LAGOS STATE POLYTECHNIC
OTITOR SUNDAY .N.
LAGOS STATE POLYTECHNIC
OGUNBONA EMMANUEL .G
THE DEREGULATION OF THE DOWNSTREAM SECTOR OF THE NIGERIA OIL INDUSTRY IS MORE OF A CURSE THAN BLESSING. DISCUSS
LECTURER IN CHARGE
THE DEREGULATION OF THE NIGERIA DOWN STREAM SECTOR OF THE NIGERIA OIL INDUSTRY IS MORE OF A CURSE THAN BLESSING
The oil industry has been a major contributor to Nigeria’s economy and that is why over 80 percent of the country’s foreign exchange earnings come from this sector. Since the discovery of oil in commercial quantity, Nigeria has been experiencing consistent increase in revenue earning. But this increase notwithstanding, Nigerians are yet to enjoy certain basic necessities of life. It has been strikes and protests against inadequate supplies and incessant increases in the pump price of refined products. In order to reduce the burden on the citizenry, the federal government introduced the policy of subsidy, which was to make the prices of fuel in the country cheaper for consumers to buy. But, in spite of the whooping amount of money spent on subsidy, the prices of the refined products continued to rise astronomically. It is against this background that we seeks to examine the issue of deregulation in the downstream oil sector and to find out if the crisis being generated can be resolved. During the course, it was discovered that a group of dissidents and saboteurs have been working against the functionality of the existing refineries and equally engage in fuel importation for the purpose of satisfying their selfish interests. In order to ameliorate the ugly situation, introduction of deregulation in the downstream oil sector becomes imperative. The believes is that the policy, if properly implemented, will go a long way in eliminating market distortions, promotes free market competition, and encourages private ownership of refineries in the downstream petroleum sector.
DEFINITIONS OF SOME TERMS
* DOWN STREAM
According to Hornby (2001:313), deregulation is the freeing of a trade or a business activity, from rules and controls. In his own view, Obioma (2000), understood it to mean the allocation of resources by market forces. He equally saw it as the determination of price by the interplay of demand and supply. It means the withdrawal of government control of resource allocation mechanism, thereby allowing the forces of demand and supply to determine the prices of goods and services. By way of expansion, Ezeagba (2005:43),stated that the fundamental economic objective of deregulation can be summarized as bringing more competition to the market with its attendant increase in economic efficiency and welfare. In his own words, Fawibe (2009:1), believed that deregulation is the removal of government control, withdrawal of state interference, encouraging free market operation, and simplification of government’s rules and regulation for greater market force.
The downstream sector commonly refers to the refining of petroleum crude oil and the processing and purifying of raw natural gas. As well as d marketing and distribution of products derived from crude oil and natural gas. The downstream sector touches consumers through product such as gasoline or petrol, kerosene, jet fuel, diesel oil, heating oil, fuel oils, lubricants, waxes, asphalt, natural gas and liquefied petroleum gas (LPG) as well as hundreds of petrol chemicals.
Nigeria is endowed with vast natural resources including such minerals as petroleum, limestone, tin, natural gas and others (Anyanwu et al, 1997:3). All these minerals have remained untapped, except petroleum which had dominated Nigeria’s economy since the 1970s. Today, petroleum...