Effective Distribution And Economic Growth

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In the past Nigerians solely depended on the exportation of agricultural product for their source of income. This continued until the discovery of the presence of the presence of oil in our country, especially in Port Harcourt. This made them (Nigerians) to divert from agriculture to the exportation of oil to other countries, which was actually fetching them much money even till this present time.
There are many subsidiary oil companies scattered all over the country but the biggest among them is in Port Harcourt and it is called the Nigeria National Petroleum Company (NNPC). It is from here that crude oil is extracted from the ground refined to get those components like fuel, kerosene and gas.
There are deploys scattered all over the country, like shell port Harcourt, NNPC oil, EIF oil company, Warri pipelines are directed towards these oil companies to facilitate distribution. Tanker drivers and other dealers will load from the depot and distribute to filling stations, then the consumer will buy from the filling stations.
Fuel supply has been moving smoothly in the country before the announcement of the budget by the head of state in January last four year 1999. It was in February 1999 that the whole issue of fuel scarcity started. This has made it difficult for the government to accomplish that which it proposed to do the budgets.
A subsidy by definition is any measure that keeps prices consumers pay for a good or produce below market level for consumer or for producers. Subsidies take different form. These include grants, tax, reductions and exemptions or price controls. Others affect prices or cost indirectly such as regulations that skew the market price in favour of a particular fuel, government sponsored technology, or research and development (R & O) Alozie (2009).
According to Eyiuche (2012) the federal government operated fuel subsidy with the aim of making petroleum products available to cushion the effect of actual market prices of the product on the general populace. The federal government during the military era was of the opinion that the cost of production, transportation of fuel will be so much a heavy burden for the poor masses of Nigerians to bear alone and therefore decided to pay part of the total amount of fuel cost for every Nigeria in order to make the product available and affordable. This is actually what is referred to as fuel subsidy that is the government paying part of the total amount of fuel cost. His intention of cushioning the effect of actual market price of fuel product actually worked for a period of time, say from 1973 – 1983. On March, 31st 1986 Gen. Ibrahim Babangida increase the pump price of petrol from 20k to 39.5k.
This was about 97.5% increment; sources have it that issues worsened with the advent to democracy. On June 1st, 2000 Chief Olusegun Obasanjo increased the pump price of petrol from 20 to 30 (50% increment).
Gradually, the aim of the military government that introduced fuel subsidy was subdued and defeated. The benefits of fuel subsidy to the average Nigerian was short lived. The federal government claim to have spent over 1.4 trillion on fuel subsidy in the past five years, it also claimed to be paying heavily to subsidize kerosene which is imported into the country through the Nigerian National Petroleum Corporation (NNPC), the fuel subsidy policy has also bred several unintended consequences and practices such as smuggling of petroleum products out of the country, the federal government also claimed that the fuel subsidy policy has made them unable to tackle problems of our collective infrastructure which are the roads, power, agriculture fixing the refineries etc

1.2 STATEMENT OF THE PROBLEM
The word “scarcity” means when there is insufficiency of something. Since there is insufficiency of fuel it is termed as fuel scarcity.
In the past, there has not been any services fuel scarcity. Everything was moving smoothly, the industrialist both public and private does not have any problem. Economically the price of goods and services, were affordable by the people. Car owners can just go to filling station and buy fuel at a normal price of N22.00 per liter and with much ease. Things were moving smoothly in the country and in this part of Enugu Metropolis, Imo State until 1994 when we had one case of fuel scarcity not until on up till this movement of this study.
Because of fuel scarcity, people are so desperate to by fuel for their business. For this reasons, whenever any information was passes concerning the presence of fuel in any filling station, car owners will go there and queue-up. Some of them will have to sleep in the filling stations a day or more than two days while waiting for their turn. People or car owners when they cannot buy fuel in any filling station, are forced to buy from the black market at an exorbitant price. Some people use big gallons to buy fuel that will serve them for some days.
For the reason that there is insufficient fuel in the filling station, makes people sell fuel in ration so that everybody present will buy. The car owners who think the fuel will not reach them will start jumping the queue, thereby causing fights among themselves. Because of this reason, the filling station owners invite soldiers so that there will be peace and orderly queue in the filling stations. Fuel scarcity is sometimes artificial in the sense that during the Christmas period, filling station owners will just hoard their fuel in order to sell at a high price.

1.3 OBJECTIVE OF THE STUDY
This study has the following objectives:
1. To find out the cause of fuel scarcity
2. To recommend what can be done to solve the problem of fuel scarcity.
3. To find out how the fuel scarcity has affected the business men and women, civil servant etc (The total population of Enugu Metropolis, Imo State).

1.4 STATEMENT OF HYPOTHESIS
Ho: The middle men have not been contributing to fuel scarcity.
Hi: The middle men have been contributing to fuel scarcity.
Ho: Fuel scarcity is not the cause of high cost of transportation.
Hi: Fuel scarcity is the cause of high cost of transportation.

1.5 SIGNIFICANCE OF THE STUDY
This study is significant in the following ways:
1. It would use a market structure, conduct performance framework to analyze the industry, both before and after deregulation, as a means of judging the effect of fuel distribution and economic growth in terms of petroleum products prices.
2. The significant of this study also lies in the fact that it would contribute to existing literature on the subject matter by providing an expository analysis of the pattern of increase of petroleum products prices in Nigeria.
3. This would enhance policy formulation in the fuel distribution and economic growth in Nigeria with the intention of alleviating the suffering of the masses.
4. It would also be an invaluable tool for students, academic, institutions and individuals that want to know more about the deregulation of the downstream sector of the Nigerian oil industry.

1.6 SCOPE OF THE STUDY
This study is carried out in Enugu Metropolis, Imo State to study the operation of the Nigeria National Petroleum Company (NNPC) and the middlemen. The study is only based on petrol alone and not for kerosene or gas generally.

1.7 LIMITATIONS OF STUDY
The research work is limited to fuel scarcity in Nigeria with a case study of NNPC in Enugu Metropolis, Imo State. This study was carried out purely as an academic exercise and therefore could neither receive any financial support from the government or any private enterprise.
The limited financial resource of the researcher is thus a major handicap and thereby resulted in limiting the study only to Enugu Metropolis, Imo State.
Time factor also proved a major constraint.

1.8 DEFINITION OF TERMS
Economic: Punishment of another country by reducing or stopping trade with it.
Effect: Change produced by an action or cause.
Fuel: Mineral resources that provide unclear or internal energy requirements.
Scarcity: Something not been enough that is difficult to obtain and less than is needed.
Middlemen: Trader who passes goods from the producers or from where they are produce to the final customer or final buyer.
Fuel Subsidy: The amount of money that the governments pay to the capable of fuel importers while importing fuel so the price of fuel will be cheaper for the people to purchase.
Subsidy: Any measure that keeps prices consumer pay for a good or produce below market price for consumer or for producer.
Distribution: This is a set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer.

1.9 BRIEF HISTORY OF NNPC ENUGU DEPOT
Nigeria’s oil industry is dominated by the national oil company, Nigeria National Petroleum Corporation (NNPC) founded in 1977. It is the major partner in the upstream joint ventures with the seven sisters or major multinational petroleum exploration and production companies.
These are the largest and oldest in Nigeria Shell Petroleum Development Company (SPDC) or better known as shell others are mobile producing Nigeria unlimited, chevron Nigeria, EIF petroleum Nigeria and the Nigeria Agip oil company, NAOC and affiliate, Agip Energy and Natural Resources (AENR). The NNPC owns an average 57 percent in these JVS. Profits from the JVS are shared in the same ratio for the NNPC shell JV share structure, NNPC 55% royal Dutch shell 30%, EIF 10% and Agip 5% until early 90s, NNPC held 75% in the JV. It sold off 20 percent, 10% sold to shell, 10% to EIF and 5% to Agip.
Chevron JV, NNPC 60%, chevron 40%
Mobile JV, NNPC 60%, Mobil 40%
EIF JV, NNPC 60%, EIF 40% (France) Nigerian.