Petroleum and energy are indispensable for human sustenance and industrial production. Today in Nigeria, the petroleum industry assumes a special importance. Almost 90% of the country’s foreign exchange earnings come from this sector while about 65% of federal government of Nigeria income are derived from the sector.
Since the introduction of the structural adjustment programme (SAP) when the Naira began to suffer depreciation against the dollar and other foreign currencies, there had never been stability in petroleum products prices, for example, depreciation of the value or the Naira to the dollar and the price of crude oil in the international market.
In June 2000, the nation witnessed in popular protest which led to a week strike following the arbitrary increase in the prices of petroleum products by Nigerians National Petroleum Corporation (NNPO). The national strike lead by the NLC was called off following negotiations with the federal government. The negotiations resulted in a downward review of prices of petrol, Diesel and kerosene to
N22,N19 and N17 from N30, N89 and N27 respectively earlier announced by the NNPC.
The present passion and tension that usually characterize petroleum discourse is due to inexplicable deprivations and succoring of Nigerians despite plenty and abundance of petroleum worldwide, it is paradox that in the past decades, supply of all products has been erratic and on sharp decline.
Ironically, as supply declined, products prices have been on the increase. The combined impact of erratic and inadequate supply and unending price increases have brought untold hardship to the citizenry and worse too prevented economic recovery as promised by the present democratically elected government led the then president Olusegun Obasanjo.
The effect by government to overcome this lack of policy and total depending on oil companies led to policy shift towards regulations. Government therefore introduced uniform pricing, to satisfy domestic demand strengthen self reliance and avoid a situation is which the oil companies could hold the country to reason.
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The Nation witnessed adequate supply of petroleum products up till 1986. Until the devaluation of the Naira on account of the implementation of the SAP coupled with the criminal non-maintenance of the refineries. Currently there are two source of product prices will eliminate distortion in the market by promoting free competition. The idea is that single uniform pump price will disappear and be replaced with multiple competitive prices. This system may not be workable.
The case for privatization of the refineries and depots/pipeline system is canvassed as the most viable option to put an and to supply problems because of inability of government to adequately fund the refineries as and when due in sustenance of productive volumes to meet domostrive market demand and possible export requirements.