should nigeria deregulate its downstream sector?
TRANSCRIPT
CENTRE FOR ENERGY, PETROLEUM AND MINERAL LAW AND POLICY
STATEMENT OF ORIGINALITY
STUDENT I.D.: 090018338
STUDENT NAME: AHMED ADAMU.
PROGRAMME: Msc Energy studies with specialization in Oil and Gas Economics.
MODULE CODE: CP52033 (ECONOMICS OF REGULATION AND RESTRUCTURING OF ENERGY INDUSTRIES).
TITLE OF THE RESEARCH PAPER: SHOULD NIGERIA DEREGULATE ITS DOWNSTREAM SECTOR?
ABSTRACT: Nigeria is blessed with oil resource which accrue huge amount of money to the country every year. Subsequently, it was comfortable for the government to regulate the downstream sector and subsidised the petroleum products to make it affordable to the citizens especially the poor. But Recently, due to low production level of refineries, non reflection of regulated prices at the retail outlets, exclusion of the targeted group of people from the benefits and increase in consumption of the petroleum product, government found it unbearable to continue regulating the sector and decided to deregulate the country’s downstream sector so that it can discharge its statutory functions effectively. This has lead to serious challenges and criticisms from some group of people. Consequently, this paper studied the two divergent opinions with a view to find out whether it is economically efficient to deregulate the country’s downstream sector. The paper has empirically analysed the reform issues and conclude that if the government will be prudent, committed and adhere strictly to the necessary steps and recommendations in the process, deregulation will be good for the country economically and politically.
WORD COUNT: 4,262
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CONTRACT CONCERNING PLAGIARISM
I, the undersigned, have read the Code of Practice regarding plagiarism contained in the Students' Introductory Handbook. I realise that this Code governs the way in which the Centre for Energy, Petroleum and Mineral Law and Policy regards and treats the issue of plagiarism. I have understood the Code and in particular I am aware of the consequences, which may follow if I breach that code. I also authorise the centre to scan the e-copy of my research paper through the Plagiarism Detection Software to detect plagiarism
SIGNED: ____________________________Date: 11-05-2010.
TABLE OF CONTENTS Page
ABBREVIATIONS:……………………………………………...…... 3Chapter 1:INTRODUCTION:…………………………………………… …… 4Chapter 2: Rationales for Regulation in Nigeria:................................................... 9 2.1. Support for the poor:....…………………………………... .. 9 2.2. Encourage patronage:............................................................ 10 2.3. Fear of Inflation:…………………………........................... 11Chapter 3: Effects of Subsidies and Regulation:................................................... 123.1 Demand Growth:............................................................................ 12
3.2 Budgetary Burden:................................................................ 133.3 Hinder Growth of Alternatives:............................................ 133.4 Targeted individuals not achieved:....................................... 143.5 Regulated prices not reflected:.............................................. 15
Chapter 4: 4.1 Why Deregulate Nigerian downstream sector:.............................. 16
4.1.1. Availability of Products:.................................................... 164.1.2 Increase Government Savings:.......................................... 174.1.3 Environmental standard:......................................................184.1.4 Energy Security:................................................................. 184.1.5 Other economic Benefits:................................................... 19
4.2 Challenges of Deregulation:......................................................... 194.2.1 Lost of Jobs:...................................................................... 194.2.2 Inflation:............................................................................ 204.2.3 Resurgence of Traditional Energies:................................. 214.2.4 Market Exploitation and lack of trust on Government:..... 21
Chapter 5:Recommendations for Effective Implementation of deregulation in Nigeria:................................................................................................ 22
5.1 Transparency:........................................................................ 225.2 Awareness:............................................................................ 245.3 Use the Savings well:............................................................ 24
Chapter 6:Conclusion:.......................................................................................... 26BIBLIOGRAPHY………………………………………………....... 28
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LIST OF ABBREVIATIONS:
Organization of Petroleum Exporting Countries (OPEC)
Nigerian National Petroleum corporation (NNPC)
Barrels per day (bpd)
Pipelines and Products Marketing Company (PPMC)
Petroleum Products and Pricing Regulatory Agency (PPPRA)
Petroleum Motor Spirit (PMS)
Automatic Gasoline (AGO)
Household Kerosene (HHK)
Liquefied Petroleum Gas (LPG)
Turn Around Maintenance (TAM)
International Monetary Fund (IMF)
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1. INTRODUCTION:
As the sixth largest oil exporter in the Organization of Petroleum Exporting
Countries (OPEC), Nigeria is endowed with abundant quantities of oil,
subsequently; the country generates billions of dollars as revenues from oil
since the last four decades when oil was first found in the country. Despite
the enormous revenues Nigeria gets, it has not reflected into the lives of
ordinary citizens in the country and the Nigerian Economy is continuously
confronting challenges, this may be resulted from inefficiencies, corruption,
abuse of Natural Monopoly Powers, mismanagement, smuggling,
bureaucratic bottlenecks and excessive subsidy.
The Nigerian Oil industry is separated into two sectors: the upstream sector
and downstream sector. Upstream sector deals with exploration and
production while the downstream sector deals with refining and distribution
of crude oil for domestic consumptions. This paper only focused on the
downstream sector and issues relating to its deregulation especially removal
of subsidy in Nigeria, this is because the Downstream sector has a
significant impact on the lives of all Nigerians especially on how the sector
operates. Deregulation is the removal or simplification of government rules
4
and regulations that constrain the operation of market forces.1 Deregulation
does not mean elimination of laws against fraud, but eliminating or
reducing government control of how business is done, thereby moving
toward a more free market.2
Nigerian downstream sector is managed by the government through the
National Oil Company Nigerian National Petroleum Corporation (NNPC)
which was given the powers and operational obligations in refining,
Petrochemicals and products transportation as well as marketing. Oil
refining in Nigeria dated back to 1965 when the first refinery was built.
Presently, the country has four refineries with the total capacity of
445,000nbpd but operate below its optimal capacities. The supply of
Petroleum products and management of pipeline networks that link these
refineries to bulk customers is undertaken by the NNPC subsidiary known
as Pipelines and Product Marketing Company (PPMC). The bulk customers
otherwise known as dealers supply the products to the millions of
customers throughout the country. These products include Petroleum Motor
1 Sullivan, Arthur; Sheffrin, Steven M. (January 2002). Economics: Principles in Action. New Jersey: Pearson Prentice Hall. ISBN 0-13-063085-3.2 Diran Fawibe(2009); The need for complete deregulation in the Nigerian Petroleum Industry International Energy Services Limited, Lagos Chamber of Commerce and Industry.
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Spirit (PMS) otherwise known as Gasoline, Automatic Gasoline (AGO),
Household Kerosene (HHK), Fuel Jet and Liquefied Petroleum Gas (LPG).3
In the 1990’s, due to the increase in demand for Oil Products, which
outweighed its supply, necessitate NNPC (as a state owned Enterprise) to
import heavily from abroad to meet the escalating demand, and as a result,
the revenue generates from crude oil export has to be used to import refined
products in to the country. Currently, Nigeria import 85% of refined
products. This has exposes the country to difficulties in funding subsidies
on the refined petroleum products, the country had to borrow from
International Financial Institutions to maintain this subsidy and also spent
more to service the debts. Consequently, the country entered a difficult
situation where meeting the major budget needs of the government became
difficult.4
Considering the fact that international oil prices were increasing and the
real refined productions in the country was dropping the government
decided that it can no longer afford the continued subsidies in the pump
price of the fuels because it was purchasing refined products at huge
3 Nigerian National Petroleum Corporation ( NNPC) 2010, official website.com “ http://www.nnpcgroup.com “4 Sarah, A. K., (1994), Nigeria: The Political Economy of Oil , Oxford institute for Energy Studies, Oxford University Press.
6
international prices only to sell at a heavily subsidized rate. Presently, one
litre of Petroleum Motor Spirit (Gasoline) is regulated at N65
(US$1=151.38 Naira, as at 21/4/2010) but the actual cost is expected to be
N114.32, therefore for every litre of Gasoline the government pays the
difference of around N49.34. However, Nigerians consumed around 32
million to 35 million litres of Gasoline per day. Therefore, Nigerian
government pays around N1.6 billion (US$1.1 Million) per day on
subsidies.5 The government claim that despite the huge amount spent, the
subsidies did not reach the targeted individuals but rather few higher
income groups, it further claim that continuation of subsidies on Petroleum
Products limits its ability to deliver its statutory functions such as power
generation, security, education health etc.
Consequently, the government found it imperative to resort to selling the
refineries and invites other local Marketers to apply for licenses to build
private refineries. This was not achieved because the marketers who are
profit motivated declined their interest to apply as the government still
regulates the pump price. Subsequently, the recent government considers it
5 Chika, Amaze-Nwachiku, (2010), shake-up looms in oil industry , News paper article, this day News Paper online 21st April, http:// www.thisdayonline.com
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necessary to deregulate and privatized the downstream sector in the
country. However, the deregulation process is now facing serious
challenges and criticism especially from Labour and Trade Unions,
Parliamentarians and the public. It was against this backdrop that this paper
tries to look at this controversial issue with a view to discover whether
deregulation could be important and relevant to the country? The paper
employs empirical literature in discovering and analyzing the issues
surrounding deregulation and its feasibility in Nigeria.
The paper is divided into chapters, the next chapter (Chapter 2) looked at
the rationale for the introduction of subsidy in Nigeria, the third Chapter
studies the effects of subsidies, chapter four analyses the benefits and
problems of subsidy removal in Nigeria and chapter five proposes some
recommendations for effective and successful implementation of
deregulation in the country. Conclusion came under chapter six.
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CHAPTER 2:
RATIONALE FOR REGULATION IN NIGERIA
“Disruption in the Nigerian downstream sector have deeper and more
immediate domestic and political implications for the country than those
that may occur in the upstream sector” (Sarah 1994), hence the need to
regulate the downstream sector. “Rationale for National regulation is that
uniform national regulations are generally more efficient for nationally
marketed consumer products” (Viscusi, et al, 2005). Generally, government
intervention in the petroleum sector either through public ownership or
through regulation could be justified to ensure adequacy, reliability and
affordability of the petroleum products in a country. Nigeria was not in
exception, as part of the efforts to ensure energy security; the government
provided subsidies on its critical Petroleum products to guarantee the
followings:
2.1 SUPPORTS FOR THE POOR:
Nigeria is growing to a more industrialized and urbanized country where
movements and appliances that require modern fossil fuels were becoming
popular among poor and rich people. However, more than half of Nigerians
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were living below one dollar per day. Subsequently, the Nigerian
Government deemed it necessary to regulate and subsidised these important
ingredients of human lives to make it reliable, adequate and affordable to
the poor (majority group of people in the country). The government resolve
was due to the appreciation of the fact that the poor man cannot afford the
real prices of petroleum products, this came as a relief and support to the
poor as the government now pays up to 40% of the price of every litre of
Gasoline.
2.2. ENCOURAGE PATRONAGE:
Traditional energy has dominated Nigerian Energy sector until the last forty
years when fossil fuels especially oil and gas were discovered in the
country. To transit to a new and more energy intensive sources, the
Nigerian government introduced subsidies on these Fossil fuels to
encourage people to start using them as it is more flexible and energy
saved. This worked out effectively, as the traditional energy sources were
replaced with Fossil fuels in the country. Though, traditional energy is still
been utilized in the rural areas. But due to the provision of the subsidies the
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people over concentrated on the exhaustible fossil fuels in their energy
consumptions; this will be elaborated in the next chapter.
2.3 FEAR OF INFLATION:
Oil prices are so volatile and Nigeria import heavily refined products. This
accentuates Nigeria as an oil dependent country to high inflated and
frequent fluctuations of petroleum products prices. This is another reason
for introducing subsidies to protect the citizens from facing the highly
volatile petroleum products prices so that they will continuously face
regulated fixed prices.
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CHAPTER 3:
EFFECTS OF SUBSIDIES:
Despite the huge amount of money spent in Nigeria to fund subsidies, its
cost is observed to outweigh the social benefits and environmental
improvements. Other adverse effects of subsidies include the following:
3.1 DEMAND GROWTH:
Proving subsidies tend to encourage individuals to consume more even
inefficiently due to the lower petroleum products prices they face in the
market. Over consumptions of fossil fuels will lead to environmental
degradation. This is observed in major Nigerian cities where pollution is
highly concentrated in the atmosphere and congestions across the cities.
Moreover, no one pay for the environmental degradation hence negative
Externality. Similarly, the cost of addressing the environmental challenges
could also be more costly. Therefore, removing subsidies will help address
the environmental issues because consumption of fossil fuels will reduce
relatively.
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3.2 BUDGETERY BURDEN:
Despite the billions of dollars Nigerian government gets from exporting
crude oil, the country face deficit budgeting due to the heavy subsidies on
fossil fuels, this has restrict the government commitments and concentration
on some other basic infrastructural projects. Subsequently, the government
has to borrow from international financial institutions to fund the budget
and pay for the continue increasing interest on previous loans thereby
adding more weight on the government. The Nigerian government claim
that, if relief from funding subsidies it will use the money to pay back these
loans and deliver its statutory functions effectively.6
3.3 HINDER GROWTH OF ALTERNATIVES:
Due to the heavy subsidies on the fossil fuels in the country, petroleum
products tend to be more attractive and highly concentrated in terms of
consumption. Oil consumption constitute 53% share of the total energy
consumption in Nigeria7. This has disheartened the discovery and
development of some other alternative energy like Solar, wind, geothermal,
biomass and hydro. Subsequently, the country is exposed to the imminent
6 Kupolokun, Funsho, (2005); Liberalization: the experience of the Nigerian Petroleum Sector, Alexanders Gas and Oil connections, volume 10, issue No. 2, 27 jan.7 EIA US energy information administration (2009); Nigeria , country analysis brief, http://www.eia.doe.gov/cabs/nigeria/background.html
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predicament of fossil fuels depletion. This justifies the necessity to embark
on deregulation so that the savings could be used to develop other
alternative energy source for energy security in the country.
3.4 TARGETED INDIVIDUALS NOT ACHIEVED:
As earlier mentioned, subsidies are aim at providing support to the poor.
However, due to the fact that fossil fuels have dominated every aspect of
human lives whether rich or poor, the Nigerian government provide
subsidies to make the petroleum products affordable to the poor. But
practically, in Nigeria only the rich people who could conveniently afford
the real petroleum products prices enjoy the subsidies because the poor
cannot afford to buy some of the appliances or equipments that require fuel,
for example if Gasoline has been subsidised, it end up only the rich benefit
it, because the poor man cannot afford to buy a car or motorcycle.
Therefore the targeted individuals do not benefit from the subsidy.
3.5 REGULATED PRICE NOT REFLECTED:
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The petroleum products prices are been regulated in Nigeria but still
consumers pay beyond the regulated prices, this could be due to corruption,
inefficient regulation and monitoring. For example, Gasoline price is
regulated to be fixed at N65 (43 cent)8 but some of the marketing and
distribution agents sell at a higher prices. Dealers sometimes deliberately
hoard the Gasoline and later sell it when it is scarce at higher prices
sometimes higher than N100. Despite the huge amount of money Nigerian
government spend to provide the petroleum products at a subsidised prices,
the aim is not achieved. Is only at the NNPC retail outlets which is own by
the government that sell at the regulated prices.9
8 Petroleum Products and Pricing regulatory Agency (2010); official website, http://wwwpppra-nigeria.org/ 9 Hary, O. C., (2006); Nigeria’s petroleum market segements: characteristics and financing requirement in oil gas financing in Nigeria: issues, challenges and prospect. Lagos, Nigeria; CIBN.
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CHAPTER 4:
4.1 WHY DEREGULATE NIGERIAN DOWNSTREAM SECTOR:
“Reform and change are difficult undertaking in any nation. Poor economic
performance in the 1990s, therefore, sparked a vigorous domestic debate
over the need for government administrative reform, economic deregulation
, new accounting rules and other changes to spur more efficient corporate
behaviour” (Edward 2001). Nigeria, like other developed countries decided
to reform its downstream sector to achieve the followings:
4.1.1 AVAILABILITY OF PRODUCTS
The deregulation proposal is based on the assumption that in freeing the
Petroleum products market from its current quantity and pricing
restrictions, the market forces of supply and demand would invariably
operate to regulate the delivered quantity and price which would prevail in
the domestic consumer market. A further addition of this logic claim that
the operation of market forces would ultimately intervene to ensure that the
right quantity of products demanded would be supplied at the cheapest
market price. 10
10 Emmanuel, Ihenacho, (2009); who is afraid of deregulation of petroleum sector, news paper article, daily trust 7th November.
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4.1.2 INCREASE GOVERNMENT SAVINGS:
The government, and indeed a large school of informed public and
petroleum industry opinion, generally subscribe to the belief that the
proposed market liberalization policy would upon implementation, lead to
the recovery by government of significant economic benefits including the
opportunity of dissociate from the difficult burden of subsidy payments,
which restrict it from concentrating on the provision of the major
infrastructures in the country. Recently, it is estimated that the projection
for the level of subsidy commitments which the government was
constrained to underwrite for fiscal 2009 amounts to a huge N675 billion or
roughly about a quarter of the entire national budget for the year. The sum
of N675 billion recoverable by way of subsidy cost savings from the
proposed deregulation of the petroleum products market could be used to
buy a tremendous amount of goodwill, social security and welfare if
properly utilized in the development of infrastructure and facilities which
benefit the Nigerian working class/struggling class. 11
11 Supra Notes 7, at 13.
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4.1.3 ENVIRONMENTAL STANDARD:
Environmental degradations which are largely believed to be as a result of
too much consumption of fossil fuels is believed to be doing harm to the
society, and managing that could be costly as well. By deregulating and
removing subsidy, there will be an efficient and reasonable level of fossil
fuel consumptions in the country thereby mitigating the country’s
vulnerability to pollution and global warming.
4.1.4 ENERGY SECURITY:
Speculation is continue to spread on the imminent fossil fuel depletion, this
could be substantiated by the fact that the world is increasingly relying on
the fossil fuels in meeting energy needs and its production is decreasingly
reducing. This has given a signal to most of the developed countries and
started to develop some other alternative energy sources for energy
security. Nigerian government if relief from the burdensome funding of
subsidies could be able to developed its potential alternative energies
especially renewables.
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4.1.5 OTHER ECONOMIC BENEFITS:
Apart from the potentials which exist for the elimination of the
government’s current subsidy burden, there are also other significant
economic benefits which are expected to accrue from the implementation of
the market liberalization policy. There will be efficiency in terms of
operations in the refineries and also improvement in investment thereby
creating job opportunities to some Nigerians. The deregulation will also
help to provide correct price signals to the investors as all prices will be set
by the invisible market forces.
4.2 CHALLENGES OF DEREGULATION
4.2.1 LOST OF JOBS:
It is possible that in the short term unemployment may arise due to price
increases and the attendant problem of potential job losses by workers in
the refinery, this will be done by investors who aim to maximize efficiency,
once they acquire control.12 Schipke (2001) notes that, “Countries in which
government was a dominant player in terms of both ownership and
intervention are also likely to have highly regulated labour markets. Hence,
12 Ifiok, Ibanga, (2006), The Economics of privatizating and deregulating the Nigerian Downstream oil sector, florin.com
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a reduction in government ownership without the simultaneous
liberalization of the labour market will lead to increases not only in
temporary but also permanent unemployment.”
4.2.2 INFLATION:
An abrupt removal of subsidy may cause dislocation to prices of petroleum
products because with high demand, and not enough supply the price would
sky rocket. Similarly, prices of other inputs and commodities will increase
due to the increase in the transportation cost; this may lead to labour strikes
and chaos. This may encourage the military to try and take over governance
using the threat of insecurity to justify their actions as it use to happen in
some developing countries.
4.2.3 RESURGENCE OF TRADITIONAL ENERGIES:
Due to the fact that majority of Nigerians are poor, people may resort to
revive the use of traditional energy sources after the subsidies have been
removed, because the people may not be able to afford the un-subsidised
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prices of fossil fuels. Usually this may happen in some of the developing
countries.
4.2.4 MARKET EXPLOITATION AND LACK OF TRUST ON
GOVERNMENT
The deregulation constitute selling of refineries to investors, while in
Nigeria only few individuals could be able to buy a major part of the shares,
this accentuate the consumers to market exploitations and collusion among
the suppliers. Similarly, most of the Nigerian government has been
criticized of corruption and un-sincerity; therefore if the present
administration exhibits these habits then it may end up benefiting few
groups of individuals and expose the masses to difficulties.
CHAPTER 5:
RECOMMENDATIONS FOR EFFECTIVE DEREGULATION:
“An obvious way to soften the blow is by doing it gradually. Removing
energy subsidies in one fell swoop is not always politically feasible or
socially desirable. At the same time, it should not be so slow as to allow the
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costs to persist for too long. Another approach is to directly link subsidy
removal with another measure that is likely to be seen by all or most of the
public as favourable to them, like an across-the-board tax cut. That measure
should, of course, be prudent and appropriate in its own right.”(Trevor
Morgan 2010). The following measures have been identified to build
political support and reform subsidy, and if Nigerian government strictly
adhere to it the implementation of deregulation would easier and effective:
5.1TRANSPARENCY:
In the framework of public policy, transparency refers to the openness and
accountability of governments, particularly regarding expenditure and
decision-making. More specifically, the International Monetary Fund (IMF)
defines fiscal transparency as the extent of the openness to the public about
the government’s past, present and future fiscal activities, and about the
structure and functions of government that determine fiscal policies and
outcomes (IMF, 2007). Transparent procedures include disclosure of
financial transactions, budgets and audit reports.13
13 International Monetary Fund. (2007). Code of Good Practices on Fiscal Transparency. Washington DC: International Monetary Fund.
22
Improved information about fossil-fuel subsidies, in particular, can help
governments meet their reform objectives. Making the information publicly
available increases awareness of the effects of existing policies and allows
public input to decision-making (Wolfe and Helmer, 2007).14
From the argument in this paper, Nigeria can be pointed out that its cost of
subsidy outweigh its benefits, however the government efforts to deregulate
has been undermined due to the fear that the government may not be
transparent in the process. For the Nigerian government to earn the public
support and confidence in the reform it has to be transparent throughout the
transformation. This has to do with letting citizens to know the amount and
whom the refineries were sold to.
5.2 AWARENESS:
The critics to the government on deregulation may be due to the little or
absence of knowledge on the benefit and what the deregulation entails from
the citizens. Therefore, the government shall embark on a pervasive
14 Wolfe, R., and Helmer, J., (2007). Trade policy begins at home: Information and consultation in the trade policy process. In Process Matters: Sustainable Development and Domestic Trade Transparency. Eds. M. Halle and R. Wolfe. Winnipeg: International Institute for Sustainable Development.
23
campaign through individual campaign, as well as Electronic and Print
Media. Vocal middle class citizens shall be educated on the reform and
incorporated in the campaign. Similarly, the information should not be
highly technical or encoded and it should be made frequent and easy
accessible to all citizens.
5.3 USE THE SAVINGS WELL:
Due to the fear of insincerity and corruption from the government,
deregulation has not been embraced by the citizens and considers it non-
beneficial. The Nigerian Government will have a huge financial savings
after the removal of subsidies, as such these savings shall be used
effectively especially in providing the basic infrastructures in the country
like power, roads, education and health. Similarly due to the fact that some
of the poor people may not be able to afford the un-regulated prices of
petroleum products, the government shall use part of the funds to support
the poor by replacing the subsidy with direct transfer or other means of
compensation wherever possible.15
15 Xiaoyi, Mu, (2010), Price Regulation of Petroleum Products, lecture slide, unit 6, Economics of Regulation and Restructuring of Energy Industries, Centre for Petroleum and Mineral Law and Policy, University of Dundee.
24
Similarly, due to the over reliance on oil in Nigeria, the country is
Vulnerable to the Energy predicament if the speculated oil depletion prove
to be real, therefore the government shall use the funds in discovering and
developing other alternative Energy sources especially the renewables
whose potentials in the country are high, likewise Nuclear Energy.
25
CHAPTER 6:
CONCLUSION:
Every year the Nigerian government spend huge amount of money on
subsidising petroleum products, this has restricts it from discharging some
of its statutory functions and providing the major critical infrastructures in
the country, yet the subsidies did not get to the targeted populace but rather
few income groups. Similarly, the pump prices of the petroleum products
are higher than the regulated price and the four refineries are not up to its
optimal capacities due to what is observed as lack of maintenance. As a
result, the country has to borrow money from abroad and also imports 85%
of refined products to the country. At the same time government has been
blame for the backwardness and other failures in the economy and social
infrastructures. It was against this backdrop that the recent government
became committed on the deregulation process where the refineries will be
sold to almost 50% of the shares to the citizens before other core investors,
so also to give licence to private individuals to import refined products to
the country. To make the free market competitively strong and effective,
the government also as part of the reform decided to remove subsidies. This
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has made some citizens in the country to vehemently clamour against the
reform on the assumption that it will bring about inflation and suffering in
the country due to the fact that majority of the people in the country are
poor.
Presently, the reform is slacking due to the pressure, scepticism and lack of
interest from the parliamentarians. Subsequently, this paper analysed the
whole reform and study the consequences of regulation and deregulation in
Nigeria with a view to advice whether the country should deregulate its
downstream sector? It was observed that if the government will be
determined, sincere, committed and adhere to the recommendations
proposed in the paper, the deregulation will be far better for the country
socio-economically and politically. Therefore, deregulation is the best
solution for Nigeria in order to solve its economic and social crisis. The
word limits of the paper has restrain the author from dwelling on the effects
of deregulation on the major macro economic variables in Nigeria, which
require a dedicated research consideration.
27
BREFERENCES:
BOOKS:
Edward, J.L., (2001), Arthritic Japan: The slow pace of economic reform, Brookings Institution press, Washington, D.C.
Sarah A. K. (1994), Nigeria: The Political Economy of Oil , Oxford institute for Energy Studies, Oxford University Press.
Schipke, Alfred, (2001), Why do Governments Divest? : The Macroeconomics of Privatization: Berlin: New York: Springer, (p. 67).
Sullivan, Arthur; Sheffrin, Steven, M., (January 2002). Economics: Principles in Action. New Jersey: Pearson Prentice Hall. ISBN 0-13-063085-3.
Viscusi, W., et al, (2005), Economics of Regulation and anti-trust, 4th
edition, the MIT press, Cambridge, Massachusetts London, England.
ARTICLES:
Diran, Fawibe, (2009), The need for complete deregulation in the Nigerian Petroleum Industry International Energy Services Limited, Lagos Chamber of Commerce and Industry.
Hary, O. C., (2006), Nigeria’s petroleum market segements: characteristics and financing requirement in oil gas financing in Nigeria: issues, challenges and prospect. Lagos, Nigeria; CIBN.
28
Ifiok, Ibanga, (2006), The Economics of privatizating and deregulating the Nigerian Downstream oil sector, florin.com
Kupolokun, Funsho, (2005), Liberalization: the experience of the Nigerian Petroleum Sector, Alexanders Gas and Oil connections, volume 10, issue No. 2, 27 jan.
Wolfe, R., and Helmer, J., (2007). Trade policy begins at home: Information and consultation in the trade policy process. In Process Matters: Sustainable Development and Domestic Trade Transparency. Eds. M. Halle and R., Wolfe. Winnipeg: International Institute for Sustainable Development.
OTHERS:
Chika Amaze-Nwachiku (2010);shake-up looms in oil industry , News paper article, this day News Paper online 21st April, http:// www.thisdayonline.com
EIA US energy information administration (2009); Nigeria , country analysis brief, http://www.eia.doe.gov/cabs/nigeria/background.html
Emmanuel Ihenacho (2009); who is afraid of deregulation of petroleum sector, news paper article, daily trust 7th November.
International Monetary Fund. (2007). Code of Good Practices on Fiscal Transparency. Washington DC: International Monetary Fund.
Nigerian National Petroleum Corporation (NNPC) 2010, official website.com, http://www.nnpcgroup.com
29
Petroleum Products and Pricing regulatory Agency (2010); official website, http://wwwpppra-nigeria.org/
Trvor Morgan (2010); Revealing the high cost of energy subsidies , an interview. Global subsidies Initiative (GSI). http://www.globalsubsidies.org
Xiaoyi Mu (2010); Price Regulation of Petroleum Products, lecture slide, unit 6, Economics of Regulation and Restructuring of Energy Industries, Centre for Petroleum and Mineral Law and Policy, University of Dundee.
30