Fuel importation: ‘Banks don’t lend to most operators’

Over 70 per cent of oil marketers eligible to import fuel are not doing so because banks are not lending money to them, the Chairman, Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho, has said.

He said banks were not lending to operators in the downstream because of paucity of funds and the inability of operators to repay with interest as agreed upon.

He said the banks’decision to impose restrictions on lending has compounded the woes of indigenous oil and gas operators further as they have to operate at below the capacity level.

He said: “More than 70 per cent of the operators in the nation’s oil sector want to import fuel in the wake of lopsided performance of the refineries, but unable to do so because

banks have shut the window to advance credit to them for reasons best known to them. In view of this, the operators rely on fuel allocations or supplies from the Federal Government.“

Ihenacho said the country needed to adopt and implement a policy that is geared towards making the refineries refine more crude oil in order to proffer solution to the perennial fuel crisis and its attendant problems in Nigeria.

“There is a need for a paradigm shift from importing to refining in-country. This shift can only be made possible when more refineries are allowed to operate. Why can’t we encourage companies to establish more refineries to meet fuel needs of operators in the downstream sector and the consumers,” he asked.

Ihenacho said lack of a workable operation plan is killing initiatives by the Federal Government to move the downstream sub-sector of the oil and gas forward, adding that to improve the downstream sub-sector, government needs to restructure it.

He said deregulation of the downstream segment of the industry cannot be possible unless private entities invest in refineries.

Ihenacho said subsidy is a drain on the government’s purse, stressing that trillions of naira have been paid as subsidies to fuel importers in the last few years.

He urged the government to remove subsidies, and also provide environment that is conducive for private refineries to operate, adding that the idea would help in reducing the fiscal challenges, which the country is facing.