The Lagos State Government Wednesday called on the Federal Government to allocate the remaining oil blocks in the Dahomey Basin for more oil prospecting, adding the state’s interest lies in gas in order to generate power to run the engine of its economy.
The State Commissioner for Energy & Mineral Resources, Mr. Olawale Oluwo, who made the call while speaking at a Breakfast Business Lecture organised by the Island Club in Lagos. Titled: Petroleum Industry Bill: Challenges and Opportunities, he said the state government will take advantage of the rare oil discovery in Dahomey basin.
He said: “Our interest is not in oil but in gas. We need gas to power Lagos economy. “Our programme is centred on power generation that will be off-grid.”
Oluwo also said the Petroleum Products Pricing Regulatory Agency (PPPRA) will have no business in the downstream sector when the Petroleum Industry Governance Bill (PIGB) comes into operation.
He said the establishment of the Nigeria Petroleum Regulatory Commission (NPRC) in the PIGB will make the PPPRA irrelevant.
According to him, the NPRC will be a one-stop regulatory body, so PPPRA will have no business in the downstream when the NPRC comes into force.
Oluwo who was the chief host at the meeting, advocated for a downstream driven by the forces of demand and supply. He said a deregulated downstream is the way forward for the country. According to him, the Federal Government has been regulating petrol price through which the rich take advantage of the masses. This is not correct, he argued
“If you must regulate fuel price, you must ensure that you have a very deep pocket to subsidise the products. If you don’t have a deep pocket, the market will help you by creating a black market that sets the appropriate price for the product. But if the price is driven by the forces of demand and supply, competition will set in and force down the price,” he said.
He cited the case of the price of Global System for Mobile (GSM) communications subscriber identity module (SIM) cards which are now being given free of charge today.
He recalled that in the past, a SIM card costs over N30, 000 but competition has made it to be given freely today. “So, I don’t belong to the school of thought that says prices that go up in Nigeria will not come down.
“Prices do come down as long as there is competition. I like the PIGB and we will like to see more reforms in oil and gas. It is in Nigeria that I see products and commodities that are characterised by inelastic demand and for which we can’t have close substitutes to be subsidised by the government.
“So our problem is structural and we must continue to handle it from the structural correction perspectives. In Nigeria, we subsidise all commodities including electricity, gas, petrol, interest rates, and foreign exchange, among others. Government should allow the private sector play its role in all these,” he added.
He congratulated The Island Club for the business meeting and Folawiyo Petroleum for making Lagos State an oil producing state.