Abuja: Mr Wumi Iledare, an energy expert, asserts that the success of downstream deregulation should be assessed by the public value created through the new market structure. Iledare, a Professor Emeritus of Petroleum Economics at Louisiana State University, expressed this view in an interview with the News Agency of Nigeria (NAN) in Abuja.
According to News Agency of Nigeria, Iledare emphasized that the value should be evident in reliable fuel supplies, quality petroleum products, competitive pricing, reduced exposure to foreign exchange risks, enhanced energy security, and increased domestic value creation. He stated that the goal of Nigeria’s evolving downstream petroleum sector should be to establish a genuinely competitive market where domestic refining becomes the economically preferred source of supply.
The expert highlighted the need for the downstream petroleum market to maintain efficiency, with imports continuing to be available to preserve competition and address any genuine supply shortfalls. He pointed out that the emergence of significant domestic refining capacity offers Nigeria an opportunity to reduce its long-standing reliance on imported petroleum products while still benefiting from competitive forces.
Iledare explained that locally refined petroleum products could alleviate the financial and logistical burdens historically faced by marketers, thereby limiting exposure to freight, insurance, port charges, demurrage, and foreign exchange risks. He noted that a dependable domestic supply could strengthen competition, improve energy security, and allow Nigeria to retain a larger share of the value generated within its petroleum economy.
Furthermore, Iledare clarified that deregulation should not be misconstrued as a policy to eliminate imports from the Nigerian market. He stated, “Imports can remain an important source of competition and market contestability, particularly when domestic production is inadequate or unable to compete effectively on price and quality.”
He expressed concern that Nigeria risks paying a premium for import dependence if it continues to import petroleum products at a higher delivered cost than domestically refined products. Iledare underscored that the transition to a more competitive downstream market requires more than just increasing refinery capacity; it necessitates predictable and commercially viable access to crude oil, reliable infrastructure, adequate financing, and operational efficiency for domestic refineries.
Iledare emphasized the importance of a regulatory framework that allows domestic refiners to compete on a commercially sustainable basis. He argued that domestic refiners should not be shielded from competition or guaranteed market share simply because they are Nigerian producers. Instead, domestic refiners, importers, and petroleum marketers should operate under transparent, predictable, and non-discriminatory rules, with the regulator acting as an impartial referee.
He identified the creation of a level playing field as one of the Federal Government’s most crucial responsibilities during the transition. The challenge for the government, Iledare said, is to design rules and provide regulatory tools that enable the market to deliver welfare gains rather than converting regulatory failure into market failure.
He also stressed the importance of regulatory capacity, including independent testing of petroleum products to ensure consistent enforcement of quality standards. Without credible regulatory oversight, Iledare warned, government failure could ultimately turn into market failure.