Labour and the Downstream Petroleum Products Pricing in Nigeria, 2003-2010

ABSTRACT This study examined the role of labour in the downstream petroleum products pricing in Nigeria, from 2003 to 2010. Downstream petroleum products are characterized as Premium Motor Spirit (PMS, i.e. petrol), Automotive Gas Oil (AGO, i.e. diesel), Dual Purpose Kerosene (DPK, i.e. domestic kerosene), to mention but a few. The specific objectives of the work were to: (i) investigate the main issues that orchestrated the problems of the downstream petroleum products pricing in Nigeria: (ii) find out the reasons for the persistence of the problem of pricing of petroleum products in spite of the past efforts of labour: and (iii) discuss ways through which labour could be more effective in addressing the lingering problems of petroleum products pricing in Nigeria. The study adopted a descriptive research design. Data for the study were gathered through two main sources. These were primary and secondary sources. The primary sources were through participant observation and interview. The secondary data were collected from books, journals, etc. The study revealed that past policy failures in Nigeria such as moribund refineries, vandalization-prone petroleum pipeline distribution network and corruption-ridden subsidy administration primarily orchestrated the problems of pricing in the petroleum downstream sector. The four refineries in Nigeria, with two located at Port Harcourt, one each at Warri and Kaduna, having a combined production capacity of 445,000 bbl/day only, produced 89,000 bbl/day. The Nigerian petroleum policy which provided for refineries and petroleum pipeline distribution network to guarantee petroleum products supply at uniform prices throughout the country, therefore, failed in its objective. The resort to importation and the quest for stable supply at reasonable prices in all parts of the country led to the introduction of the policy of subsidy. Unfortunately, the policy failed in its objective due to corruption. For instance, ₦667.295 billion was looted in 2010 in oilrelated transactions in Nigeria. In addition, Nigeria’s dependence on importation of downstream petroleum products resulted in the prices that were influenced by the dynamics of the international market forces of demand and supply. For instance, the price of crude oil rose from $60 in 2003 to $118 in 2010. Thus, fluctuations in the prices of imported petroleum products repeatedly complicated subsidy administration in Nigeria. Finally, the non-application of effective communication and compromise strategy in the determination of the downstream petroleum products pricing regime by the Nigerian government and the continual resort to protests, strikes and confrontations by labour were counter-productive as the problem of appropriate pricing of downstream petroleum products persisted. Consequently, there is an urgent need for government to encourage the local refining of downstream petroleum products through proper maintenance of the existing refineries and the establishment new ones in Nigeria.