Nigeria Deregulations, Impact And Implication
Deregulation refers to the process of reducing or eliminating government regulations in a particular industry or sector, often with the aim of promoting competition, efficiency, and innovation. While deregulation can lead to increased market flexibility and lower prices for consumers, its impact and implications are multifaceted. On one hand, it can spur economic growth by removing barriers to entry for new businesses and encouraging investment. However, deregulation can also lead to market instability, reduced consumer protections, and environmental concerns if not carefully implemented. Moreover, it may exacerbate income inequality and pose challenges for regulatory oversight and enforcement. Thus, the consequences of deregulation depend on various factors such as the specific industry, the regulatory framework in place, and the effectiveness of alternative mechanisms to ensure fair competition and safeguard public interests.
Title page
Approval page
Dedication
Acknowledgement
Table of contents
CHAPTER ONE
Introduction
1.1 General introduction
1.2 Statement of problems
1.3 Problems definitions
1.4 Objectives of the study
1.5 Formation of Hypothesis
1.6 Significance of the study
1.7 Scope of the study
1.8 Limitations of the study
CHAPTER TWO
Literature review
2.0 General Discussion
2.1 Deregulations law
2.2 Partial deregulation
2.3 Demand side
2.4 Compute deregulation
CHAPTER THREE
Research methodology
3.0 Introduction
3.1 sources of data
3.2 Location of data
3.3 Methods of data collection
CHAPTER FOUR
Presentation of data
4.1 Introduction
4.2 Presentation of data
4.3 Analysis of data
4.4 Theory Hypothesis
CHAPTER FIVE
5.1 Summary and findings
5.2 Recommendation
5.3 Conclusion
5.4 Bibliography
INTRODUCTION
The petroleum oil sector is the major area where Nigeria income emendates. Before the discovery of crude oil, agriculture is the major source of income in this country and it forms the major exporting base in this country then. Right now, Nigeria exports more than 50, 000 barrels of oil a day to other countries in this country, the oil sector is controlled by the federal government under the direct supervision of Nigeria National Petroleum Cooperation, whose immediate chairman is chief fusnso Kupkolukun who succeed Pius Obaseki. The NNPC is vested with the power refine Nigeria crude oil but other petroleum agencies like orient petroleum, cheoron, EIF, Total etc con embark in exploration of land areas that might concern crude and possible extraction.
The oil sector is controlled by the federal and this makes them to be the sole monopoly of this sector. Therefore, president Olusegun Obasanjor announced the deregulation policy which not only restricted to the oil sector, but to other sectors of the economy” commercialization and prostration of all the sectors of the economy. President Olusegun Obasanjor in Lagos on 27th February 2001, Obasanjo said that deregulation would mean the end to the existing subsidy system in the sector.
Due to the Non competitiveness of the fuel prices in Nigeria, no investor will establish a refining in the country, said the president, instead, the government will subside the social services and improve publics utilities like education, health, transport, power and water Obasanjo said on the occasion.
Nigeria currently spends billions of U.S dollars on subsidization of oil products every year, but still experiences fuel shortages from time to time. So, the aim of this derogation policy is to ensure that fuel shortages are curbed and that the constant labour stricken because of the incessant rise and hike in the fuel prices is also curbed.
Nupeng and pengassen are also involved in the regulatory process, because both are indirectly involved in supply of petroleum, thereby possible shortage in fuel supply might be triggering off by the acovgies of nupeng and pengassen.
1.2 STATEMENT OF PROBLEM AND PURPOSE OF THE PURPOSE OF THE MASTER:
There is the need to address the issue of petroleum scarcity and the huge rise in pump prices in it country. The deregulation of oil sector is meant to reduce this but the question now is what proper process should be involved in the deregulation. So the cause of dacaricty and high-rise in pump prices might also be attributed to the monopoly of the oil sector, by the federal government, the scholiast of oil radials and bunkering and almost, the improper management of our refining by NNPC.
The purpose of this study, is to know whether the presidential proclamation on February 2001 on the deregulation whether it will yield the desired results, and to know its impacts and implication. This research project purpose is to bring to the notice the impact of the deregulation has on the oil sector economy and the implication of such policy. Because, deregulation is meant to end the existing obstacles and problems inherent in the oil sector.
1.3 BACKGROUND OF THE STUDY
The Nigeria National petroleum cooperation (NNPC) cooperation that controls the oil sector of this country, is involved in the reefing and supply of petroleum to every hook and corners of this country, since the 1960’s when Nigeria experiences the era of oil boom, that is the period which the mecum source of revenue shifted from commercial agriculture to oil because of the discovery of crude oil in Nigeria land.
The refineries in port court and Kaduna are the major refineries refining crude oil, in this country. So the major supplies of fuel, kerosene, diesel and gas are based on the refining of petroleum and this usage are also based on supply to various outlets in the country. The 1990’s experience the shortage of petroleum and subsequent scarcity, which led to the hike in the price by the various presidents. So the oil sector curled not delivered its dividends, which are expected to it. So the announcement by president Olusegun Obasanjo that the oil sector should be deregulated was met by missed feelings by all and supply in this country. This missed feeling has to do with the fact that it is wise decision or a very wrong decision since the oil sector is a major income earner in this country.
So this has led to this research project which is geared towards knowing the impact and implications of the deregulation policy, this is to ascertain whether the policy when and if implemented is the right decision that will permanently solve the issue of scarcity and hike in pump prices or whether such decision is bound to compound the problem of pump hike and scarcity.
1.4 RATIONALE OF THE STUDY
This study which is to ascertain whether the deregulation of the oil sector yield what is supposed to yield and also to know the benefits that are accruable to all and sundry because of policy.
Therefore, the rationale for this study to check the oil sector and to find out the following:
• The causes of incessant fuel like and fuel scarcity.
• Deregulation policy, is the best policy needed in reshaping and redirecting our oil sector
• Can this deregulation curb this frequent issue of scarcity
• Will this deregulation strengthen our oil sector and bring equilibriums in the economic balances of this country.
So this research report is based on the following retainable, so that in the end, we can be able to distinguish more clearly the deregulation polices and the polices that accompanies it, coupled with the fact that the positive and negative impacts and implication of this policy will be noted so, the rationale will be specifically on the impacts and implications of oil sector deregulation.
1.5 SIGNIFICANCE OF THE STUDY
It is aimed that this deregulation of the oil sector will help in tackling the issue of scarcity. The real aim of oil sector is the provision of steady supply of petroleum so since this aim was unable to be achieved before the presidential announcement on 21st Feb. 2001, of the aim to deregulation the oil sector. So the significance of this study is to find out whether the aim of the deregulation is achieved or will be achieved and that whether the aim of the deregulation is the aim in such a total flap. This project topic will significantly portray the impacts and implication of such deregulation policy. So whether the deregulation of the downstream sector of oil will yield the required dividends will be found out at the end of this project research. Even this research is also significant because the problems that our industry is suffering will also be determined and know whether such problems can be curbed.
1.6 LIMITATIONS OF THE STUDY AND SCOPE
The scope of this study covers the deregulation policy of president Olusegun Obasnayo, its impacts and implication and the reactions and feelings of individuals towards this deregulation policy. The impact it has on oil marketing firms like Mobil, EIF and total, so these are what these research topic is are restricted to all the issues concerning deregulation policy.
Lack of literature and journals on the deregulation
The inability of people being questioned to release vital information on this deregulation.
The death of literature and journals on deregulation.
The incorporation attitude of people being questioned.
1.7 OPERATIONAL DEFINITION OF TERMS
1. Oil sector this is the part of or field of business activity that is concerned with the refining and supplying of petroleum to all parts of the country.
2. Deregulation according to Advanced learners dictionary deregulation means the amendments or making of another regulations in respect to an existing issues or programmes
3. Impacts and implication the effect of such deregulation polices on the oil sector whether polices were able to yield its required results.
4. Implication can also be defined as the tendency in which the deregulation is to be blamed or not be blamed in the problems encounter by the oil sector especially that of fuel scarcity.
Nigeria Deregulations, Impact And Implication:
Deregulation in the context of Nigeria often refers to the deregulation of the country’s oil and gas sector, specifically the downstream petroleum industry. This involves reducing or removing government controls and regulations on the pricing and distribution of petroleum products. The deregulation policy in Nigeria has primarily focused on the downstream sector, which includes activities such as refining, distribution, and marketing of petroleum products.
Impact:
- Price Fluctuations: Deregulation has led to more volatile fuel prices. In a regulated system, the government can subsidize fuel prices to keep them stable. However, with deregulation, prices are influenced by global oil prices and market forces, which can lead to frequent price changes.
- Competition and Efficiency: Deregulation encourages competition by allowing private players to enter the market. This can improve efficiency and service quality as companies strive to attract customers.
- Investment and Infrastructure: Deregulation can attract private investment in refining and distribution infrastructure. This can potentially lead to the expansion and modernization of the country’s oil and gas infrastructure.
- Reduced Government Subsidies: Deregulation reduces the financial burden on the government, as it no longer needs to subsidize fuel prices. This can free up resources that can be used for other development initiatives.
- Market Dynamics: The market-driven approach can theoretically lead to better resource allocation as prices reflect supply and demand conditions more accurately.
Implications:
- Inflation: Frequent fuel price changes can have an impact on overall inflation, as transportation costs affect the prices of various goods and services.
- Social Impact: Deregulation can lead to higher fuel prices, which can have a direct impact on the cost of living for citizens. This can disproportionately affect low-income households.
- Political Considerations: Fuel price hikes have historically been politically sensitive issues in Nigeria, often leading to public protests and social unrest. Deregulation can make the government less able to control fuel prices and prevent such unrest.
- Sector Sustainability: While deregulation can attract investment, it’s important to ensure that environmental and safety regulations are still in place to maintain the sustainability of the sector.
- Monitoring and Enforcement: Deregulation requires effective regulatory bodies to prevent anti-competitive practices and ensure that market players adhere to safety and quality standards.
- Subsidy Management: Although deregulation reduces the need for fuel subsidies, it doesn’t eliminate them entirely. Governments might still need to manage targeted subsidy programs to support vulnerable populations.
In Nigeria, the deregulation of the downstream petroleum sector has been a contentious issue due to its social, economic, and political implications. Balancing the benefits of market-driven efficiency with the potential negative consequences for citizens’ livelihoods requires careful planning, communication, and implementation. It’s important for the government to consider strategies to mitigate the adverse effects of deregulation, such as implementing social safety nets and investing in alternative energy sources.