ABSTRACT
In many developing countries, structural reform of petroleum markets has been a critical component of macro-economic liberalization policies. The role of government in the petroleum sector is being re-defines and markets are being deregulates that is state interventions such as special treatments of states owned oil companies, price control and restriction to trade are being broken up.
The researcher to examine the need for deregulation in Nigeria petroleum industry to examine the survival strategies being adopted by the small scale enterprises in Nigeria.
So also the following review the researcher findings throughout the period under review, show positive relationship because x2cal>x2 tab which make use to accept Hi and reject Ho.
At the present stage of implementation of the deregulation policy, government investment in technical restructuring of the downstream sub-sector needs to be married with the pursuit. The objectives of right pricing of petroleum product (which was the first phase of deregulation).
The medium term recommendation involves the repair of pipelines, tank and other reception facility and the provision of level playing field for investors and operators in the downstream sector.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In many development countries, structural reform of petroleum market has become a critical component of macro-economics liberation policies. The role of government in the petroleum sector is being re-defined and markets are being deregulated that is state interventions such as special treatments of state owned oil companies, price control and restriction to trade are being removed and monopolies are being broken up.
Increasingly, the private sector is particularly in more competitive petroleum markets. The low capacity utilization of Nigeria state owned refineries and petrochemicals plants in Kaduna, Port Harcourt and Warri. The sorry state of despair, neglect and repeated canals of the state ran petroleum products pipelines and oil movement infrastructure nationwide, the collateral damage of institutionalized competition, with the frightening emergency of a local nouveauriche oil mafia that controls and coordinates crude-oil and refined petroleum products pipeline sabotage and theft ("illegal bunkering") nationwide, the instability corrupt military task force operations that assist diversions of both crude oil and petroleum products and large scale cross boarder smuggling of petroleum products all of which are the root causes of protracted and seemingly intractable severe fuel crisis to a decade now, are all predictable outcomes of government involvement in the downstream sector of Nigeria petroleum industry.
Today, Nigeria needs about 30 million litres of gasoline daily, up from about 22 million liters per day in 1996, through in 25 million liters per day in 2001. Thus, the annual petrol consumption growth rate between 2011 and 2003 is about 10% per annum. Meanwhile, Nigerian refinery all of them operating at a very low efficiency are detective or are frequency shut down and can hardly Produce 60% of the fuel needed to keep Nigeria going strong, even if they were all brand new and optimally operational given the imposed feed stock constraint of 300,000 bbl/d.
While Nigeria refineries need about 530,000 bbl/d of crude oil in order to satisfy a pent up daily demand for about refining capacity amounts of only 445, 000 bbl/d but the federal government of Nigeria allows only 300,000 bbl/d of crude oil for the expect of excess refined petroleum products even when the local demerit has not been met These inefficiencies of the petroleum industry of Nigeria have necessitated the introduction of deregulation and liberalization policies of the downstream sector of the industry. However deregulation is seen as desirable in freeing government products in the Nigerian market. It is refined petroleum products in the Nigerian market. It is the reduction of government control and allowing the market forces to dominate in industry decision making. This shows that government will stop interfering in the downstream activities of the petroleum industry and would allow private investors to refine, distribute and sell petroleum products at prices not determined by government or its agencies. The fundamental objectives of deregulation are to allow for competition in the petroleum products market with its attendant increased economic efficiency and welfare packages.
Given a fore going analysis on deregulation, it was assumes that technically, the price of petroleum products may not be easily deregulated however when the petroleum products markets are deregulated, the new competitive environment would affect the prices. Thus to make economic deregulation work, particularly in the petroleum products market, in Nigeria government inaugurated the petroleum products pricing regulatory Agency (PPPRA) on 19 June, 2003 to monitor and regulate the pricing and distribution of petroleum products. Despite this, the prices of petroleum products tend to move towards international prices, some factors competitive force particular impeded the setting of prices at import party.
Presently, hundreds of small enterprises are being strengthened by the deterioration in economic conditions especially inadequate credit, rising production costs caused by the rise in price of petroleum products for running the business and diminishing consumer demand which was brought about by like in prices of the goods demand for the capacity of the economy to provide full time employment has diminished. It is difficult to estimate the size of Nigeria's informed sector, since virtually its entire city redes peoples busy scratching a livelihood from micro and small-scale enterprises. The apparent resilience of this sector, which provides a wide range of services and goods for the poor and the pauperized middle classes, sharply contrast with the fragility of the formal sector. According to the international labour organization, small and medium scale enterprises and particular informal sector undertakings account for over 60 percent of economic activities in Nigeria and over 35 percent of urban employment.
The deregulation policy of the government was based on some objectives are elimination of large welfare losses emanating from supply inefficiencies and poor quality of services establishment of a perfectly competitive energy market environment so much so that consumers needs are adequately not dynamic efficiency gains associated more with market oriented pricing, providing the necessary incentive to innovate and improve the quality of supply through investment prevention of any possible collision by producers to form cartels to controls the market products quality and quantity prices investment etc.
.