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Stable forex policy will attract investment in downstream petroleum sector—udoji

An expert in downstream petroleum sector, Dr. Emmanuel Udoji has said that the best bet in increasing local and foreign investment in Nigeria’s downstream oil and gas sector is for the government to prioritise stable foreign exchange policy.

He made the call in an exclusive interview on Sunday, saying time has come for the government to urgently address the challenges of foreign exchange (forex).

According to him, “There is urgent need for the government to review the administration of the current ineffective foreign exchange intervention in the downstream sector in view of the timing gap between the offer of forex and the opening of Letters of Credit, which often erodes the value and usefulness of the offer”.

While welcoming the current raids on Bureau De Change (BDC) operators by security agencies in the last few days, he called for the sustenance of the raids and arrest, saying “Time has gone when ordinary artisans that are not players in financial activities will be allowed to decide the rise and fall of naira”.

 “There is need for government intervention by way of policy on LPG to facilitate its growth and make it easily available and accessible.

“Full liberalisation and deregulation of the downstream oil sector, with removal of all hindrances and bottle necks are needed for the improvement of private investment and market competitiveness in the industry.”

He complemented the major part of the communiqué signed by Chair, OTL Africa Advisory Board, Reginald Stanley and Chairman, OTL, Africa Downstream, Emeka Akabogu, which in summary called for the establishment and empowerment of a strong independent regulator to oversee activities in the subsector and ensure implementation of open and transparent rules for the downstream value chain.

Udoji also harped on the need to expedite action in the passage of the Petroleum Industry Bill (PIB), which should cover full deregulation of the downstream sector.

On allied shipping charges, he said “The Cabotage Act as well as the Local Content Laws need to be optimised in implementation by The Nigerian Maritime Administration and Safety Agency (NIMASA), and other regulatory bodies in the downstream sector to ensure more participation of Nigerians.

“Payment of charges in foreign currencies by indigenous operators to agencies like NIMASA, Nigeria Port Authority (NPA), Department of Petroleum Resources (DPR) and others should be stopped forthwith and the Naira prioritised as the means of exchange to maximize the value to ship owners and improve competitiveness at the ports.

“Financial institutions should be encouraged to develop special lending arrangements that will allow players in the downstream sector access funds at single digit interest rate to facilitate and sustain growth.

Udoji submitted further that “To streamline policy interventions, inter-agency collaboration between key branches of Government is strongly advocated and Government should identify supervisory mechanisms to harmonise policy engagements.”