Article Preview
Top1. Introduction
Nigeria is categorised Africa’s continent leading crude oil producer, but the nation rely on importation of refined petroleum commodities for the consumption of its citizens as its four petroleum refineries have not been functioning optimally for years. Though diesel and kerosene values had been deregulated, a subsidy which was intended make price of fuel cheap and accessible in all fuel stations to her citizens have created avenues for corruption thus impeded the country’s economic growth and development.
The nation is ranked sixth primary oil nation in the Organisation of Petroleum Exporting Countries since it is blessed with enormous crude oil that engenders her billions of Dollars oil revenues. However, the government like other developing countries has not put in place any meaningful growths that commensurate with the vast oil revenues generated by the country but only recorded prevalence of corruption, misappropriation, trafficking of refined products to other countries, vandalisation of pipelines despite the unnecessary subsidy expenditures for refined products in the industry.
The downstream petroleum sector is classified into three sections: the upstream encompasses of exploration, production and the downstream sector consist of trades on refined petroleum products, retailing, and haulage while the midstream transacts business on natural gas. The research centred on the downstream oil industry, which has extreme effects on the lives of all populaces. Besides, deregulation is the broadening of the oil trade through de-monopolisation of government-held petroleum firms which are ineffective to encourage constructive profitable development and firmness in the industry. It is also a model for freeing the government involvement in the industry by easing the numerous rules regulating the industry for a liberated oil market where petroleum commodities prices are determined by the interaction of the forces of supplies and demands in the oil market.
Conversely, liberalisation is the abolition of control and involvement of numerous investors in the downstream oil sector to promote vigorous competition, accessibility of oil products; reasonable and rational oil prices via the sustenance of private sector possession and growth of downstream oil industry substructure, for instance, oil refineries, lubricant plants and pipelines provisions. But Privatisation is the total transfer of ownership of government-held oil assets or firms to investors on shareholding ratio, while subsidy scheme is the situation where fuel customers pay less than the market price of fuel per litre with the aid of the government via subsidisation of oil products prices to ensure fuel user-friendliness for the residents.
Furthermore, the government initiated an additional mechanism called harmonised pricing of petroleum commodities to promote uniform apportionment of oil products in the country. Equally, the Petroleum Equalization Fund was inaugurated in 1975, to tackle price inequalities occasioned by haulage of petroleum products to all part of the country at the uniform estimating policy initiated by the government to boost the supply of distilled petroleum commodities through practical know-how in refining, trade and allocation of oil commodities to boosting local oil firms involved in the downstream oil industry. Equally, to boost the adequate nationwide supply of fuel products at reasonable values via suitable storage stipulations for fuel commodities and haulage of purified oil products to eliminate the shortage of fuel and other oil commodities to improve private investments via removal of NNPC’s branches oil market domination and control of the industry.
Consequently, numerous nations have industrialised their downstream oil industry via liberalisation and deregulation models which have boosted private sectors investments in their downstream oil industry—the challenge of an ongoing shortage of fuel products in Nigeria and primary concern for this research. The downstream oil industry is examined due to numerous efforts of the government to develop the industry via policies but with insignificant results even though the nation is rated ten positions among the primary oil reserves countries in the world with Ninety per cent of the Federal Government’s income emanating from the industry. Thirty-five per cent of her Gross Domestic Products also originated from the industry, and One per cent of its national Gross Domestic Products also come from the downstream oil industry (Wapner, 2017).