THE IMPACT OF SCARCITY OF PETROLEUM PRODUCTS IN ENUGU STATE

ABSTRACT

This research study focuses on the impact of scarcity of petroleum products in Enugu State a vivid study on Enugu and its environs.  The study tries to look in the researcher point of views on what should be done for continuous flow of petroleum products in Nigeria, Enugu State in particular.

            The research consulted some literatures related work, like Tijani Alawe (2002) African Journal of Business and Economic Research vol. 2 Awowele Francis B. (2003) Prof. Jerry Gana government spokesman blamed the shortage on sabotage daily Champion, March 20.

            And this work was design purposely to find the root cause of fuel scarcity to analyze critically the impact of oil scarcity in Enugu State and entire economy to offer meaningful suggestions as to find a lasting solution.

            Method used in the collection of data are primary and secondary method in the primary data collection method, personal interview, questionnaire personal observations were adopted within the study area of Enugu State.

Also secondary data collection was used as an additional source of data, the use of literatures related textbooks, newspaper, journals and other forms were adopted.

One may conclude therefore that the practice of strategic management in the corporation is not yet total or fully adhered to professional to be able to create a very wide margin of performance safety.

Furthermore, government should review the margins of the oil marketers close to the recent levels that existed prior to the recent changes in the price of products.  This pricing strategy would terminate all the gully developments and ensure that product reach the filling stations.

The following solutions are recommended to put an end to petroleum products scarcity in Nigeria, Enugu state in particular.

NNPC should try to increase the volume of crude oil produced, and also try to increased the actual amount of crude oil reserve for strategic reasons.

It is not too much to has new refineries, rehabilitate the old existing ones at home.

They should be continuous training and training of experts and staff to improve individual and corporate competence.

The research findings were given possible solutions which when applied effectively would stop this ugly phenomenon of petroleum scarcity in Enugu State.

TABLE OF CONTENTS

CHAPTER ONE: 

Introduction                                                                           

1.1              Background of the study                                                                   

1.2              Statement of the problem                                                      

1.3              Purpose of the study                                                  

1.4              Scope of the study                                         

1.5              Research questions                                                     

1.6              Significant of the study                                                         

References                                                                 

CHAPTER TWO:   

Review of related literature                                                   

2.1              Literature review                                                                                

2.2              Origin of petroleum product scarcity                                     

2.3              Causes of petroleum product scarcity                                    

2.4              Smuggling of petroleum products                                         

2.5              State of Nigerian refineries                                        

2.6              Roles of petroleum products                                      

References                                                                                         

CHAPTER THREE:           

Research design and methodology                                        

3.1              Research design                                                                                 

3.2              Area of the study                                                                               

3.3              Population of the study                                                         

3.4              Sample size and sampling procedure technique                     

3.5              Instrument for data collection                                               

3.6              Method of data collection                                                     

3.7              Method of data analysis                                                        

References                                                                             

CHAPTER FOUR:  

Data presentation and analysis                                                          

4.1              Presentation of data                                                   

4.2              Analysis of data                                                                     

4.3              Summary of results                                                    

CHAPTER FIVE:               

Discussions, recommendation and conclusions                     

5.1              Discussion of result findings                                     

5.2              Conclusions                                                                            

5.3              Implications of the research findings                                     

5.4              Recommendations                                                                 

5.5              Suggestions for further research                                                        

Bibliography                                                                                                   Appendix/appendixes                                                            

CHAPTER ONE

1.1              BACKGROUND OF THE STUDY

The Nigerian Economy can largely be described as one with a strong petroleum industry super imposed over an undeveloped industrial base.  Presently Nigeria is growing into a mono-economic country by depending majorly on oil revenue.  The dominance of oil production at the end of the civil war (1967 – 1970).  It usually became predominant after the fuel price increase of 1973/74.  Most recently is the one about to struck the nation now, taken from Daily Champion Newspaper.  Monday March 17, 2003, “fuel price like NLC threatens showdown with FG” was the caption.  Which the NLC and TUC later embarked on, started from June 30 and suspended it July 8, 2003.  I wonder were we are heading to, I doubt if the federal government understands, that the comfort of her citizens is the pride of a government.  Fuel supplies the federal government revenue of about 90% of the countries foreign exchange and supply over 75% of federal government revenue.

Fuel scarcity which struck the nation in recent times appears to be continuing without end.  Disturbing as the picture might be, the situation on the ground leads to massive suffering of our people including oil producing states, Delta State in particular, it also shows that a petroleum endowed nation which is one of the world, major producers and a member of the organization of petroleum.  Exporting of 1.865 million barrels and one whose four refineries have combined production of 445,000 barrels per day is in the threes of domestic oil shortage.  The shortage has a great impact towards the life of the Enugu, it makes majority of kerosene consumer who cannot afford to buy it at black market prices, to adopt the habit of using firewoods, which is unusual to an oil producing state Enugu State.  It also characterized by the long queue of vehicles in filling stations.  Some of these vehicles, queue for about four or more days to obtain fuel at exorbitant prices.  Taking a critical view of this problem, one would discover that “there is a long list of players from the supply of petroleum products through the depo to the end users.  Some of the participants in this chain of distribution have acquired the role of middlemen admits Mr. Ekeh K. E. the then managing director of the Nigerian National Petroleum Corporation (NNPC).

These middlemen operated from a seeming lack of control.  The cause of petroleum scarcity could be traced to a complex process; these many people and actions contribute from crude oil through refining the PPM (Pipeline and Product Market Company) the tanker drivers and owners independent marketers, retailers and consumers will collectively contribute knowingly or unknowingly to petroleum scarcity by their acts of omission or commission.

The ugly development in which roadside peddlers have abundance of petrol while the filling stations are empty also cries for critical attention.

1.2              STATEMENT OF PROBLEM

This research work is motivated by an interest in finding a solution to the unending fuel scarcity in our filling stations.  This fear of petroleum scarcity ought not to exist in our oil-producing country with massive investments in our four petroleum refineries (Warri, Port Harcourt, Kaduna and Elema).  It is puzzling and tragic that the country’s major source of income has become the harbinger of inconvenience to the citizens and in particular Deltans that has the major petroleum resources of this nation.

However, the problem, is to find out the extent to which fuel shortage has affected the entire economy, what are the options left for the government in solving the problems left?  How has it affected the common man in the street?

In view of these complexities government needs to consider with utmost urgency, other arrangement for managing its oil sector efficiently as a catalyst for national development rather than a source for easy money and personal interest.  It is quite obvious from what we seen day to day about the random rise of fuel price.  If I may say the problem is highly affecting the masses in their economic lives.

The essence of good governance is the interest of the masses which fuel scarcity has turned up side down.

1.3              PURPOSE OF THE STUDY

The purpose of this study is to

(a)                Find the root cause of fuel scarcity

(b)               To analyze critically the impact of oil scarcity in Enugu state and entire economy

(c)                To offer meaningful suggestions as to find a lasting solution

The need for this study emanated as a result of a persistent fuel scarcity in the nation.  This work will no doubt cover the smuggling of petroleum products, problems of our four major refineries, why these refineries do not produce up to full capacity.  It will indeed look effects on the growth of the economy.

Finally this work will create the awareness and give insight of the actual picture of fuel scarcity and the associated danger it will create if not checked.

1.4              SCOPE OF THE STUDY

These are some indispensable constraints that affects research works most importantly is the non availability of financial resources to be used in traveling to the headquarters of major oil companies like Cherton, Shell BP and Golf oil, all situated in Lagos.  Much as the study is not aimed at discrediting any individual or group or any constituted authority.  Most people in possession of relevant information.  Find of difficult to release them suspecting that to do so would lead to their being relieved of their posts.

To enquire information from NNPC is like chasing a white Elephant.  It was made clear that facts and figures about oil will guard secret.  The study is limited to Newspapers, past literatures, textbooks and questionnaire from commercial and private users, where I get practical facts.

1.5              RESEARCH QUESTIONS

(1)               What are the causes of petroleum shortage in Enugu State?

(2)               Does in adequate manpower has an impact in the scarcity of petroleum products?

(3)               Does the scarcity of the petroleum products affect the overall economy of the state?

(4)               Are the refineries in order?

(5)               Is there any measure to combat the hording of petroleum products?

1.6       SIGNIFICANCE OF THE STUDY

            This study will check:

(a)                The impact of fuel scarcity in transportations

(b)               Unemployment

(c)                Agriculture

(d)               Oil revenue

Recently the (NLC) National Labour Congress threatens showdown fuel price hike (Daily Champion March 17, 2003) which later commenced on June 30 and dissolved on July 8, 2003.  The fuel scarcity has gone a long way affecting every aspect of our economy.

Talk about transportation a part of economic sector has increased that many people could not afford to go to their various working places as usually, some resort to walking to their offices which will take a long time and will affect their ability to work.  The problem of petroleum scarcity is practical.

Petroleum scarcity has a well-created unemployment when there is scarcity, most energy source industries would close down these by throwing a lot of workers to the unemployment market.  This will also affects the road transport workers and their drives, which eventually led to serious disorder.  Demand for oil is a derived demand.  Motor spirit for instance is demanded chiefly for the services it renders in the engine, because of the vital importance of oil in our economic life, its shortage has brought untold hardship and powerful effect on labour force.

An economy in crisis of low capacity utilization mighty lay off workers and in the long run increase unemployment.

Agriculture, which is one of the most important requirements for existence of man, was adversely affected by the scarcity of petroleum products.  Production is not complete until it gets to the consumers.  During the period of scarcity farmers found it difficult to convey their farm product to market which resulted to a large loss as most of the perishable products get spoilt due to lack of adequate preservative method and lack of warehouse.  This development was not unconnected with the exorbitant cost of transportation which emanated from the scarcity of fuel.

Oil revenue, the federal government lost about 150 million dollars (about N3.3 billion) from oil export during the NUPENG/PENGASSON strike in July and August 1994 and also billions of naira at this present NLC and TUC strike embarked on June 30 to July 8, 2003.  This shows that petroleum scarcity has really done much damage to our economy.  This industrial action happens almost every time there is petroleum shortage in the nation.  It is no gain saying that oil is the main stay of Nigerian Economy hence an acute shortage is bound to ground the economy.  As a result there has been a considerable fall on the accruing to Nigerian which will definitely lead to budget deficit.  Project stated for completion many not get government would be battling its balance of payment deficit.