ABSTRACT
In
the past decade or so, Nigerians have been traumatized by the impact of fuel
crises. Lives have been lost and some productive enterprises have either gone
under or operating far below optimal level as a consequence of fuel supply
shortage and unpredicted high pricing associated to the mismanagement of the
downstream sector of the petroleum industry. The federal government is aware of
this problem and decided to appoint a committee of technocrats to chart a new
mode of operating the downstream sector. The committee recommended a paradigm
shift from regulation to deregulation of the downstream sector. The sector was
deregulated. Until then however, very little was known about deregulation in
the Nigerian economy particularly in the running of public utilities in which
the petroleum industry is a foremost concern. The study examined amongst
others, the strategic management system of firms in the downstream sector, the
nature of benefits that come from the deregulation of the sector, the process
of strategic charge in a new business environment by firms in the downstream
sector of the petroleum industry with a view to determining the impact of
deregulation on the strategic management of these firms and to ascertain the
risks associated with strategic change in terms of impact on the growth of the
firms. Also examined are the best practices in the global petroleum industry,
an analysis of the strategies for deregulating the Nigerian downstream sector
in relation to best practice, and leadership styles of managers/entrepreneurs
of the petroleum marketing firms. The survey method was used in line with the
objective of the study data were obtain from both primary and secondary sources
and chi-square statistic was applied to test the hypothesis. The study reveals
that deregulation is desirable and that the petroleum marketing firms dwindling
collective performance hangs on the fact that their management system lacked
the capacity to adjust strategically to the deregulation of the sector. Based
on the fining of the study a number of recommendation believed would eliminate
the hurdle on the way to successful operation of the sector were made. Conclusively,
the study maintain that the deregulation downstream sector requires a change in
business modes of operation and that the gain accruing to the policy are worth
the effort.
TABLE OF CONTENTS
Title page – – – – – – – – – i
Certification – – – – – – – – – ii
Dedication – – – – – – – – – iii
Acknowledgements – – – – – – iv
Abstract – – – – – – – – – iv
Table of contents – – – – – – – – vi
CHAPTER ONE: INTRODUCTION – – – – – 1
1.1 Background
of the Study – – – – – – 1
1.2 Statement
of Problem – – – – – – 6
1.3 Objectives
of the Study – – – – – – 8
1.4 Research Questions – – – – – 9
1.5 Hypothesis
Formulation – – – – – – 9
1.6 Significance
of the Study – – – – – – 11
1.7 Scope
of the Study – – – – – – – 12
1.8 Limitation
of the Study – – – – – – 13
1.9 Definition of Terms – – – – – 13
1.10 References
– – – – – – – – 17
CHAPTER TWO: REVIEW OF THE RELATED
LITERATURE 18
2.1 Introduction
– – – – – – – – 18
2.2 Strategic
Change – – – – – – – 18
2.3 Benefits
of Deregulation – – – – – – 21
2.4 Strategic Adaptation to Change of Business Environment 25
2.5 Post Regulation Risk of Firms in the Downstream – 27
2.6 Leadership Styles of Managers and Entrepreneurs – 29
2.7 Best
Practice in the Global Oil Industry – – – – 34
2.7.1 French Background – – – – – – 34
2.7.2 Germany
Background – – – – – – 36
2.7.3 Italy
Background – – – – – – – 38
2.7.4 Kuwait
Background – – – – – – 39
2.7.5 Japan
Background – – – – – – – 41
2.7.6 Australia
Background – – – – – – 42
2.7.7 Venezuela
Background – – – – – – 43
2.7.8 United
States Background – – – – – – 44
2.7.9 Analysis
of Strategic Prepositions for deregulating the
downstream sector – – – – – – – 45
2.7.10 Four strategic propositions
for deregulating – – – 47
2.7.11 Strategic 1: Partial
deregulation of only the supply side – 47
2.7.12 Strategy 2: Partial deregulation of only the demand side – 50
2.7.13 Strategy 3: Complete deregulation of the downstream sector – 52
2.7.14 Strategy 4: Fine-tuning the
status quo – – – – 54
2.8 Summary of the Review – – – – – 55
2.9 References
– – – – – – – – 58
CHAPTER THREE: RESEARCH METHODOLOGY – – 64
3.1 Introduction
– – – – – – – – 64
3.2 Research
Design – – – – – – – 65
3.3 Sources
of Data – – – – – – – 66
3.4 Instrument
for Data Collection – – – – – 66
3.5 Method of Data Collection – – – – – 67
3.6 Populations / Sample Size Determination – – 67
3.7 Validity
and Reliability of Instrument for Data Collection – 68
3.8 Procedure
for Data Analysis – – – – – 68
CHAPTER FOUR: PRESENTATION AND ANALYSIS
OF DATA 71
4.1 Presentation and Analysis of Data – – – – 71
4.2 Test
of Hypothesis – – – – – – – 79
CHAPTER FIVE: FINDINGS – – – – – – 96
CHAPTER SIX: SUMMARY OF FINDINGS,
RECOMMENDATIONS
AND CONCLUSION – – – – 103
6.1 Summary of Findings – – – – – 103
6.2 Conclusion – – – – – – – 105
6.3 Recommendations – – – – – 107
6.4 Area for Further Study – – – – – 109
REFERENCES – – – – – – – – 110
APPENDIX II: QUESTIONNAIRE – – – – – 118
CHAPTER ONE
INTRODUCTION
1.1 Background
of the Study Area
All over the world, reasons for
reforms in the public sector vary from country to country depending on the
objective, peculiarity and the circumstance that the country finds itself. The
issue of reform of the Nigerian downstream sector refining and distribution of
petroleum products has been on for quite some time. It has however, become more
compelling in the last few years given the trauma of scarify of petroleum
products that the nation has continuously witnessed.
Prior to 1965, petroleum products
domestic requirements were met entirely through importation under a deregulated
environment. By 1965, it had become apparent that the nation, haven gained
independence five years earlier, could no longer rely on important for its
entire requirement.
Consequently, the first refinery in
Nigeria – the old Port Harcourt refinery was built in 1965 as a commercial
venture to provide petroleum product at market related prices. It was a 35,000
bard per day refinery jointly owned by shell (25%), British Petroleum (BP) 25%,
the Federal Government (20%), and the three regional governments (10% each),
(Kopolokun, 2004).
However, by mid 1970s, with the
advent of the oil boom government became directly involved in the downstream
sector by building two new refineries and lacking over the first. The Warri
refinery was commissioned in 1978 while the Kaduna refinery came on stream in
1980. Government’s main objective was to make petroleum products available throughout
the country (www.nnpcNigeria.com)
With the change in ownership
structure, the pricing, policy was modified and controlled to encouraged
national distribution at uniform prices. This incidentally introduced the issue
of bridging and price equalization at government’s expense. This was later
inherited by the Nigerian National Petroleum Corporation (NNPC).
However, these controlled prices did
not respond to the continuously changing business and economic environment.
Thus, the control of petroleum products prices by government mark at difficult
to earn enough resources to maintain the refining and distribution assets.
Since the commencement of
government’s direct involvement therefore, prices of major petroleum products
such as premium motor spirit (PMS), Automotive Gas oil (AGO) and dual purpose
kerosene were set by government. This, of course, has been disincentive to the
private sector investment in refining (Kopolodun, 2004).
Also, the impression is created that
since Nigeria is an oil producing nation, petroleum product must be cheap
regardless of the cost of productive.
This has resulted in economic dislocation with its dire consequences.
Such consequences include.
THE IMPACT OF DEREGULATION ON THE STRATEGIC MANAGEMENT OF THE PETROLEUM MARKETING FIRM IN THE NIGERIAN DOWNSTREAM SECTOR
