The Effect Of Deregulation Of The Oil Sector On The Nigerian Economy

Project and Seminar Material for Economics

The Effect Of Deregulation Of The Oil Sector On The Nigerian Economy


This research work examines the effect of deregulation of the oil sector on the Nigerian Economy, it examines the definition, reasons modes, theories, problems as well as the solution to deregulation and its relation to privatization policy in the course of carrying out the investigation, hypothesis were stated and literature like magazine, textbooks, information from the internet, newspapers and questionnaires were prepared, and used in order to effectively and critically examines this issues and how it affects the general public with a view of making recommendation on how best to ensure the effective implementation of the policy. This project provides a background information of the topic of discussion with the purpose of assessing the effects of deregulation of oil sector on the Nigerian economy and examines the reasons, problems and solutions to deregulation. In an attempt to carryout this investigation, the study centred around the down stream oil sector with specific reference to the Nigerian economy

Chapter One


1.1 Background of the Study

The economic system practiced by any country determines the type of economic policy that country produces, that is determines the monopoly of power of power in production and distribution activities with special reference to the ownership, decision making as well as incentive structure operating in the country. Karl Polory (1964) distinguishes three (3) main types of economic system as the traditional (subsistence) planned (command) and market economy. However, the field of comparative economic system breaks the above categories into the capitalism, socialism and communism.

The economic system operative in Nigeria are basically the capitalism, socialism and communism system. But with the collapse of the communism and socialism economic policies in 1986 to give rise to a unipolar economic system-capitalism the policy of “deregulation” has been found expedient to implement.

This policy (deregulation) was first mooted during the military era but was given fillip by the present administration.

1.2 Statement of Problem

The problems surrounding the deregulation of oil sector which this research topic aims to investigate are:

  1. Does deregulation affect the price of petroleum?
  2. Does deregulation affect the price of goods and services?
  3. Does deregulation encourage the growth of the economy?
  4. Does deregulation improve the standard of living of the people?

1.3 Purpose of the Study

The major objectives of this study are to access

  1. The effects of deregulation of the oil sector on the Nigerian economy.
  2. The season and problems of deregulation of the Nigeria oil sector.
  3. To proffer solution based on findings on the study that will be useful for deregulation policy and achievement of stable balance of payments.

1.4 Scope of the Study

The scope of this project will centre around the deregulation of the down stream sector as it affects other sectors of the economy with specific reference.

1.5 Significance of the Study

This study is significant in the sense that it looks into the deregulation of the Nigeria oil sector as a means of liberalizing the economy and encouraging competition hence, this study is beneficial to both academicians and non academicians as it will enable them know, and it will also suggest solutions to some of the problems associated with the policy.

1.6 Hypothesis of the Study

To empirically carry out this research, the following hypotheses have been formulated for testing.

  • Ho 1: deregulation of the oil sector does not significantly affect the pump price of petroleum products.
  • Ho 2: deregulation of the oil sector does affects significantly the pump price of petroleum products.

1.7 Limitation of the Study

The major limitation of this study is that the period of time given by the College for the study would not allow for an in-depth coverage of all the issues connected with the topic under study and collection of related information.
A certain information analyze some observation may not be accessible e.g. independent marketers operation records may be regarded as strictly confidential and would not be developed to the research. And lastly finance is another constraint to an indebt study of this topic.

Chapter Five

Summary of Findings, Conclusion and Recommendations

5.1 Summary of Findings

This study was set out to empirically analyze the effect of deregulation of the oil sector on the Nigerian economy. In the opening stated and the way it was to be analyzed was carefully indicated. In the review of the literature in chapter two, major issues related to deregulation as contained in the works of several authors was extensively dealt with and looked into. It was however deduced from the work of these authors that deregulation is related to privatization as it is been propelled by it and also as they both involve the relinquishment of part or all of the equity and other interest held by the federal government wholly or partly owned to allow for private ownership and participation.

In the theoretical aspect in chapter three (3), a model or method was specified to empirically analyzed data collected to which the percentage (%) method was adopted. Also, in the presentation and interpretation of results in chapter four (4) the following findings were drawn finally, in all, it was discovered that the policy of deregulation is a good development and one indeed geared towards revitalizing and building the Nigerian economy. The findings were proved that mismanagement of the nations resources and the wrong way of the policy implementation has affected the prices of petroleum product, which has in turn led to hardship on the part of its citizenry.

5.2 Conclusion

The reform package as embodied in the structural adjustment programme (SAP) is capable of contributing to growth. However, we have seen from the study that this is not so in the Nigerian case. The reason is the selfish mode of its implementation and the absence of an enabling environment, which is having adverse impacts on growth. Also, it is better to embark on total reform measures in the short run with little inconvenience than to adopt half backed policies. These suggestions provided by this study are pragmatic and enforceable and will yield desired results if well implemented.

5.3 Recommendation

Based on the findings of this study, I would like to proffer this solution as way of consolidating the gains of economic deregulation and ensure its continuous benefit to the economy.

The objective of non-oil production should be pursued with greater determination other sectors of the economy other than the oil sector should be developed as success in the venture will reduce excessive dependence on the oil sector, promote industrialization is fast becoming which of course is founded on economic and technology. Nigeria can only be part of this trend if she repositions herself through adequate and consistent economic policies. The policy of deregulation should not therefore be a “Go-Stop”; policy.

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