the old subsidy regime or relying on ad hoc government interventions whenever pump prices became politically or economically difficult. The proposed reserve, he said, would accumulate funds when international petroleum prices were favourable and deploy them when prices rose beyond predetermined thresholds. “This is not a return to the old subsidy regime. It is a counter-cyclical stabilisation mechanism designed to protect consumers from exceptional shocks while Nigeria tackles the structural causes of high petroleum costs,” he said. Wali called for a forensic review of the existing petroleum pricing template covering crude supply, refining, freight, foreign exchange, financing, pipelines, storage, depots, transportation and distribution. According to him, the review should distinguish between genuinely unavoidable costs and those that are excessive, reducible, unnecessary or capable of being addressed through regulation. He also proposed a predictable system under which qualified domestic refineries would have clearly defined access to crude, covering allocation, pricing, delivery obligations, quality standards, measurement, dispute resolution and penalties for non-performance. “Although domestic crude oil is not free, local supply can eliminate some freight, handling and logistics costs, with such savings reflected transparently in the commercial structure,” Wali said. Beyond crude supply and refining, he identified the country’s petroleum infrastructure deficit as another cost driver. He proposed transforming the Nigerian Pipeline and Storage Company Limited into a professionally managed national petroleum infrastructure operator and opening strategic infrastructure to users on transparent and non-discriminatory terms. Premier Paints appoints three directors with oil, engineering expertise Fossil fuel revenue dependence unsustainable, World Bank warns Crude rises above $109 as petrol prices surge He also called for independent technical and commercial assessments of the refineries owned by the Nigerian National Petroleum Company Limited to determine which facilities could still be economically rehabilitated. Facilities found viable, he said, should be opened to partnerships involving competent private investors, international refinery operators, technical firms, infrastructure investors and development finance institutions. Wali also urged international oil companies and upstream producers to participate more directly in Nigeria’s downstream transformation through investments in refinery rehabilitation, crude supply, storage, pipelines, financing, technology and other infrastructure. He proposed that once the stabilisation reserve accumulates beyond an agreed threshold, part of it could be deployed as repayable financing for commercially viable downstream projects, including pipelines, storage facilities, depots, LPG projects, strategic petroleum reserves, terminals and refinery rehabilitation. “This way, Nigeria will not simply spend money to reduce today’s petrol price. We will invest in reducing tomorrow’s petroleum cost,” he said. Wali said the long-term objective should be to move Nigeria away from dependence on imported petroleum products and develop the country into a regional refining and supply hub for West Africa. He stressed that his proposal was not designed to advance the interest of any political party or presidential candidate, saying the framework had been circulated for consideration by political leaders and national policymakers ahead of the 2027 elections. He challenged presidential candidates to explain how they intended to achieve sustainable petrol pricing and downstream industrialisation without returning to subsidy or relying on temporary political interventions. “What is your sustainable petroleum pricing and downstream industrialisation model for Nigeria beyond subsidy and short-term political interventions?” he asked. Ayoola Babalola

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