The Nigeria’s downstream sector has continued to underperform due to the current regulated price regime.
While government tries to incentivize investment in the sector by introducing fiscal policies and measures to attract investors, such as exemption of petroleum products from value added tax, gas utilisation (downstream operations) incentive and pioneer status incentive, the potentials of the sector to leapfrog economic growth remain stifled, due to the prevailing price fixing regime.
This newsletter highlights some of the recent events within the sector, including the regulatory and tax matters affecting the industry.
Updates in the downstream sector
The global economy is currently grappling with a pandemic occasioned by the rapid spread of the novel Coronavirus disease (“Covid-19”) that was first identified in Wuhan, Hubei, China in December 2019. Countries around the world have responded by introducing measures to curtail the impact of the pandemic on their economies and the well-being of their citizens. These measures include tax reliefs, welfare support to families and grant of loans to businesses. In Nigeria, the government, through the Central Bank of Nigeria, has responded by creating a special intervention fund for the health sector and reducing interest rate from 9% to 5% on some intervention funds, amongst others. Also, the government has reduced the pump price of petroleum motor spirit (PMS) from ₦145/litre to ₦121.50/litre, to ease the impact on citizens. But the question still remains whether this is a fair price when compared with the price per litre of fuel in other countries where fuel price is deregulated.
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