CPEEL Monograph Series - Volume 1, Issue 1, 2014
Volume 1, Issue 1, 2014
Source: CPEEL Monograph Series 1, pp 1 –7 (2014)More Less
The strategic role is incontrovertible that the downstream sub-sector of the petroleum industry plays in economic growth, sustainable development and national security in Nigeria, Africa's largest economy and the most populated country, spread over almost 1 million square kilometres. Therefore, it is understandable that when the Federal Government decided in the early 1970s to take over the 'commanding heights of the economy', following the unprecedented large government revenue inflows from the exports of crude oil, the downstream petroleum sector became a prime target of attention. Since Nigeria became a major world net exporter of petroleum in the 1970s, five major policy objectives have been explicitly or implicitly pursued. These objectives are: (i) the provision of inexpensive and 'affordable' petroleum products (petrol, kerosene and diesel) to all consumers through price regulation; (ii) uniform product pricing regime as a mechanism to spread the benefit of petroleum exploitation to all citizens despite locational differences; (iii) the insulation of domestic consumers from price fluctuations in the world oil markets through price regulation; (iv) meeting the domestic demand for refined products in a rapidly growing economy; and (v) value addition through the export of refined products and eventually making Nigeria the regional hub for petroleum refining and export.
Source: CPEEL Monograph Series 1, pp 28 –49 (2014)More Less
Governments, throughout history, have intervened in the workings of the economy by assuming interventionist and command and control roles. It is not surprising, therefore, that when Nigeria became a major world net exporter of petroleum in the early 1970s the Federal Government took over both the upstream and downstream petroleum sector, the legal, regulatory, institutional and policy landscapes changed to reflect the new policy environment. In this section, we examine briefly the policy landscape and focus on the legal, regulatory and institutional frameworks and pricing policy in the downstream petroleum sector in recent decades.
Source: CPEEL Monograph Series 1, pp 50 –59 (2014)More Less
In the past four decades, the downstream petroleum sector has absorbed tens of billions of dollars of public funds but with no perceptible improvement in the supply fundamentals or an effective and efficient way out of the numerous economic, technical and administrative inefficiencies that characterize this important sector in the economy. The persistent failure of the sector to deliver adequate and reliable supply of petroleum products to end users across the country has questioned the overarching role and control of the government to deliver an efficient and sustainable downstream oil in the country. The entitlement syndrome associated with cheap domestic oil as part of the national cake because Nigeria is an oil producing country has exacerbated the problems of the sector. Price deregulation, which in the last decade has brought about sharp increases in the prices of petroleum products, has brought about a coalition of interest groups opposed to further government moves in the direction of reform.