Civil Society Organization And The Fuel Pump Price Deregulation Of 2013; A Critical Analysis

Project and Seminar Material for Political Science

Project and Seminar Material for Political Science


Abstract


January 2012, economic activities has been grounded through out the country with strike embarked by labour union and civil society group to protest the removal of fuel subsidy and resultant increase in petrol pump price from IM65 to N141and N140. The strike action which has a ready swilled down several billions of naira has indeed put to question whether the continued statement in the federal government and organized labour and civil society organizations talks that is not actually costing _the country more revenue than the estimated trillion the federal government pay oil marketers yearly. This work adopting analytical research examines the 2012 deregulation of the petrol pump price with effect on the economy and the standard of living. It was therefore observed that the given present fiscal challenge of the Nigerian state national situation should be that of collaboration and reviving of the various sectors.


Chapter One


Introduction

1.1 Background of the Study

January 1, 2012, remain a memorable day in the years of Nigeria history. No true Nigeria will ever forget easily, even in the years to come. It has registered itself as a remarkable just like June 12 1993. This day, the President Dr. Goodluck Ebele Jonathan gave the nation a New Year gift. The declaration of the subsidy removal of the motor spirit otherwise know as fuel, which is the last of the nations petroleum product to be deregulated over the years. The removal subsidy has led to increase in the years. The removal subsidy has led to increase in the prices of goods and services across the nation and has generated a lot of outcry by some citizens who felt that the timing was wrong considering the suppose on going consolations between the federal government and stake holders as to when the subsidy would be eventually removed.

In the bid to solve the problems in many nations, structural reform on petroleum market has become a critical component of microeconomic liberalization policies.

Historically, major petroleum products marketing companies were the main source of petroleum product supply. The companies transported and distributed the retail outlets. This was an era of deregulation in which Nigeria pay market determined price for product. But this arrangement was however not sustainably given that, it depended on the profit and market imperatives of the oil marketers.

Furthermore, a role of government in the petroleum sector is being redefined, and markets are being deregulated. Increasingly its private section is participating in more competitive environment.


1.2 Statement of Problem

From the beginning, it must be accepted that prior to January 2012, so many people did not known about the subsidy issue by federal government for the regulation of petroleum products. Subsidy suddenly becomes a national issue, only because the cost of living was skyrocketed on this first day of the year. With the increase in the prices of fuel from #65 to #150 to #250 across the nations. But the truth is that right from the 1980s, the federal government has been subsiding the price of petroleum products in the country.

But unexpectedly, the outcome of the deregulation has been increase in petroleum products. It was expected that deregulation would give room for competition which would transform to the price reduction and excellent supply and distribution network. But we are seeing a different thing altogether. This study is devoted on the evolution of deregulation exercises. Appraising its impacts on petroleum consumption and the general living standard possible solution to hike in pump price.


1.3 Aims and Objectives of the Study

The aim of this study is to appraise the deregulation exercise that was carried out in January 2012. However the specific objectives of this study are as follows:

  1. To examine the impact of deregulation on the petroleum product in Nigeria.
  2. To investigate the effects of deregulation on living stand of the people.
  3. To advance possible solutions to the hills in fuel pump price.
  4. To examine the role civil society organization in the anti-deregulation struggles in Nigeria.
  5. Finally to explore the reasons why deregulation has not yielded the desired result in terms of price and supply.

1.4 Research Questions

  1. What is impact of deregulation on petroleum price in Nigeria?
  2. What are effects of deregulation on living standard of the people?
  3. What is the role of the civil society organization in the deregulation struggle in Nigeria?
  4. What are the possible solutions to the hike in the petrol pump price?
  5. Why has deregulation not yielded the desired result in terms of price and supply?

1.5 Scope and Limitations of the Study

This study examines the rationality that is behind the 2012 fuel pump price deregulation, this is because it was during this period that the policy was implemented.

On the other hand, one of the major limitations to this study is time frame, the little time of study will not allow for an in-depth coverage of all the issue connected with the topic under study and the collection of related information. Then finance is another constraint to the in-depth study of the topic.


1.6 Methodology

Sources of Data:

Data will be acquired through primary and secondary sources, the primary sources will consist principally of the administration of questionnaire, Oral interview may also be conducted where necessary. Then under secondary sources, I am going to basically use of the library based or deck bench, basically this will consist of reading and gathering materials from books or published works like books, journals, news papers, and magazines e.t.c.


1.7 Data Analysis and Presentaton

A simple sampling method will be adopted, and subjects will be sampling method. Respondents will be taken from students of university of Benin, the science and non science students using questionnaires. Data will be tabulated or be displayed in tabular format, using simple percentage method. Inferences will be drawn from the tables.


1.8 Conceptualization of Civil Society Organization

According to Ikelegbe civil society today not just a major analytical but a major force and factor in the politics of Africa. Its current development is regarded as a significant mile stone in the restructuring of Africa political life.

Perhaps the simplest way to see civil society is as a third sector distinct from government and business. In this view, civil society refers essentially to the so called intermediary institution such as professional association, religious group labour unions, citizens advocacy organization, that give voice to various sectors of society and enrich public participation in democracy (Ikelegbe 2005).

The fast expanding role of civil society groups have assumed in the development of modern society. This has become so important that no government desirous of exploiting and harnessing the potentials of its citizens for national development can afford to ignore.

This according to innocent, since the demise of the former Soviet Union and the retreat of socialism in Eastern Europe in the middle and late 80s. The civil society sector or what social entrepreneurial literature now call civil sector has now given in life and bounds in the world over (Innocent).

Buttressing this development, Bornstein argues that, it got to strike you that a quarter of the century ago outside the hunted states. There were very few NGO (non governmental organization). But now, there are million of them all over the globe.(Bornstein)2004:4

In Nigeria, the story is not even though qualitative data on practically data on practically every thing is difficult to come by, but all one needs to be conceived is that civil society’s sector is among the fastest growing sectors in the country to look at the rate of which groups that describe themselves as human right organization has grown. In 1987, we had only one institutional human right organization in Nigeria called the civil liberties organization which was founded by Olisa Asbakola and Clement Nwankwo. But today you can count over a thousand of such groups organized at both national, state and local levels.


1.9 Civil Society: Meaning and Utility

As a way of escaping the conflicting reflection for varied definition of these concepts has been anchored on the definition of society by McLean and McMillan, Thomson and Diamond.

For Mclean and McMillan, it is the set of intermediate association which are neither the state nor the (extended) family: civil society therefore includes voluntary association and firms and other corporate bodies.

For Thomson; it is organization that arises out of voluntary association within society, found between the extended family and the state. Example of these include professional organization, labour unions, trade associations, women group, church assembles, business special interest campaigns, community groups and so on right down to sports and social club. In this respect, any group organized beyond the family but not part of the state apparatus can be defined as part of civil society.

Moreso, According to Diamond, Civil society is that realm of organized social life that is voluntary self generally, self supporting autonomous from the state, and bound by the legal order or sets of shared rules. It involves citizen acting collectively in the public sphere to express their interest passion and mutual goals, make demands on the state and hold state official accountable. It is an intermediary entity standing between the private sphere and state (Kukah 2008). Form this definition, we could stay say that civil society has the following benefits:

  1. It serves as a check to the excess of the government and any likely abuses of the rule of law.
  2. It serves to improve citizens participation.
  3. It serves as an alternative to political party and offers a refuge to those that are shut out from their right.
  4. It serves to enhance the bargaining power of interest group.
  5. It serves as a recruiting grounds for and training of political and economic class to enhance the quality of participation.

A polity with strongly formed or constructed civil society does not provide the polity with policy making that is enriched but shared as a reference point for challenging government arbitrariness in the society. The process of agreement and disagreement on policy issue between the government and civil society helps in balancing the public policy process in a way that most often reflect the public interest. Accordingly, Hegal had argued that it is through this mediating moment that a particular will comes into contact with other wills such as interactions lead to the creation of institution that attempts to bring universal will into a contradictory unity for only item can people be truly free. (Akumen 2012).

The system theory in political science is highly abstract, partly holistic view to politics, influenced by cybernetics the adoption of system theory to political science was first conceived by David Easton in 1953.

In simple teams Eastons behavioral approach to politics proposed that a political system could be seen as delimited (i.e. all political system have precise boundaries) and fluid (changing system) of steps in decision making simplifying his model.

STEP I

Changes in the social or physical environment surrounding a political system produce “Demand and ‘support1 for actions or status quo directed as ‘inputs’ towards political system.

STEP II

This demand and supporting groups stimulate competition in a political system leading to decision or ‘output’ directed at some aspect of the surrounding social or physical environment.

STEP III

After a decision or output is made (e.g. a specific policy) it interacts with its environment and if it produces changes in the environment, there are outcomes.

STEP IV

When a new policy interacts with its environment outcomes may generate new demand or supports and groups In support or against the policy (Feedback) or a new policy on some related matters.

STEP V

The feedback leads back to step 1 it is never ending story. If the system functions as described then we have a stable political system. System breaks down, then we have a dysfunctional political system.

A system is a set of element standing in interaction, a set of object with emphasis on interrelationship and a whole which is compounded with many parts. The whole idea of system theory is the characteristics of the structural relationships to one another of the numerous main parts of the whole which is geared towards the attainment of the system’s objectives. The Federal government as a political administrative institution is likened to the system which has many parts many element with emphasis on based on inter-relationship. The environment makes demand on it when it which it process into output.

The primary concept which the theorist put forward as the major element of this theory is the political system (the federal government in the case of deregulation policy). The input demand, support, environment, output and feedback mechanism.

Inputs

These represent the raw demand or preferences coming from the political environment. Example of inputs into the system includes demand and support. Demand represent the quest by the civil society groups to the federal government support is derived by the system when it is seen to be doing what the people want. This gives legitimacy to the system. The Federal government usually in all political system there is bound to be much demand in form of infrastructure and socio economic development. Once these demands are not adequately met, it will impinge on the general acceptability of the system.

Output

These are the authoritative decision of the political authorities for the allocation of value (demand) decision from the political system (state government/federal government) could be in the form of edicts- The leadership may in some cases decline in responding effectively and meaningfully to certain demands for reasons best known to the political leaders. Outputs to such demand may sometimes be based on symbolic flavors such as empty rhetoric promises to suppress such demand.

Feedback Mechanism

This is an important and dynamic process which refers to the influence of the output on inputs the feed back may produce a positive or negative reactions. It is only when there is knowledge of what has taken place concerning demands and support cans the authorities of government respond by adjusting, modifying or correcting previous decision.

Environment

The political system operates within the environment which is composed of members of the political community. They are usually the one that effect demands as well as supports in the process of inputs into the political system. Our governments also operate within in an environment which is of importance to their functioning. Responses emerging from government policies also come from the environment either positively or negatively.


Chapter Five


Conclusion and Recommendation

5.1 Conclusion

From the discussion so far, it is clear that the current state of the Downstream Sector is judged as inefficient in service delivery and ineffective at promoting national developmental objectives. The rationale for restructuring the oil and gas sector in a petroleum dependent economy like Nigeria must be to enhance the sustainability of petroleum wealth and its impact on all sectors of the economy. This notwithstanding, such reforms or restructuring must not only focus on enhancing industry effectiveness and efficiency, it must be mindful of equity issues with respect to wealth distribution among all the sectors of the national economy. In Nigeria, the focus of the reform should be for the oil and gas institutional structures and regulatory framework to maximize the economic benefits of petroleum resources, for the current and future generations.

Deregulation or Subsidy removal is a germane economic policy for sustainable democratic transformation of Nigeria, provided social vices like unethical marketing practices of middlemen in the purchase, and distribution of the petroleum products are removed. The corrupt practices of both officials of NNPC and government must be avoided while the proceeds from the downstream should be used to provide social infrastructure, which will also accelerate self-employment, job creation and efficient mass transportation. With deregulation, subsidy, which has been a conduit pipe and source of fraud in Nigeria, will be a forgotten issue. Furthermore, competition which is an important component of deregulation policy will encourage private sector participation in building new refineries, thereby increasing refining capacities in Nigeria. We cannot continue to import petrol, when we have the capacity to produce what we can consume as well as for exportation (Okere, 2010:45). In other words, Nigeria has all the wherewithal, not only to be self-reliant but even enough to export refined products.


5.2 Recommendations

With this partial deregulation, the benefits of maintaining a good fiscal policy is coming to bear, government has moved away from over dependence on oil revenue and is diversifying into other areas. All loopholes used for smuggling of petroleum products across various Nigeria boarders must be closed. According to Barkindo and Lipede
(2007) Nigeria‘s boarders were used to send out crude oil. Nigerian petroleum products were predominantly smuggled across the boarder into Niger and Cameroon (Asiwaju, 2003).

Deregulation of the downstream sector must be gradually and consistently pursued to revive maximum result to all stakeholders and the nation. While that is being pursued, adequate infrastructure, especially refineries should be put in place. The four refineries already established should be maintained and made to operate at full capacity. In addition, the three newly approved refineries are grossly inadequate. Each geopolitical zone should have an additional refinery for easy supplies across the country to boost the refinery, distribution and marketing capacity of the country.

The SURE Program of reinvestment and empowerment from the subsidy removal proceeds should be used to revamp the economy and federal government should monitor the state and local government on how the make use of the funds. A serious commitment by government at the three tiers that money generated would be judiciously used in the provision of infrastructure will help in restoring confidence in the minds of Nigerians.

There is need to strictly comply with rules of public procurement and Fiscal Responsibility in the awards and executions of contracts. As a follow up the above, we call for the immediate commencement of work on the three Greenfield refineries proposed by the government in order to expand existing capacities making it possible for us to lay to rest finally the monster called ―fuel subsidy‖.

Government should, as a matter of urgency, ensure a robust Petroleum Industry Bill (PIB) that will solve the problems of both the downstream and the upstream sectors of the petroleum industry is passed into law, thereby optimizing the benefit to the people of the oil and gas sector which is a finite resource.

Decision making must be participatory. Government must sufficiently involve the citizenry in the process of decision and policy making particularly on issues and policies that affect their lives. This could be through town hall meetings with all segments of society and making the necessary contacts with members of the grass-root and civil society organizations. To do this, government could employ the services of NGOs and National Orientation agencies across the country.


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