DEREGULATION OF DOWNSTREAM OIL SECTOR IN NIGERIA: ITS PROSPECT

Ovaga, Okey H.

Department of Public Administration and Local Government

University of Nigeria, Nsukka

E-mail: revovaga@yahoo.ca

ABSTRACT

The oil industry has been a major contributor to Nigeria’s economy and that is why over 80 percent of the country’s foreign exchange earnings come from this sector. Since the discovery of oil in commercial quantity, Nigeria has been experiencing consistent increase in revenue earning. But this increase notwithstanding, Nigerians are yet to enjoy certain basic necessities of life. It has been strikes and protests against inadequate supplies and   incessant increases in the pump price of refined products. In order to reduce the burden on the citizenry, the federal government introduced the policy of subsidy, which was to make the prices of fuel in the country cheaper for consumers to buy. But, in spite of the whooping amount of money spent on subsidy, the prices of the refined products continued to rise astronomically. It is against this background that this paper seeks to examine the issue of deregulation in the downstream oil sector and to find out if the crisis being generated can be resolved. During the course of this paper, it was discovered that a group of dissidents and saboteurs have been working against the functionality of the existing refineries and equally engage in fuel importation for the purpose of satisfying their selfish interests. In order to ameliorate the ugly situation, introduction of deregulation in the downstream oil sector becomes imperative. The paper believes that the policy, if properly implemented, will go a long way in eliminating market distortions, promotes free market competition, and encourages private ownership of refineries in the downstream petroleum sector.