Adaobi Rhema Oguejiofor
The marketers and operators of the oil and gas sector have said that the deregulation of the downstream petroleum sector after the removal of petrol subsidy is expected to bring about mergers and acquisitions as fresh competition begins to take shape.
The oil marketers and operators revealed this in Lagos on Thursday during a Policy Intervention Series under the theme: The National Dialogue on Transiting to a Deregulated, Sustainable Petroleum Products Market.’
According to them, the removal of petrol subsidy has opened up the market to increased competition, which prompts marketers to explore strategic options to maintain or increase their market share.
At the event, several speakers stated that existing businesses may join forces or acquire other companies in order to strengthen their market position, improve efficiency, and gain a competitive advantage in the deregulated market.
The Executive Director of Distribution Systems, Storage and Retailing Infrastructure at Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Ogbugbo Ukoha, while speaking at the event, said that there is a likelihood of mergers and acquisitions taking place among several companies.
In his own words, “it is possible we will see mergers and acquisitions go on. It is possible that retail outlets will be structured in a way that is highly optimized.”
According to him, deregulation will unlock investment opportunities for pipeline infrastructure, coastal vessels for marine transportation, and reception facilities, adding that it will bring clarity to consumption figures, attract multiple players to the sector and foster competition among various fuels, including Liquefied Petroleum Gas (LPG), Premium Motor Spirit (PMS), and Compressed Natural Gas (CNG).
The Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Olumide Adeosun, said that the country needs investments to expand the fuels market.“What we are going to see with the direction of flow of the market today is that there is going to be consolidation in order to optimise the barriers to entry, 27,000 stations is too much to offer quality service to customers.”
He added that the adoption of technologies for improved distribution efficiency and customer experience, along with improved corporate governance and industry self-regulation, will be promoted.
