No Going Back on Deregulation - Lukman; Banks Give Stiff Loan Conditions to Fuel Marketers

Written by Duncan Sunday, 18 October 2009

No amount of pressure will stop the Federal Government from deregulating the downstream oil sector, the Minister of Petroleum Resources, Dr Rilwanu Lukman, exclusively told Sunday Trust in Abuja at the weekend. The Minister said that “we have made it clear that deregulation is inevitable, the question is not if but when?”  

While insisting that deregulation will surely be implemented, the Minister added the Federal Government is still negotiating with stakeholders on how to solve some of the key issues before the implementation take effects, though he didn’t specify the actual date for the implementation of the policy.

Also, Lukman refused to make further explanations on the knotty issues the government is trying to sort with the stakeholders before the policy implementation. This development came one day after his counterpart in the Ministry of Labour and Productivity, Prince Adetokunbo Kayode denied reports that the policy would take effect from 1 November 2009.

On the other hand, the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMA) carpeted the government at the weekend saying that the planned deregulation would jeopardise their business, bearing in mind the recent stringent condition introduced by banks before granting them loans.

The association’s chairman, Sylverious Okoli told Sunday Trust that due to the unfolding reforms in the banking sector the banks had made it mandatory for oil importers to provide collateral to cover the sums being lent out to them. “The banks are now making things difficult for my members. They were asking for personal collateral instead of using the products imported as securities,” he said.

The situation, he said, is different from what it used to be “because when we import the products we put them under banks’ care and when we sold the products, they recovered their money. But they are no longer satisfied with this arrangement; they need something they can lay their hands on.” He explained that the banks now ask for tangible assets such as oil depots as guarantees as well as sureties with properties equivalent to the expected loan in choice areas of the country.

Okoli decried that the banks were no longer ready to support them, because “if you want to borrow N1 billion, you must have facilities worth such amount which they can lay their hands on. Now, we are not comfortable with this measure. Every member is complaining about it.” He said that if this issue was not tackled it would hinder the smooth take off of the planned deregulation.   

Sunday Trust reliably gathered yesterday from a top official of PENGASSAN that the Federal Government actually presented November 1 to the labour unions that comprised of NUPENG, PENGASSAN and Trade Union Congress (TUC) as the commencement date for the total deregulation in their last meeting with government officials in Abuja, two weeks ago.

The government officials that attended the meeting were the Ministers of Finance, Mansur Muktar, Petroleum Resources, Dr Rilwanu Lukman, Labour and Productivity, Adetokunbo Kayode and the Economic Adviser to the President, Tanimu Yakubu.

The PENGASSAN official said that “we told them that November is not feasible and unless we have our refineries back and functional, put palliative measures as well as address the issues of poor storage facilities at our depots. We don’t have problem with deregulation, the only issue is when and how government wants to implement it.”