Petroleum Products Distribution System in Nigeria: Nature, Mechanics and Challenges
Abstract
This study x-rayed the Nigerian petroleum industry with special focus on its nature (in form of units, players and regulatory authorities), their mechanics of operations and the challenges they face as it impart on citizens' welfare and the economy. Extant literature on the dynamics of regulations that created the actors and guide their roles and functions in the industry were reviewed. To fit a link between theory and practice, distribution theories and models were discussed pointing out how the Nigerian economy became constrained as a result of non-adherence to popular distribution principles and practices as induced by presence of sharp practices. This is in addition to the incapacity of regulatory authorities to affect strong control. Further model analysis provides insights that underscores distribution paradigm in the industry. These include supply and demand chain management and how they integrate to predict the flow of products, information, finance, risk etc., with special focus on attaining efficiency in the industry. In this dimension, comparative analyses were made between the Nigerian experience and countries like Malawi and Kenya especially in the functional area of pricing. Factors that impinge on effectiveness of petroleum distribution system in the economy discussed include: constrained infrastructure, price instability and the open tender system among others. The study concludes that given sharp practices in the industry, connivance of regulatory authorities and price instability, the industry can be described as anything but stable – this has negative impact on the citizens' welfare and the economy. Recommendations suggested include building domestic refining capacity, curbing militancy in the Niger Delta, and improving transparency in the distribution system.
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