Contending Issues in the Niger Delta Crisis of Nigeria - Journal of ...

Chapter IX: The Politics and Policies of Oil Deregulation in Nigeria:
Implications and Policy Suggestions
world, the third largest in Africa and the most prolific oil producer in
Sub-Saharan Africa. The Nigerian economy is largely dependent on its
oil sector which supplies 95% of its foreign exchange earnings
(Asanhwe, 2000). Over the last couple of years, the Nigerian oil
industry has become known for the phenomenon of petroleum
product scarcity resulting in long and unending queues at petrol
stations and rising costs of production input and operations for all
other sectors of the economy.
The government felt that this is a result of a number of risks
associated with the petroleum product exploration and refining
activities in the country besides the external influences. The said risks
associated with investment in the oil sector in Nigeria were grouped
into three main categories via political activity and civil unrest, border
disputes and government under funding (Odiase, 2005). There is also
the continuing problem of corruption within the system.
In April 2000, the Nigerian government set up a committee to
investigate reform in the oil and gas sector with a focus on
deregulation and privatisation of Nigerian National Petroleum
Corporation (NNPC). The government believes that this would ensure
efficiency in the industry and end the perennial problem of petroleum
scarcity in the country. Under the privatization programme seven
subsidiaries are to be sold. These are all downstream companies and
include the four refineries, the Eleme Petrochemicals Company Ltd,
the Nigerian Petroleum Development Company and Hyson Nigeria Ltd.
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