LCCI advocates equal access to FOREX for NNPCL, others for competitiveness

The Lagos Chamber of Commerce and Industry (LCCI) has called for equal access by all importers of petroleum products, including Nigerian National Petroleum Corporation Limited (NNPCL), to the foreign exchange market.

Dr. Michael Olawale-Cole, President, LCCI, said at the LCCI 2023 Second Quarter Economic Review on Tuesday in Lagos that this was to ensure competition and eliminate unfair advantage.

The LCCI president expressed concern over incidents of speculation around the pricing of Premium Motor Spirit (PMS) and the opaqueness of the pricing mechanism of petroleum products in the downstream sector.

He urged the regulator to strengthen issues around transparency in pricing, in conjunction with other critical stakeholders, to consciously promote competition and prevent a return to fuel subsidies.

“The regulator should ensure that NNPCL, as the historical sole supplier and the supplier of last resort, does not use its dominant market supply position to keep new importers out of the market by supplying products at a price that is not reflective of either international import prices or the current foreign exchange rate.

“We urge the government to keep track of plans to tackle the menace of oil theft, boost oil exports and earn more foreign exchange, and intensify efforts to combat the cartels involved.

“LCCI commends the government on the two policy reforms: subsidy removal and exchange rate harmonisation, and we expect the policies to be sustained and impact positively on investment, fiscal, and external sectors.

“We advocate that more policy reforms should be embarked upon by the government to improve the business environment, boost investor confidence, stimulate economic growth, create more employment, and alleviate poverty,” he said.

Olawale-Cole projected the country’s manufacturing growth to remain weak in the short term due to squeezed consumer spending.

He, however, stated that the sector’s outlook in the medium term was expected to improve due to subsidy removal, which might attract investment in oil refining and other opportunities in the sector.

He stated that the global economy's recovery, though moderate in the second quarter of 2023, was forecast to slow considerably amid continued monetary policy tightening to reign in the stubborn inflation trend.

Olawale-Cole said inflation, though persistent, was projected to decline gradually as demand weakened and commodity prices moderated on the back of longer-term inflation expectations remaining anchored.

He urged the Federal Government to focus on addressing the security challenges that had plagued the business community and negatively affected investment inflows.

“My hope is that this new political era will witness a marked improvement in terms of the state and fate of national security in Nigeria.

“The government needs to sustain its targeted interventions in critical sectors like agriculture, manufacturing, and export infrastructure.

“They must continuously improve electricity supply, resolve all issues affecting distribution companies’ profitability, reduce consumption costs, and address the problem of poor generation,” he said.

The LCCI president commended the Federal Government for the recent efforts to improve infrastructure and called for more of these developments for the organised private sector’s benefit.

This, he explained, would address the cost of logistics, which had gone up due to the poor state of roads and inadequate connectivity amongst farms, factories, and markets.

He said that to reduce shocks from disruptions to supply chains for raw materials, manufacturers should be assisted with subsidised inputs and more allocation of foreign exchange for the importation of critical inputs.

“While the Central Bank of Nigeria (CBN) embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for Micro, small, and Medium Enterprises (MSME).

“Also, while all eyes are fixed on inflation and exchange rate management, the authorities must not lose sight of the unhealthy unemployment figure,” he said.