Nigeria's long-running years of fuel subsidy regime has been attributed to Nigerian National Petroleum Corporation's (NNPC's) perceived dysfunctions and subsequent failure to conveniently meet the country's energy needs overtime.
The Programme on Energy and Sustainable Development (PESD), an international, interdisciplinary programme that studies how institutions shape patterns of energy production and use, in turn affecting human welfare and environmental quality said that reforming Nigeria's energy pricing was the most important and challenging step towards increasing NNPC's commercial orientation.
PESD, which is part of the Freeman Spogli Institute for International Studies at Stanford University, California United States, stated that reforms in Nigeria's energy pricing amongst other expected reforms in the oil and gas sector could enable the country's national oil company- that is, NNPC, to fully develop its own hydrocarbon resources and capabilities, thus, finally establishing reliable energy services for Nigerians.
According to a study on 15 National Oil Companies (NOCs) by PESD; Saudi Aramco, National Iranian Oil Co (NIOC), Kuwait Petroleum Co (KPC), Petróleos de Venezuela (PDVSA), Abu Dhabi National Oil Company (ADNOC), Nigerian National Petroleum Corporation (NNPC), PEMEX, Gazprom, Sonatrach, CNPC, Petrobras, Petronas, ONGC, Sonangol, and Statoil, these NOCs remain firmly in control of vast majority of the world's hydrocarbon resources and oil markets, thus determining energy production and use.
It was gathered that as excruciatingly difficult as it might be, the existence of petrol subsidy had in its part contributed to the commercial inefficiency of the NNPC and that reforms in Nigeria's energy pricing could help to improve the commercial efficiency of the corporation.
While attempts to increase prices unleash howls of protest from Nigerian populace that view petrol subsidy as one of the only things the government provides them of any value, politicians have often concluded with some justification that price reform was politically suicidal.
On the other hand, efforts to gain public trust by increasing transparency in the shady transactions around petroleum exports, imports, and marketing are likely to be thwarted by the private interests that benefit richly from petrol subsidy.
Nonetheless, tenacious efforts at reform from both ends could help."
Just as Nigerians had kicked against the recent deregulation of the country's downstream petroleum sector, the report noted that, "genuine improvement in transparency over time might help convince a sceptical public to go along with needed reforms in other areas including pricing.
"One reform strategy that has had success in other developing country contexts is to build up new markets in parallel to established ones in which entrenched interests block reform. Natural gas markets might be a reasonable starting point for price reform in Nigeria, as their underdevelopment means that there are fewer players that benefit from the status quo than in, for example, the vehicle fuel market."