Nigerian lubricant manufacturers – along with producers of other petroleum products – are breathing easier after a provision that would have restricted base oil imports was removed from pending landmark reforms of the country’s energy industry.
The importation restriction was removed from the Petroleum Industry Bill last month shortly before Nigeria’s Senate and House of Representatives resolved differences between their respective versions of the legislation, which now awaits the signature of President Muhammadu Buhari.
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The provision, which was intended to encourage investment in Nigeria’s refining industry, would have prohibited imports of base oils, fuels and other petroleum products except by entities with domestic refining capacity.
The provision was removed after several organizations from the petroleum industry, including the Lubricant Producers Association of Nigeria, made a last-minute appeal, arguing that the restriction would have benefitted a few businesses while handicapping the industry at large.
“Lupan and other industry groups confronted the government and said that we cannot have this provision,” Lupan Executive Secretary Emeka Obidike told Lube Report today. “How can you stop importation of petroleum products. We need to liberalize the market. We should allow anyone to buy the products that they want to buy.”
Nigeria’s finished lubricant industry depends heavily on imported base oils. Theoretically the country has one domestic base oil plant – at Nigerian National Petroleum Corp.’s fuel refinery in Kaduna – but it has not produced base oils for a number of years and suffered frequent disruptions before then.
The Petroleum Industry Bill is intended improve the functioning and profitability of the country’s oil industry – Nigeria’s biggest source of revenue – while also benefitting consumers of petroleum products. It has been in the works for more than a decade and stalled several times. Since being approved by the Senate and House of Representatives in mid-July, it has been awaiting Buhari’s signature, its final hurdle to becoming law. Residents and officials from the Niger River Delta region have clamored for Buhari not to sign the bill until it is amended to earmark a bigger share of industry profits for that region. The delta region has been one of the country’s main sources of crude oil but has also suffered significant environmental impacts.