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Why we’re not investing in refinery -MOMAN

The Major Oil Marketers Association of Nigeria, MOMAN at the weekend, said it would not established refinery in Nigeria for now due to the huge cost involved the nation’s harsh economic and the regulatory environment.

The development, it said, has continued to pose serious concerns to members of the association to boost in-country refining of petroleum products.

The association advocated the need for improved environment to encourage private investors into refinery business in the country, just as it said that resumption of petroleum products importation by his members is not being considered at the moment because the regulatory environment is not profit driven.

Besides, MOMAN observed that the understanding expressed by the Petroleum Products Pricing Regulatory Agency (PPPRA), of possible downward review of pump price of petrol due to decline in crude oil price in the international market may not necessarily prompt price adjustment.

Speaking at a press conference in Lagos, the new chairman of MOMAN, Mr. Adetunji Oyebanji, said that price adjustment is a function of various factors of which crude pricing is just one of the various indices.

According to him, the exchange rate is a major determining factor, and that except the present price template is reviewed taking into account all the changing market variables pump price may likely not change in either direction.

He added that since the Association is operating under a regulated regime, it can only follow guidelines issued by the industry regulator.

On whether price adjustment of petrol is convincing, he said, available infrastructure may not support the idea, because beside high exchange rate, other associated costs like, bridging which is done by road takes toll on transportation of products.

He added that his members are currently operating at huge loss and many operators have shut down operations because the sector is highly regulated and not investment friendly.

“We are currently tied to a margin which is fixed and we cannot adjust. If my input cost is going up and exchange rate is going up it affects our business, pump price has to do with exchange rate, so we have to understand the economics.”, he said.

He said, the Association has supported the liberalisation of the downstream sector through the Petroleum Industry Governance Bill, PIGB, as that is the only way that investments can freely flow into the sector.

The Chairman explained that the regulated environment has discouraged the Association from making investments in the refinery project as it is capital intensive, and current operating system cannot guarantee return on investment.

He spoke on the N800 billion debt owed marketers by government, Oyebanji said so far MOMAN members have received about N237 billion in the form of promissory note, adding that the association is engaging the commercial banks on other issues especially on how the notes can become cash.