THE PROBLEMS AND PROSPECTS OF MARKETING PETROLEUM PRODUCTS IN NIGERIA

(A CASE STUDY OF NNPC NIGERIA)

ABSTRACT

The study on the problems and prospects of marketing petroleum products in Nigeria seeks to find out what causes or generated problems in the oil industry and tries to find a lasting solution to it for the benefit of all the public or consumers.

Data on this issue were collected through survey (questionnaire schedules) and that serves as a primary source of data to complement the secondary materials.

These data were analyzed and some interesting revelators were made for e.g. it was discovered that constant vandalization of oil pipelines, hoarding of petroleum products, striting workers constant power outage etc. contributed greatly to these problems.

It was also reveled that the independent marketers contributed immensely to the marketing of petroleum products in the country considering the percentage of

Petroleum products such as pms (super), DPK (Kero) and AGO (Diesel) that are lifted through them to the consumers.

          The data revealed the important role, which they play by distributing products to areas, regarded as unattractive by existing oil companies thereby reducing problems of artificial scarcity and marketing of petroleum products.

          The study recommends that more refineries should be built in the country to support the existing ones and locate them well on the basis of economic consideration rather than political considerations.

          Modern equipments should be installed together with refineries to ensure optimum capacity workage.

          The NNPC should open supply depots for 24 hours daily and motivate their staff to work effectively. Loans should be encouraged to build more filling stations at desired locations by independent marketers.

          Constant power supply should be encouraged to ensure a steady pumping, Loading and easy marketing of petroleum products.

          Vandalization, which is a menance to the government, should be properly checked and stopped by ensuring strictness and security are the oil producing areas.

          The oil producing areas should be properly compensated and motivated to ensure an end to vandalization.

          The first chapter indicates how and when the problems of scarcity and marketing emanated. The problems can hardly be appreciated without the background.

          The research involves it review, which was extracted from journals, magazines, Newspapers, textbook, symposium and Government statement.

Chapter three deals with research methodology. It includes sources of data, methods of data collection, population of study etc.

          Chapter four presented and analyzed the data collected in tables and figures while finally the chapter five summarizes the findings, conclusions and recommended some possible solutions to help put an end to marketing problems in petroleum products.

TABLE OF CONTENTS

Title page

Approval page

Dedication

Acknowledgement

Abstract

Table of contents

CHAPTER ONE:          INTRODUCTION

Background of the study

Statement of problems

Objective of study

Significance of study

Scope of study

Limitation of study

Definition of terms

CHAPTER TWO:         REVIEW OF RELATED LITERATURE

Sponsored studies

Government statement

Symposium statement

Journal review/extracts

Newspaper Articles/publication

Bulletin

Textbook survey

The concept of distribution

CHAPTER THREE:              RESEARCH METHODOLOGY OR DESIGN

Research design

Sources of data

Population of

Determination of sample size

Sampling technique

Research instrument

Method of data collection

Questionnaire allocation, administration and response rate.

Pretesting the questionnaire and interview schedules.

  CHAPTER FOUR:       PRESENTATION AND ANALYSIS OF DATA   CHAPTER FIVE:         SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION

Research findings

Recommendation

Conclusion

Bibliography

CHAPTER ONE

INTRODUCTION BACKGROUND OF THE STUDY

          On various occasions between 1974 and 1978, many part of Nigeria were hit by frequent and acute shortage of fuel motorists spent hours queuing at the few filling stations that were open. Others resorted to obtain fuel at exorbitant price called “black market prices”. Most offices were empty as key officer drove out in search of fuel.

          The administrative and economic life of the nation became disrupted. Transport fare sky rocketed and prices of food stuff rose as food sellers had to pay for transporting their commodities/goods to the market.

          Pedestrians/inhabitants found it difficult to get transportation to their destination.

          The question on the lips of many people was “what is the cause of fuel shortage in the country? Some believe that tanker drivers and fuel haulage contractors to the greedy petroleum dealers who allegedly cashed in one reason or the other to board their fuel supplies only to sell in “black markets to willing buyers at higher or prohibitive price.

          Another reason given for this shortage was the break down on some storage equipment at the fuel deposits. It was them an Irony that Nigeria which is raped as the world producers of oil and which has 3 refineries with a net work of fuel pipeline and 19 main oil depots for easy distribution of fuel throughout the country should experience frequent shortage most of her towns.

          The oil dealers that had the responsibities of distributing the fuel products to the final consumers operating under the eight oil marketing companies such as Mobil, Texaco, African Petroleum (AP), EIF , Total Unipetrol, Nationals, Agip seemed not to provide the answer to this scarcity.

          The retail outlet survey conducted in 1977 by the NNPC to find out the number of retail outlets and filling stations showed that there were only 1352 retail outlets for marketing and distribution of petroleum products. It now showed the percentage share of oil marketing companies on a state basis throughout the country. For a coming as big as Nigeria which has a surface area of approximately 356, 670 square miles or 913, 075 square kin of Land area.

          This study and other subsequent events led the government to think that inadequate distribution of outlets in the country on the part of the major oil companies or the oil marketers could be the source of frequent acute shortage of petroleum products.

          By 1980, the government through the agent NNPC advertised for independent marketers a new breed of Nigerians interested in petroleum business to apply for government recognition to participate in the petroleum distribution trade in the country. In a government circular of 13th November 1980 from petroleum inspectorate Lagos to the Chief Engineer NNPC Port Harcourt. It was stated, “you may recall that government indicated about two (2) years ago to encourage Nigerian to participate in the distribution and marketing of petroleum product.

          To this effect about 260 two hundred and sixty Nigerians have been given approval by the commercial division of NNPC as independent marketers. He then confirmed on investigation that the total number of people given approval (provisional) to operate as independent marketers in Nigeria is “491”

STATEMENT OF PROBLEM

          Many parts of Nigeria were hit by frequent and acute shortage of fuel on various occasions. The resultant effects were so numerous that the administrative and economic life of the nation became disrupted. The problem is that the existing oil marketing companies charged with the sole distribution and marketing of petroleum products in the country appeared not to have profound this function very satisfactory.

          Ethnic problem among the oil producing areas who demands much more than their compensation from the federal government there by engaging on the vandalization of oil pipes and oil drillage.

          Unscrupulous or unwholesome practice engaged on the tanker and truck drivers who at any slight provocation embark on industrial action and disturb the oil distribution and marketing.

          Unavailability of a good crop of well trained highly motivated and knowledge enable leader managers and staff since they look over from the experts.

          Constant smuggling of the petroleum products by the unfaithfully staff of NNPC in their quest to earn hard currencies. This equally contributes to the distribution and marketing of petroleum products.

          Misplacement of priorities by the post governments and NNPC coupled with the negative behaviours of NNPC officers and insufficient storage or evacuation of the product.

          Lack of maintenance and finding to NNPC personnel, interruptions on the product supply, sharp and unpatriotic practices of the marketer in the distribution of the products.

          Insufficient refineries and filling stations for the industrial users also contributed for the problems of marketing petroleum product etc.

          Too much declaration of huge profit by the independent marketers and like in the oil price as was stated by the federal government thereby engaging onto black market business and credit instabilities in the price of petroleum products.

          Inappropriate refining and distribution costs of the petroleum products and reduction in the crude oil allocation.

OBJECTIVES OF THE STUDY

          The objectives of this study refers to the possible solution, goals, targets intended to be achieved by carrying out this research work these are

-         To find out why there are problems in the marketing of petroleum products in Nigeria.

-         To find out the marketing strategies adopted to ensure a lasting solution for the problem.

-         To know the kind of police being imposed on them to solve this problems in marketing petroleum product within Nigeria.

-         To know whether NNPC workers marketers are well motivated.

-         To find out if it is caused by the constant or frequent change of government.

-         To find out whether the oil producing areas are compensated accordingly.

-         To also find out what government has contributed to ensure that this artificial scarcity is solved.

SIGNIFICANCE OF STUDY

          Petroleum products are very essential as a source of economic development. It appears to be a defensive factor in the economic development.

          In an article in business time (March 8, 1982) it was averred that Nigeria oil industry accounts for 90% of Nigeria total “Gross Domestic Product (GDP). Therefore, a study bordering on the petroleum business in Nigeria is significant especially to the inhabitants of this country because of the role of the oil sector to the economy.

          Furthermore, petroleum scarcity affects everyone in the country whether directly or indirectly. Gasoline is a source of power for different purpose for various mode of transportation, electricity power, for different purpose for various mode of transportation, electricity power and engages many in productive employment.

          Lots of people in the society would look towards to uninterrupted supply of petroleum product at every point in time.

          This study is also important for the society in order to examine whether many Nigerians are participating actively in the oil economy of the country through the business as was stipulated in the Nigeria enterprises promotion Decree of 1972.

          This study will attempt on investigate and enable us to answer the following research questions will the appointment of independent marketed help to improve distribution of petroleum product in Nigeria.

Will it be an effective measure to stop or alleviate fuel shortage?

Will it result in a greater profitable business to indigenous marketers or distributors?

Will this appointment evaluate the effectiveness of NNPC in grapping with the petroleum or fuel scarcity?

Will it attempt to find out what causes gasoline shortages or fuel scarcity and make recommendations?

SCOPE OF STUDY

          The study on the problems and prospects of marketing petroleum products is wide; as a result, the study is restricted to the eastern parts of the country such as Anambra, Rivers, Imo, Abia and Enugu State.

LIMITATION OF STUDY

          Some oil company official attempted to remain anonymous probably for security reasons. They found it difficult to deluge some information, which they regard as “official secret”.

-         Repeated calls were made on officials at NNPC thus utilizing more time than was anticipated.

-         Many petroleum dealers and independent marketers were suspicious of the study and hesitated at times before responding to the questionnaires.

-         There was lack of sufficient information by way of literature extracts on the subjects from the available library materials.

-         The financial resources affected the study, as there was no money to cover all that are required.

DEFINITION OF TERMS

Independent marketers:- These are the group of Nigerians given license by NNPC to operate petroleum business in the country.

Existing oil marketers:- The eight major oil companies engaged in petrol retailing in the country before the appointment of the independent marketers.

          Their are- National, Mobil, Texaco, total, Agip. African, petroleum, ELF and unipetrol.

Petroleum products:- Petroleum refers to fuel embracing components. They are:

Premium motor spirits (PMS) called super

Automatic Gas oil (AGO) called Diesel

Dual-purpose kerosene (DPK) called kerosene

Nigerian National petroleum company (NNPC)

This is the administrative arm of the federal government which comes into existence in 1977 and which was charged with petroleum industry in the country.

Government Deposits or supply point:- They are the locations where petroleum products are purchased by marketers from the government.

Artificial security: This is boarding of petroleum products with the aim of petroleum products with the aim of selling at prices above the government controlled prices.

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