EVALUATION OF THE EFFECTIVENESS OF DEREGULATION ON THE DOWNSTREAM SUB-SECTOR OF THE NIGERIA PETROLEUM INDUSTRY
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Date
2020
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Abstract
In recent times, deregulation has been accepted to be a universal development that came as a
product of economic globalization aimed at freeing of government control from the regulation of
a system. Deregulation of down-stream oil sub-sector in Nigeria was meant to lessen public
sector control and develop an open market while ensuring adequate supply of the product.
However, despite the abundant availability of this natural resource (crude oil) in the country, the
nation has experienced over the years fuel scarcity, inadequate supply of petroleum products, as
well as hoarding, smuggling, adulteration, long queues, inappropriate pricing. The unhealthy
development degenerated into poor performance of the nation's refineries, which resulted in
excessive dependence on imports. The study thus evaluates the effectiveness of deregulation on
the downstream sub-sector of the Nigeria petroleum industry using descriptive statistics and
Person Chi-square inferential statistics. The data used for the empirical analysis were generated
through structured questionnaire where the respondents were required to read each question
carefully and indicate their agreement or disagreement with the statement using a five-point
likert scale. Findings from the study revealed that there is no significant relationship between
deregulation of the downstream petroleum sub-sector and the supply and distribution of
petroleum products in Nigeria. It revealed that the supply and distribution of fuel product by
NNPC and oil marketers have not entirely helped reduce scarcity of the product. It was
discovered also from the empirical analysis that there is no significant relationship between
deregulation of the downstream petroleum sub-sector and the instability in the pump price of the
product. NNPC inability to attain a stable price for its products has been a major challenge in
the implementation of the deregulation policy. Above all, the deregulation of the downstream
petroleum sub-sector was found to have not significantly been able to improve the availability of
petroleum product. Smuggling of petroleum products in the downstream sector have not been
addressed by the deregulation policy. Based on these findings, the study thus recommends that
government should create an enabling environment to engender private investors for the purpose
of improving the local refining capacity to meet the ever-increasing local demand of petroleum
products and indeed for exportation purpose. Revisions to the petroleum fiscal and regulatory
regime should not introduce multiple taxes, high royalties and remove incentives; if these
impediments are introduced, oil and gas projects would not be economical for investors.