PROBLEMS OF ALLOCATION, DISTRIBUTION AND MARKETING OF PETROLEUM PRODUCTS

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Oil exploration began in Nigeria in 1908 although the documentation of occurrence of the minerals were reported some five (5) years earlier in 1903. The exploration efforts were punctuated by two world wars but eventually yielded results with discovery of oil in Oloibiri in 1956 by sheel Bp. Bayeri (2016). Production increased from a more five thousand (5,000) barrels per day in 1957  to seventeen thousands (17,000) per day by independence in 1960  and leapfrogged to four hundred and fifty thousand (450,000) barrels a per day by 1966. Although, this upgrade trend was slowed down by the civil war, by 1970 daily production had reduced the level of one million barrels per day. A peak production level of two million four hundred thousand (2.4 million) barrel per day was achieved during the second quarter of 1979. However, before 1990 production fell to one million. Six hundred and eleven million (1.611 million) per day both on technical grounds and adherence to OPEC, quota brought about by the need to control production, to support price in a globally avert supplied to the market. As at (1999) OPEC  quota for Nigeria stands at 1.865 million per day as set in 1990.

The first marketing of oil from Nigeria occurred in 1958. DETEGE (2016). As most multinational oil comprise operating in the country has 100% equity in their operations up till 1973, there was no active government on Nigeria oil until then. Prior to 1973, all Nigeria oil was marketed by oil producing comprise through integrated system using their transfer price. Government’s interest in  the oil industry was handled by a number of government departments including the hydro carbon section in 1963 and department of  petroleum in the ministry of mines and power in 1970. Although the Nigeria national petroleum corporation (NNPC) was formed in 1971 and was primarily to market Nigeria oil, government direct involvement in the marketing of oil  did not begin until 1973. That was when the government started having it’s own equity interest in the operation of the oil companies (Bayero 2016).

It has been the policy of government to put in place proper facilities in the down stream sector like refinery, distribution and marketing of petroleum products so as to embrace the value added to our petroleum resources. Presently, Nigeria has four refineries with two at Port Harcourt while Warri and Kaduna has one each. All the refineries has the total production capacity of four hundred and forty  five thousand (445,000) barrels per. To ensure the supply of available petroleum products through out Nigeria, the  Nigerian National Petroleum Corporation ( NNPC) built about three hundred kilometers (300,000km) net work of pipeline covering all parts of the county, inter –connected to seventeen (17) petroleum product depot in Nigeria. This was aimed at eliminating the perennial storage’s of petroleum products in the country. Etefe (2017).

To aethalize this noble objective in Enugu, constitution of n oil depot began at Emene, and was completed and commissioned by the military administrator on 24th August, 1979. Enugu depot which was commissioned in 1979 has the storage capacity of about twelve million mi – cube (12,000,00m/3) at present. It has a stock only three bye products of petroleum products namely, premium motor spirit (PMS), otherwise called petrol, dual purpose kerosene (DPK) and Automobile Gas oil (AGO) or Diesel for onward distribution to her customers in the oil marketing companies. The depot went to serve the states which are under it, which include the present Enugu, Anambra, Kogi, Ebonyi, and parts of Imo, Benue and Cross – River state.

Enugu depot sighted at Enugu East Local Government of Enugu state is at depot as well as a pumping station. As products and distributes same to the general public through oil marketing companies. But as a company station, it was meant to supply other depots in the Northern states which include Makurdi, Yola, Minna and Suleja directly from Port – Harcourt refinery through pipeline product distribution system.

It is the wish of the federal government to ensure steady and regular supply of petroleum products to this end, effort has been made to expand and inter connect all existing refineries. It will ensure that strategic stock of petroleum produce is well maintained in the country by allowing quick replenishment of stock in all product depot of which Enugu depot benefited. So therefore, my interest to study the problems of petroleum products distribution, allocation and marketing in Enugu.

1.2    STATEMENT OF THE PROBLEMS

The poor allocation and distribution of petroleum product to the public.

The effect of diversion of petroleum products to the consumer.

The resultant effect of short in supply of petroleum product at Enugu depot to the public.

Shortage of meter tocket/other materials bring a problem in distribution of petroleum products.

1.3    OBJECTIVES OF THE STUDY

1. To create on awareness for harmony between the depot management and her workers to ensure an efficient and effective working conditions as well as high productivity.

2. To stress the need for marketers to sell pure and unadulterated petroleum products to the motorist at their various filling stations.

3. To advice government on the appropriate pricing of petroleum products as well as profit margin allowed to marketers.

4. To educate management on the need for proper checking procedures by their workers.

5. To advice government on the need for maintenance of her refinery as the main source of product of various oil depots to ensure steady supply of petroleum products.

6. To highlight on the need to have a steady or constant product supply from the refinery

7. To highlight on the need for marketers to have sound trucks and vehicles for easier evaluation and procurement of petroleum product.

1.4       RESEARCH QUESTIONS

1. What are the allocation patterns adopted by the depot management?

2. To what extent has lack of management skill and personnel lapses hinder the efficient allocation and distribution system at Enugu depot?

3. To what extent has the insufficiency petroleum at the depot affect the distribution system?

4. How far has the inability to maintain and service, procured equipment pose a threat to the industry?

5. At what extent has poor condition of our roads network affect the efficient and effective distribution of petroleum product in Enugu zone.

6. What is the impact of adulteration of petroleum products to the oil industry?

1.5      SIGNIFICANCE OF THE STUDY

The significant of this research is that the result will help identify the most effective and efficient way of managing an oil depot. It will provide a clear cut operational guide to the depot management and marketers alike as a model for petroleum product allocation, distribution and marketing which is their primary responsibility to ensure evenly and far allocation and distribution of petroleum products. On this note, awareness is being created on how steady supplying of the products namely; Prim motor spirit (PMS), otherwise knows as fuel, Auto Gas oil (AGO) –Diesel oil, Dual purpose kerosene (DPK) – kerosene should be making available at Enugu depot at all times for onward allocation to the marketing companies and subsequently distributed to their various filing station.

In view of this, Federal government and her agencies larger with the petroleum larger with the petroleum products allocation and distribution like NNPC marketers as well as task force and others will utilize the research for economic and co-operative analysis for the benefit of both government, oil marketing companies and the NNPC and the larger society. Again, the consumer needs and services will be provided at this time when petroleum products scarcity is the order  of the day.

Finally, the oil marketing companies will be able to understand their role in the distribution and marketing of petroleum products Ex – Enugu Depot. They will as well appreciate the need for them to avid  product diversion and adulteration and will work to improve on the infrastructural facilities at their   stations for the general well being of the people.

1.6       SCOPE OF THE STUDY

The researcher is concerned with the problems of allocation, distribution and marketing of petroleum product with particular reference to the Nigerian National Petroleum Corporation (NNPC) Enugu Depot Enugu East Local Government in Enugu State.

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