This study examined the deregulation of the
downstream oil sector in Nigeria as a panacea to economic recovery of the
country (An Analysis of 2010-2015 Economic Programme of Nigeria). In this study
the researcher has find out some of the problems that are facing the
deregulation of the downstream oil sector in Nigeria, these problems are
continuous increase in petroleum price, scarcity of petroleum product . all
these are the major problems that are facing the deregulation of the downstream
oil sector which government have to help solving this problems by making fuel
available and controlling the price. Also the researcher has find out some of
the objective which will also help in the deregulation of the downstream oil
sector which includes , investigating the effect or the deregulation of the
downstream oil sector on the living standards of the people, also to examine
the pre and unrealistic deregulation era and make critical comprise. And to
explore the reason why partial deregulation has not yielded the desired result
in terms of prices and supply. Data collection was also used in the research
work, data collection is an important aspect of any type of research study. The
method of data used for this study was primary and secondary sources. The
researcher administered a total of 80 copies questionnaires to both in rural
areas, from the data the following finding were apparent that a tremendous
impact was made by downstream oil sector in Nigeria oil industries. Finally the
findings and conclusion in the research work were also discussed, showing that
without proper management, control and investment the revenue generated from
deregulation of the downstream oil sector will be embossed by corrupt
government officials. If government decide to force down
the deregulation policy as currently conceived, it will greatly erode the
ability of the people to cope with further price increases on petroleum
products. Businesses would be further impaired to operate under a regime of
higher energy cost, while ease of doing business indicators remains generally
negative in the countr
TABLE OF CONTENTS
1.1 Background of the study
Statement of the problem
Objectives of the study
Significance of the Study
Scope and Limitations of the study
Organization of the Study
2.1 Conceptual Clarification
2.2 Rational Behind Govt. Plant of Deregulation
2.3 The Relevance of the Deregulation
2.4 Obstacles and Trend of Deregulation of the
2.5 Potential Benefits of Deregulation of the
2.6 Effect of Deregulation of the Downstream
2.7 The Impact of Deregulation of the
2.8 The Roleand Economic Implication of the
2.9 Government Strategy for Deregulating the
2.10 Success Story of Deregulation in Other
3.0 Research Design and Methodology
Area of Study
Population of the Study
Sample and Sampling Techniques
Instrument for Data Collection
Validity of Instrument
Method of Data Collection
Analysis of Data
4.2 Testing of Hypothesis
4.3 Discussion of Findings
Summary and Recommendations and
5.1 Summary of Findings
of the Study
major petroleum marketing companies were the main sources of petroleum
product’s supply. The companies transported and distributed the products
relying on their distribution and retail outlets. This was an era of Pre-
regulation in which Nigerian paid market-determined prices for products.
However, this arrangement was not sustainable given that it was dependent on
the profit and market imperatives of the oil marketers. The country’s economic activities expanded in
the seventies such that private companies could no longer cope with increase
demand for products. This resulted in erratic supply of petrol and kerosene and
ultimately acute scarcity of the product. The shortage was endemic and created
social and economic dislocation in the country. This market failure made
government to venture into petroleum products marketing and distribution.
concern by government to overcome this lack of product and total dependency on
oil companies led to policy shift towards regulations. Government therefore
introduced uniform pricing to satisfy domestic demand, strengthen self-reliance
and avoid a situation in which the oil companies could hold the country to
ransom. The nation witnessed adequate supply of petroleum products up till
2000. Thereafter, due to the sustained devaluation of the Naira on account of the
implementation of the Structural Adjustment Programme (SAP) coupled with the
non-maintenance of the refineries, domestic production was soon undermined
making it imperative for demand to be met through imports.
shortages of petroleum products escalated in spite of increases in prices of
products since 1999. The Olusegun Obasanjo administration
on coming on board decided to gradually withdraw the subsidy on petroleum
products to allow the mechanics of market forces to take its full course. This
again, resulted to frequency increase in petroleum products prices.
1.2 Statement of the Problem
Petroleum products supplies have
always been problematic for successive Governments in Nigeria. With the new
democratic dispensation, the supply and distribution of petroleum products
improved but this was without a frequent price increase in petroleum products.
With few months to the end of the Obasanjo’s regime, the ugly incidence of
petroleum scarcity surfaced again and one begins to wonder if there is any solution
to this problem.
The contemporary passion and tension that usually
characterize petroleum discourse is due to unquantifiable deprivations and
sufferings it causes in Nigerians. As the 6th largest producer of petroleum, it
is a contradiction that in the past decade, supply of all products has been
changeable and on sharp decline. Ironically, as supply declined, products
prices have been on the increase as successive governments searched for
“appropriate pricing”. The combined impact of unreliable and inadequate supply
and unending price increases have brought untold hardship to the citizenry and
worse too, prevented economic recovery as promised by the present
democratically elected government given that capacity utilization in the
manufacturing sector nose-dives due to shortages of industrial products. Indeed
many industries have been compelled to close due to non-availability of some of
In the bid to solve the problem in many developing
countries, structural reform of petroleum markets has become a critical
component of macroeconomic liberalization policies. The role of the government
in the petroleum sector is being redefined, and markets are being deregulated
(i.e state interventions such as special treatments of state-owned oil companies,
price controls and monopolies are being broken up). Increasingly, the private
sector is participating in more competitive environment. But unexpectedly, the
outcome of the deregulation has not been encouraging. There has been continuous
increase in petroleum prices with persistent scarcity of petroleum products. It
was expected that deregulation would give room for competition which would
transform to price reduction and excellent supply and distribution network.
This study is devoted on the evaluation of the deregulation exercise;
critically appraising its impact on petroleum pricing, consumption and the
general living standard of the people.
Objectives of the Study
aim of this study is to appraise partial deregulation exercise that was carried
out in the Nigerian downstream oil sector.
The specific objectives of this study are as
i. To evaluate the pattern of petroleum products
pricing in Nigeria;
ii. To examine the consumption pattern of petroleum
products before and after the partial deregulation;
iii. To examine the impact of the deregulation of
downstream oil sector on petroleum products pricing in Nigeria;
iv. To investigate the likely effect of the
deregulation of the downstream oil sector on the living standard of the people;
To examine the pre- and unrealistic deregulation era and make critical
To explore the reasons why partial
deregulation has not yielded the desired result in terms of prices and supply.
1.4 Research Questions
study would examine the following questions:
i. What is the pattern of petroleum products pricing
in Nigeria over the years?
ii. How has the deregulation exercise impacted on the
consumption pattern of petroleum products in Nigeria?
iii. To what extent has the deregulation efforts of the
downstream oil sector impacted on petroleum products pricing in Nigeria?
iv. How does the regulated downstream sector differ
from the deregulated era?
v. Do you think that partial deregulation of the
downstream oil sector in Nigeria will yield deserve economic recovery?
The following hypotheses were formulated based on
the objective of the study:
Hi= alternative hypothesis
Ho= null hypothesis
Hi: The deregulation
exercise has impacted on the consumption pattern of petroleum products in
Ho: The deregulation exercise has not impacted on the consumption
pattern of petroleum products
deregulation of the downstream oil sector has largely impacted on petroleum
products pricing in Nigeria.
Ho: The deregulation
of the downstream oil sector has not impacted
pricing in Nigeria.
Hi: That the regulated downstream sector differs
significantly from the
Ho: That the
regulated downstream sector does not differ significantly
from the deregulated
Hi: That the
partial deregulation of the downstream oil sector in Nigeria has yield deserve economic
recovery of the country.
Ho: That the
partial deregulation of the downstream oil sector in Nigeria has not yield
deserve economic recovery of the country.
Hi: Partial deregulation of the downstream oil
sector in Nigeria will
yield more deserve economic recovery.
HO: partial deregulation of the downstream oil sector
in Nigeria will
yield less deserve economic recovery.
of the Study
This study shall be found useful by
all citizens of the country as well as policy makers and individuals affected
by the scourge of deregulation. It shall also be found valuable by
ideologists and Governmental agencies as well as NGO’s saddled with the responsibility
of national citizens’ orientations, ethnic nationalities, and scholars with
interest in similar areas of study will equally find this report very useful.
The study will also serve as a point of reference to students in higher
institutions and as a point of reference for further studies.
and Limitations of the Study
This study shall analyze the Deregulation
of the Downstream Oil Sector in Nigeria as a Panecea to Economic Recovery of
the Country: An Analysis Of 2010 -2015 Economic Programme by those
in charge of the formulation of policy and its implementation. The study will
foster citizens consciously or unconsciously betray patriotism by beating
undeserving drums of support for public office holders in a bid to defend their
territory, whether the supported person/action is worth condemning or not.
In the course of this research, the researcher
encountered so many difficulties among which are:
[a] Cost: Inadequate
fund have limit this work beyond my test,
of fund also affect not only the period of the research but also its quality. To exalt everything about analyzing deregulation
and come out of legacy for the posterity one needed to travel far and near and
be equipped on daily reading of newspapers, magazines and internet materials
since it is the talk of the day. All this will cost the research a huge amount
[b] Time: Time is as costly as money, it is even
problems than time, and time lost is hardly regained. Financial markets do exist but time existed
for time, with the school academic, the period for the research work is too
short, putting other courses into the budget.
[c] Reluctant to Cooperate: The Management, scholars more
government agencies of some parastatals is too reluctant to disclose the
required information and more so when it comes to disclosing or exposing the
some government book record. The idea
equally affects the quality of facts given in the research work.
of the Study
This study shall contain five
chapters. The first chapter shall contain the background of the study, the
statement of the research problem, the objectives of the study, the research
questions etc that would guide the study. Chapter two would present the literature
review on the subject matter. The methodology to be adopted in the study would
be stated in chapter three. Chapter four shall focus on the presentation and
analysis of collected data. The last chapter – chapter five, would present the
summary of the findings, conclusion and appropriate recommendations.
Ojo, M. O. and Adebusuyi, B. S.
(1996). “The State of the Nigerian
Petroleum Industry: Performance, Problems and Outstanding Issues”,
CBN Economic and Financial
Review Vol.34, September.
Ozumba, C. C. (1996).
the potential of the Nigerian Oil and
Gas for Economic
Development”, CBN Economic and
Financial Review, December.