The Effects of Subsidy Removal on Effective Marketing of Petrol (Case Study of NNPC)
Chapter One
OBJECTIVES OF THE STUDY
The objectives of the study refers to the possible solution, goals, targets intended to be achieved by carrying out this research work these are.
(1) To find out why there are problems in the marketing of petroleum products in Nigerian as a result of subsidy removal.
(2) To find out the strategies adopted to ensure a lasting solution to the problems.
(3) To Know the kind of polices being imposed on to solve this problems of marketing petroleum products within Nigerian.
(4) To determine if fuel subsidy help in making petroleum products available to cushion the effect of actual market prices of the products on the general populace.
(5) To make some preferable recommendation on the issue at stake.
CHAPTER TWO
BACKGROUND OF THE STUDY
History of Fuel Subsidy Removal in Nigeria
The history of fuel subsidy removal in Nigeria is rather a long one particularly with the negative effects it has on the polity. Specifically, the story of subsidy removal dates back to 1978 when the then military government of Gen. Olusegun Obasanjo reviewed upward the pump price of fuel which was at 8.4 kobo to 15.37 kobo. The concern was for government to generate enough money to run the administration particularly when it was preparing for the 1979 democratic elections and also to carter for the social needs of Nigerians.
In January 1982, the civilian regime of Alhaji Shehu Shagari also raised the pump price to 20 kobo from 15.37 kobo. Money realized from the fuel increase was used by members of the regime to buy properties in major capitals of European nations (USA, UK, Spain, France and others), as against using same to put in place social services that Nigerians badly needed then. The inept leadership of the then NPN national government and the corruption that bedeviled the administration led to its overthrow.
Then came the military junta of General Babangida who also increased the pump price of fuel to 39.50 kobo in March 31st, 1986. This regime was notorious for numerous pump price increases. On April 10th, 1988, the regime increased it to 42 kobo from 39.50 kobo per litre and then again to 60 kobo for private cars on January 1st, 1989. These increases came at the time the regime chose to adopt a home grown Structural Adjustment Programme (SAP) as against external borrowing. His decision was greeted with massive protests by Nigerian. The economic down turn coupled with the increases made life really unbearable and Nigerians reacted angrily.
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Again, on the 6th of March, 1991, the Babangida administration raised the pump price from 60 kobo to 70 kobo. Not too long the Nigerian nation was subjected to another round of fuel increase, when in November 8, 1993, the pump price was raised to N5.00 and confronted with mass protests across the length and breath of Nigeria, the price was reduced to N3.25 on November 22, 1993. A year later, on October 2nd, 1994, it was again raised to N15.00 only to be reduced two days later to N11.00 by the Gen. Abacha’s regime. The reduction was as a result of mass protests and coupled with the need to win the support of Nigerians. On December 20, 1998, the pump price was also increased to N25 but again reduced to N20 on January 6th, 1999 just a month later. This was during Gen. Abdulsalam Abubakar brief transitional reign as a military ruler. He like others before him did not spare Nigerians the pains of fuel price increase. The decision witnessed sustained protests by Nigerians, the organized labour and the Civil Society Organizations (CSOs).
It is necessary at this point to place on record that it was only the military junta of Buhari/Idiagbon and Umaru Shehu Yardua that Nigerians were spared the ordeal of price increase. Others before and after them inflicted enormous pains on Nigerians as a result of the increases in fuel prices. This however may be because of the brief tenure of the regime and ill health of Buhari and Yardua respectively, and its focus on fighting corruption and indiscipline in the Nigerian society. Gen. Olusegun Obasenjo second coming as a civilian president, did not helped matters as he unleashed a rain of terror on Nigerians. In his eight years reign, the nation witnessed several rounds of fuel price increases.
CHAPTER THREE
METHODOLOGY
Research Design
Kerlinger (1976) opines that a research design could be seen as the plan, structure and strategy of investigation conceived so as to obtain answers to research questions and to control variance. This study therefore adopts the research design of the ex-post facto type. It is an ex-post facto research in the sense that it is an after fact or after event study (Gay, 1996). It is also a descriptive research because it is a form of planned collection of data from a large population for the purpose of analyzing the relationships between variables (Oppenheim, 1992).
Target Population
The study population of this research work is limit within which this research finding is applicable. The target population for this study therefore comprises of all commercial bus drivers in all the 33 Local Government Area of Oyo State.
CHPATER FOUR
EMPIRICAL RESULTS AND DISCUSSION
This chapter presents the results of the data obtained and analyzed in line with the research questions generated for the study. The chapter is in two sections; section A looks at the demographic variables of the respondents while section B analyses the research questions for the study. It was presented under the following subheadings.
CHAPTER FIVE
Discussion of Findings
With response to question one which asks that, “What is fuel subsidy removal?” the result obtained from the analysis shows that 96% of the respondents agreed that they were aware of fuel subsidy removal (= 2.19). 96.6% of the respondents agreed that they were affected when government increase fuel price (= 2.17). The findings indicated that commercial bus drivers are fully aware of the fuel subsidy removal. This study is in agreement with Uwadia (2009) that ICT will among others serve as a tool for increased productivity; act as a tool for information storage, processing and retrieval and increase decision-making.
In the year 2000, Nigerian government began a journey of partial deregulation of the Nigeria’s down stream sub-sector. According to Ajumogobia (2008), Nigeria has been through two phases in its pricing policy over the last decade: First, total regulation of prices for all products until 2004 and then the regulation of PMS and DPK only from 2004.
President Jonathan has repeatedly said that subsidy withdrawal is necessary to safeguard Nigeria’s future. He said the total deregulation of the downstream sector will open the oil industry for foreign investments; which will lead to massive jobs creation and development. For instance, the government’s Subsidy Reinvestment and Employment Programme (SURE), under which it listed among other projects, the construction or completion of eight major roads and two bridges, provision of health care for three million pregnant women, six railway projects, youth employment, mass transit, 19 irrigation projects, rural and urban water supply (Ofikhenn, 2011:4).
Any crisis will worsen the economic situation. You know that salaries are paid form the daily income of the companies – the manufacturers – and it will be difficult for the employer to honour his salary obligations if businesses are put on hold due to labour protest (Oladesin, et al, 2011:1). For instance, Nigeria lost about 4.75 million Man-days to strike in six years.
Conclusion
The findings from this study reveal that the removal of fuel subsidies has had a significant impact on the marketing and distribution of petrol, particularly within the operations of the Nigerian National Petroleum Corporation (NNPC). The majority of commercial bus drivers (96%) are aware of the subsidy removal, and 96.6% have been directly affected by the increase in fuel prices. The study aligns with previous research, such as Uwadia (2009), which highlights the role of ICT in optimizing business operations, including fuel marketing. The partial deregulation of Nigeria’s downstream sector, which began in 2000, led to changes in fuel pricing policies, affecting both supply chain dynamics and market competition. While President Jonathan emphasized that subsidy removal would attract foreign investments and stimulate economic development through the Subsidy Reinvestment and Employment Programme (SURE), the market response has included disruptions such as labour strikes, increased operational costs, and reduced purchasing power. These disruptions have negatively impacted the effective marketing of petrol, causing fluctuations in demand and supply within NNPC’s distribution channels.
Recommendation
To enhance the effective marketing of petrol following subsidy removal, the government and NNPC should implement policies that stabilize fuel prices and ensure affordability for consumers. Transparent reinvestment of subsidy savings into infrastructure, refining capacity expansion, and improved distribution networks will strengthen the market and reduce dependency on imported petrol. Additionally, engaging with labour unions and key stakeholders through continuous dialogue will help prevent industrial actions that disrupt fuel marketing and distribution. NNPC should also leverage ICT and data-driven strategies to optimize supply chain efficiency and forecast demand accurately. Finally, investments in alternative energy sources and public transportation systems should be prioritized to mitigate the adverse effects of fuel price volatility and ensure long-term sustainability in the petroleum marketing sector.
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