Description
Avoid The Importation Of Petroleum Pricing In Nigeria
What Methods Should Be Taken To Avoid The Importation Of Petroleum Pricing In Nigeria? Oil products are derived from crude oil and they include petrol, diesel, kerosene, natural gas, bitumen. Oil was discovered in Nigeria in 1956 at Oloibiri in the present Bayelsa State, after a century of searching (Dharam, 1991), Nigeria is the largest oil producer in Africa and has been a member of the Organization of Petroleum Exporting Countries (OPEC) since 1971. In 2011, Nigeria produced about 2.53 million barrels per day (bbl/d) of total liquids, well below its oil production capacity of over 3million bbl/d, due to production disruptions that have compromised portions of the country's oil for years. The Nigerian economy is heavily dependent on the oil sector, which accounts for over 95 percent of export earnings and about 40 percent of government revenues. Crude-oil production and export commenced in Nigeria in 1958. It accounted for 7.1 per cent of total exports in 1961, which was dominated at that time by cocoa, groundnut and rubber, in that order. In 1965, oil had climbed to 13.5 per cent of the nation's export earnings, and by 1970, it had become the leading source of foreign exchange, accounting for 63.9 per cent. By 1979, petroleum sales had completely overshadowed non-oil exports, as it then contributed about 95 per cent of the country's export earnings.
So strategic in the petroleum sector to the Nigerian economy that crucial aspects of this sector such as exploration, production, gas utilization, conservation, and petroleum policy and legislation are sensitive economic issues. It is estimated that demand and consumption of petroleum in Nigeria grows at a rate of 12.8% annually. However, petroleum products are unavailable to most Nigerians and are quite costly, because almost all of the oil extracted by the multinational oil companies is refined overseas, with only a limited quantity supplied to Nigerians themselves. Government on the 14th August 2000 set up a 34 member Special Committee on the Review of Petroleum Products Supply and Distribution (SCRPPSD) Some of the method that of which the Nigeria government can avoid importation of petroleum pricing in the country are to take the following state and necessary infrastructural development.
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Stakeholders are unhappy because of the shortages and the prevailing cost and price structure which lead to low returns on capital investment and encourage malpractices, which in turn hamper an efficient supply and distribution system.
?
Operational facilities at the depots and the pipelines should immediately be repaired.
?
To prevent further malpractices, all coastal supplies of AGO through nominated company vessels should be stopped as subsidies to the target group (NEPA, Rigs operators) were not justified.
?
Restructuring of the NNPC and its subsidiaries with the setting up of the committee on that in the first quarter of 2001.
?
Dualisation of all roads leading to the refineries and depots to allow easy access and improve efficiency of operations.
?
Current efforts to resuscitate the Nigeria Railway system by Government should be sustained.
?
Government should deregulate and liberalise the import of petroleum products by other parties and that prices of products should be based on import parity to enhance and encourage the participation of other players other than the NNPC.
?
Privatisation of all four government refineries and encouragement for the establishment of private refinery.
?
Expansion of loading capability of all marined-fed depots. Establishment of a pipeline management authority for the management of pipelines and depots, which will charge both private and public users a tariff per throughput litre of products.
?
?
Downward review of NPA ports charges to a comparable level with other ports in the world.
?
Immediate setting up of a Petroleum Products Pricing Regulatory Agency with sufficient autonomy to superintend the various phases of the proposal embodied in the report (SCRPPSD) especially the liberalisation of the downstream sector of the petroleum industry. On March 8th 2001, the government set up the Petroleum Products
Pricing Regulatory Committee (PPPRC). In conclusion the law establishing the PPPRA, the road to full deregulation and liberalisation of the downstream sector will become open for all the stakeholders in the sector to play their parts according to the rules and guidelines as would be unfolded by PPPRA based on its functions. Hence the deregulation and liberalisation so as the establishment of more petroleum refinery will be a great means of with the government can avoid the importation of petroleum pricing into the country.
doc_876322844.docx
Avoid The Importation Of Petroleum Pricing In Nigeria
What Methods Should Be Taken To Avoid The Importation Of Petroleum Pricing In Nigeria? Oil products are derived from crude oil and they include petrol, diesel, kerosene, natural gas, bitumen. Oil was discovered in Nigeria in 1956 at Oloibiri in the present Bayelsa State, after a century of searching (Dharam, 1991), Nigeria is the largest oil producer in Africa and has been a member of the Organization of Petroleum Exporting Countries (OPEC) since 1971. In 2011, Nigeria produced about 2.53 million barrels per day (bbl/d) of total liquids, well below its oil production capacity of over 3million bbl/d, due to production disruptions that have compromised portions of the country's oil for years. The Nigerian economy is heavily dependent on the oil sector, which accounts for over 95 percent of export earnings and about 40 percent of government revenues. Crude-oil production and export commenced in Nigeria in 1958. It accounted for 7.1 per cent of total exports in 1961, which was dominated at that time by cocoa, groundnut and rubber, in that order. In 1965, oil had climbed to 13.5 per cent of the nation's export earnings, and by 1970, it had become the leading source of foreign exchange, accounting for 63.9 per cent. By 1979, petroleum sales had completely overshadowed non-oil exports, as it then contributed about 95 per cent of the country's export earnings.
So strategic in the petroleum sector to the Nigerian economy that crucial aspects of this sector such as exploration, production, gas utilization, conservation, and petroleum policy and legislation are sensitive economic issues. It is estimated that demand and consumption of petroleum in Nigeria grows at a rate of 12.8% annually. However, petroleum products are unavailable to most Nigerians and are quite costly, because almost all of the oil extracted by the multinational oil companies is refined overseas, with only a limited quantity supplied to Nigerians themselves. Government on the 14th August 2000 set up a 34 member Special Committee on the Review of Petroleum Products Supply and Distribution (SCRPPSD) Some of the method that of which the Nigeria government can avoid importation of petroleum pricing in the country are to take the following state and necessary infrastructural development.
?
Stakeholders are unhappy because of the shortages and the prevailing cost and price structure which lead to low returns on capital investment and encourage malpractices, which in turn hamper an efficient supply and distribution system.
?
Operational facilities at the depots and the pipelines should immediately be repaired.
?
To prevent further malpractices, all coastal supplies of AGO through nominated company vessels should be stopped as subsidies to the target group (NEPA, Rigs operators) were not justified.
?
Restructuring of the NNPC and its subsidiaries with the setting up of the committee on that in the first quarter of 2001.
?
Dualisation of all roads leading to the refineries and depots to allow easy access and improve efficiency of operations.
?
Current efforts to resuscitate the Nigeria Railway system by Government should be sustained.
?
Government should deregulate and liberalise the import of petroleum products by other parties and that prices of products should be based on import parity to enhance and encourage the participation of other players other than the NNPC.
?
Privatisation of all four government refineries and encouragement for the establishment of private refinery.
?
Expansion of loading capability of all marined-fed depots. Establishment of a pipeline management authority for the management of pipelines and depots, which will charge both private and public users a tariff per throughput litre of products.
?
?
Downward review of NPA ports charges to a comparable level with other ports in the world.
?
Immediate setting up of a Petroleum Products Pricing Regulatory Agency with sufficient autonomy to superintend the various phases of the proposal embodied in the report (SCRPPSD) especially the liberalisation of the downstream sector of the petroleum industry. On March 8th 2001, the government set up the Petroleum Products
Pricing Regulatory Committee (PPPRC). In conclusion the law establishing the PPPRA, the road to full deregulation and liberalisation of the downstream sector will become open for all the stakeholders in the sector to play their parts according to the rules and guidelines as would be unfolded by PPPRA based on its functions. Hence the deregulation and liberalisation so as the establishment of more petroleum refinery will be a great means of with the government can avoid the importation of petroleum pricing into the country.
doc_876322844.docx