ABSTRACT
This research work investigates the problem of marketing petroleum product, a case study of Nigeria National Petroleum Co-operation (NNPC). The study shows the problem affecting the efficient distribution of sales of petroleum product in Nigeria. And the problem that affect the effective distribution and sales of the product (petroleum) and loading, from sport, low storage facility, government control and diversion for NNPC to distribute and market petroleum product in Nigeria the identified problem should be solve.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Marketing of Petroleum Product in Nigeria is not a recent phenomenon. Generally speaking, marketing of petroleum products (i.e, fuel oil and gas) are important component of the petroleum industry. Petroleum products marketing in Nigeria commence about 1907 with the establishment of a trade link with sun flower dealers in kerosene by socony vacuum oil company (now mobile). This business as since expanded to cover broad range of all petroleum products; while several oil companies are presently active in petroleum products marketing (Funke & Nsouli, 2003).
The Nigerian government however, establishes the Nigerian National Petroleum cooperation (NNPC) as an entity to acquire and own major equity, in foreign that prospect for and produce oil in Nigeria. The ownership of equity shares in these companies is in accordance with OPEC resolution XVI.90 of 1968 which place s an obligation on member’s countries to acquire equity interest in oil companies in their territories to actively participate in the operation of these companies (Oyinlola, 1995).
Nigeria joined the Organization of Petroleum Exporting Countries (OPEC) in 1971 and established the Nigeria National Petroleum Company (UNDC) and Nigerian National Petroleum Corporation (NNPC) in 1977. The NNPC is a state-owned company as well as a major player in both the upstream and downstream sectors of the Nigerian oil and gas industry. Nigeria, as a country, attained the status of the major oil producer ranking seventh world in 1972, and has ever since grown to become sixth largest oil producing country in the world.
There is no gainsaying that petroleum products marketing and export has been playing a dominant role in the Nigeria economy. However, the oil boom also created serious structural problems in the economy, although it afforded the government much needed revenues. Despite the oil boom, the existing macroeconomic policies continued to encourage consumption rather than production.
The Nigeria’s downstream oil industry is responsible for the marketing and distribution of petroleum and natural gas products. The marketability of refined petroleum products in Nigeria and their meaningful impact on the socio-economic growth of the country cannot be overemphasized (Adelegan, 2000).
It has been confirmed by events and official statistics that Nigeria is incapacitated in meeting the local demands of refined petroleum products, due to its dilapidated refineries and other socio-political exigencies, which instigates the Federal Government to encourage the importation, sales and distribution of these refined products into Nigeria: an opportunity which was not taken likely by some entrepreneurs who took advantage of the moment and are presently reaping greater benefits.
According to the Major Oil Marketers Association of Nigeria (MOMAN, 2012), about 90 percent of petroleum products consumed in Nigeria is imported due to inadequate and limited local production. The importation has been made by the NNPC, MONAN, Depot and Petroleum Marketers Association (DAPPMA) and other independent marketers under permits issued by Petroleum Product Pricing Regulatory Agency (PPPRA). The difference between the higher cost of imported PMS as ascertained by PPPRA and the then lower regulatory pump price was the subsidy repaid to importers after being subjected to audit by government appointed auditors. There are administrative lapses, however. The lapses were often accompanied by policy implementation problems that lead to social, economic, and political issues on the specific benefits of petroleum policies in Nigeria (Odozi, 1995).
Other major challenges include hoarding of petroleum products, inaccessible road network, perpetual manipulation of meters by vendors, strike by tankers challenges could only mean one thing; that final consumers are at the receiving end. It is against this background the study evaluates the challenges of marketing petroleum products in Nigeria, a case study of NNPC, Port Harcourt (Oseghale & Amonkhienan, 1987).
1.2 Statement of the Problem
In a typical marketing context, consumer s are expected to be treated as kings whose desires are taken into considerations before production commences and promises made to them are kept. However, this is not the case in the present day practice of the petroleum sector. All sort of things are happening. It is either there is scarcity or hoarding of petroleum products today or tankers drivers association going on strike tomorrow. As if that is not enough, vendors are busy taking their own share of the national cake by manipulating the dispensing meters to their own favour e.g dispending less than half a litre for 97 naira, which is tantamount to fraud.
Another important challenges includes the issue of subsidy scam that has recently ravaged the sector; while petroleum products ordinarily subsidized in Nigeria is being taken to neighouring countries like Ghana and Cameroon where the products are being sold at higher prices. Other challenges include pipeline vandalism and illegal oil bunkering activities in the wake of militancy, kidnappings, armed robbery; all have a hold on the petroleum sector and the prosperity of the country and its overall GDP. There were also confusions on the actual beneficiaries of the said subsidy in the Nigeria which can be attributable to ineffective administration of petroleum policies in Nigeria.
1.3 Objective of the Study
The major objective of this work is to determine challenges of marketing petroleum products in Nigeria. Specially, the following purposes of the study were considered to:
- Evaluate the effect of administration policies on the marketing of petroleum products in Nigeria.
- Examine the influence of petroleum subsidy implementation on the marketing of petroleum products in Nigeria.
- Assess the relationship between the sales of adulterated petroleum products and organizational growth.
1.4 Research Questions
In order to guide the researcher in writing this work to a logical conclusion, the following research questions were formulated:
- To what extent would effective administration policies encourage the marketing of petroleum products in Nigeria?
- What is the influence of petroleum subsidy implementation on the marketing of petroleum products in Nigeria?
- Do the sales of adulterated petroleum product by independent marketers affect their organizational growths?
1.5 Research Hypotheses
The following hypotheses were tested:
- H0: Effective administration policies do not significantly affect the marketing of petroleum products in Nigeria?
H1: Effective administration policies significantly influence the marketing of petroleum products in Nigeria?
- H0: Petroleum subsidy implementation does not significantly influence the marketing of petroleum products in Nigeria?
H1: Petroleum subsidy implementation significantly influence the marketing of petroleum products in Nigeria?
- H0: There is no significant relationship between the sales of adulterated petroleum products and organizational growths?
H1: There is a significant relationship between the sales of adulterated petroleum products and organizational growths?
1.6 Limitation of the Study
The study was on the challenges of marketing petroleum products in Nigeria. It specifically focused on the management and staff members of NNPC, Port Harcourt. Information was gathered from this group to include data on challenges such: as ineffective administration policies implementation; information on petroleum subsidy and data on the marketing of petroleum products in Nigeria.
The limitation of the study consist of limiting factors such as time constraints, as it requires a limited time to gather relevant data, draw conclusion and file in this report. Finance constraint associated with insufficient resources to carry out a more formidable research and bias of respondents who feels that, information freely given could be used against them.
1.7 Significance of the Study
The study will provide NNPC with stringent ideology on the effective administration of the petroleum industry. The study also provides independent marketers with the tendencies of doing things right by selling to consumer using appropriate measure and the right quality, while avoiding the sales on adulterated petroleum products.
It also provides an insight into the issues of petroleum subsidization and how it affects the general wellbeing of the country. The subject matter would effectively serve as a resource material to scholars, researchers and all stakeholders involved in the marketing of petroleum products in Nigeria.
1.8 Definition of Terms
Petroleum Subsidy: This is the monetary grants given to independent marketer to cater for the shortfall on the cost of importing petroleum product into Nigeria.
Marketing of Petroleum Products: Encompasses the process on making the petroleum product available to consumer at the right price, time place, quality and quantity.
Effective Administration: This is the imposition of norms that would benefit both the consumers of the petroleum products and all stakeholders.