AN APPRAISAL OF THE DEREGULATION OF PETROLEUM PRODUCTS PRICES AND ITS IMPACT ON THE NIGERIAN ECONOMY
AN APPRAISAL OF THE DEREGULATION OF PETROLEUM PRODUCTS PRICES AND ITS IMPACT ON THE NIGERIAN ECONOMY
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Date
2001-08
Authors
MOHAMMED, AHMED
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Abstract
The oil boom of the 1970s transformed Nigeria into an oil rich state.
It provided the financial base for huge public sector investment
programmes at all levels of government. Apparently with this
transformation, petroleum became the most important sector of the
Nigerian economy. It accounts for more than 90% of foreign exchange
earnings, three-quarters of federal revenue and some 20% of GDP.
Hence, successive Nigerian governments used proceeds from oil revenue
in the construction of capital projects, salary increases and heavy
subsidization of goods and services. To add insults to injury governments
officials perceived Nigeria's oil revenue as an avenue where they could get
rich by corrupt means.
The 1980s were not particularly blissful for Nigeria in terms of wealth
whose international price collapse precipitously. Nigeria was not prepared
to absorb these shocks. Consequently dislocations on Nigeria's economy
became inevitable. This ugly scenario was exacerbated by acts of
embezzlement and squandermania on the part of dishonest government
officials. Many policy reforms were put in place, shagari for instance
introduced the economic stabilization Act in 1982 otherwise known as
Austerity measures. Buhari introduced the counter -trade and Babangida
introduced the structural adjustment programme in 1986 as an alternative
to the IMF loan. SAP was meant to address the balance of payments
disequilibrium which was brought about as a result of the dramatic fall in
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international oil price. Unfortunately however SAP was not "home -
grown" as the government tried to make Nigerians believe, instead it was
the conditionalities of the IMF and the World Bank which were put in place.
Sooner than SAP was put in place, government in the spirit of
deregulating Nigeria's economy announced the price increases of
petroleum products through an administrative fiat. In most cases such
prices hikes are accompanied by violent protests and demonstrations.
This study intends to look at the phenomenon of price increases of
petroleum products and how it affects the Nigerian economy. Given the
domineering role of petroleum in Nigeria's economy any price increase is
tantamount to affecting the national economy in so many ways. The study
will also focus on the sorry state of the downstream oil sector in terms of
scarcity of petroleum products, low capacity utilization in the nations
refineries, vandalisation of oil pipelines etc and establish whether or not
price increase will eliminate these problems. The study will also establish
whether price increase of petroleum products is the best approach in the
commencement of deregulation, given the fact that price increase is not
synonymous with deregulation. Finally, this study intends to reveal whether
or not, the deregulation of the downstream oil sector in Nigeria will be in
the interest of the Nigerian economy and of course the Nigerian public. It is
hoped that the outcome of the study will serve as a basis for making valid
and reliable suggestions and recommendations to members of the public
and above all the Nigerian government. This study intends to
documentary sources, the questionnaire and the interview method as
sources of data collection.
Description
BEING A PROJECT SUBMITTED TO THE POST GRADUATE SCHOOL
AHMADU BELLO UNIVERSITY, ZARIA, IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (MBA) OF AHMADU
BELLO UNIVERSITY (ABU) ZARIA.
DEPARTMENT OF BUSINESS ADMINISTRATION
FACULTY OF ADMINISTRATION,
AHMADU BELLO UNIVERSITY.
AUGUST, 2001
Keywords
APPRAISAL,, DEREGULATION,, PETROLEUM,, PRODUCTS,, PRICES,, IMPACT,, NIGERIAN,, ECONOMY.