A COMPARATIVE ANALYSIS OF THE PROBLEM OF PETROLEUM PRODUCT DISTRIBUTION IN NIGERIA GOODLUCK JONATHAN AND MUHAMMADU BUHARI ADMINISTRATION

CHAPTER ONE

INTRODUCTION

Background of the study

The production process is not considered finished until the items in question have been delivered to the customers they were designed to serve. The normal business will quickly learn that the people who buy its goods are dispersed around the globe. It is not enough for a company to simply decide whether it will distribute its products directly through its own sales outlets or indirectly through marketing intermediaries, such as wholesalers or retailers; the company must also ensure that the products are actually available at or made available to the distribution outlets. The question of the distribution of petroleum products is one that has garnered a significant amount of interest from academic scholars (Agbalajobi & Alaba, 2017; Ehikwe & Ngwoke, 2018). The country of Nigeria is blessed with an abundance of natural resources, including a variety of minerals such as petroleum, limestone, tin, natural gas, and others (Onyeukwu, 2017). With the exception of petroleum, which has been the primary driver of Nigeria's economy since the 1970s, all of these minerals have remained mostly unexplored. There are two separate sub-industries that fall under the umbrella of the oil industry in Nigeria. These are the upstream and downstream sectors of the oil industry. The upstream sector works with exploration and production, while the downstream sector is concerned with refining crude oil and distributing products for local consumption. There are primarily two ways that consumers get their hands on petroleum products: via domestic refineries or through imports. According to Anyadiegwu (2015), the transfer of refined petroleum products from the refinery to the ultimate customers across the numerous places of delivery in the nation is the definition of the process that is known as petroleum products distribution. In order to serve the needs of the end users or customers, efficient distribution ensures that petroleum products are transported to retail outlets or service stations located in various locations.

The distribution of petroleum products is characterized by a variety of complicated and static features, such as a lengthy lead time and a restricted primary distribution capacity. Although, in terms of the distribution of petroleum products as a whole, many different modes of transportation are utilized at various stages of the distribution process. However, transportation is restricted either because of a company's geographical location or the capacity of its resources, which increases the inflexibility (Hassen & Szucs, 2022). In the Nigeria position, the Pipelines and Products Marketing Company (PPMC) is tasked with the exclusive responsibility of delivering, distributing, and marketing petroleum products across the whole nation. According to Adeleke and Ehinomen (2022), up until relatively recently, the distribution of petroleum products in Nigeria was carried out through a well-organized system consisting of nearly 4,000 kilometers of pipelines that were connected to 21 depots that were dispersed across the country in various locations. Items derived from petroleum may be purchased from any of the four local refineries; however, in the event that there is a shortage of supplies, products can be imported from refineries located in other countries. 

In addition to the distribution of petroleum products through pipelines, around twenty maritime tankers are used to transport a considerable number of items that are in high demand from the coastal refineries that are located in Warri and Port-Harcourt to the metropolitan area of Lagos State (Adeleke &Ehinomen, 2022). As a consequence of this, a significant quantity of petroleum products are transported and delivered by trailers and tankers on roads all over the country. This situation has led to inefficiency in the downstream sector of the petroleum industry in Nigeria, which is responsible for refining and marketing petroleum products. The petroleum industry confronts a number of issues as a result of the various limitations and difficulties associated with the distribution of its products. It is widely held that the chain for the distribution of petroleum products is more challenging than chains in other industries owing to the large number of operations that take place both before and after the refining stage (Hussain, et. al., 2016). 

Because of the intricate structure of the distribution chain, there is a need for a method of decision-making that is both effective and methodical. This requirement is what drives the demand for optimization techniques. Because of this, many of the actors and stakeholders in the business have resorted to taking a scientific approach in order to solve the issue of distribution in the sector. These scientific approaches include optimization, linear programming, and other advanced scientific methods. According to Akpan and Nnamseh (2015), one of the difficult challenges that Nigeria faces as a country is the strategy that needs to be used to ensure that petrol products are always available for local consumption. This is one of the challenges that Akpan and Nnamseh (2015) identify as one of the most difficult challenges. According to Abdulmalik and Omokoghio (2019), the distribution of petroleum products is made more difficult on a daily basis by the occurrence of short deliveries and excessive lead times. Additionally, inefficient and effective logistics and operational performance of petroleum product distribution are hindered by inadequate roads, weak road networks, and a variety of other impediments such as delays at checkpoints operated by the police, the military, the state tax agency, and customs (Olagunju, 2021). 

Inefficiencies that are related with the transportation of petroleum products to sites in the hinterland include high freight costs, traffic delays, extremely sluggish movements, and en route breakdowns, as well as armed robbery attacks (Obasanjo & Nwankwo, 2015). As a result, inefficient and insufficient petroleum products storage or depots might constitute a significant obstacle to the operational performance of distribution of petroleum products. The issues of insufficient supply, ineffective storage, and a lack of distribution efficiency are important obstacles. The efforts that were made to settle them have been unsuccessful, which has had a significant impact on inflation and the level of life. Therefore, this study will analyze of the problem of petroleum product distribution in Nigeria Goodluck Jonathan and Muhammadu Buhari administration compare.

Statement of the problem

Distribution is a very important instrument in every marketing organization, industry, and retail outlet. Properly planned and implemented distribution policies are essentially a prerequisite for the proper integration of the activities that will eventually be used to the activities eventual achievement of the organizational goal; however, problems tend to exist in places where policies, are not defined or where they are not existing. As a general rule, the prices of the petroleum-based items that are being distributed are marked up significantly, or the prices of such products become very volatile as a direct consequence of the participation of distribution channels. In many cases, this has led to the examination of whether or not channel members are essential in distribution and whether or not efficient monitoring of the distribution channel would avoid not only excessive prices but also a shortage of the product in question. (Hussain, 2016) states that this will put a stop to any marketing activity. 

The correct distribution of petroleum products has been hampered by a number of obstacles, particularly during the administrations of Goodluck Jonathan and Muhammadu Buhari. It is against this backdrop that this research was conducted, with the purpose of analyzing the issue of improper petroleum product distribution in Nigeria. This research also includes a comparison of the approaches taken by the administrations of Goodluck Jonathan and Muhammadu Buhari.

Objective of the study

The general objective of the study is to analyze the problem of petroleum product distribution in Nigeria Goodluck Jonathan and Muhammadu Buhari administration compare. The specific objectives is as follows:

i.To exmine the causes of scarcity of petroleum product in Nigeria

ii.To find out the problem of petroleum product distribution during the Goodluck Jonathan administration.

iii.To investigate the challenges of petroleum product distribution during the Muhammadu Buhari administration.

iv.To recommend ways the distribution of petroleum product can be improved in Nigeria.

1.4Research Questions

The following questions have been prepared for the study:

i.What are the the causes of scarcity of petroleum product in Nigeria?

ii.what are the problem of petroleum product distribution during the Goodluck Jonathan administration?

iii. what are the challenges of petroleum product distribution during the Muhammadu Buhari administration?

iv.What are the recommended ways the distribution of petroleum product can be improved in Nigeria?

1.5Research hypotheses

The following hypothesis have been formulated for the study:

H0:  There is no difference in the problem of petroleum product distribution during the Goodluck Jonathan and Muhammadu Buhari administration.

HA: There is a difference in the problem of petroleum product distribution during the Goodluck Jonathan and Muhammadu Buhari administration.

1.6 Significance of the study

The main significance of this study holds to the fact that Nigeria as one of the oil producers in the world and for the fact that oil production has continued to provideg 9% of her exporting and still being faced by severe petroleum shortages which is a signal, of problems in the distribution of petroleum products in Nigeria, all things being equal this should not be the case.

The study will also be significant because the  distribution of petroleum products in Nigeria is very important both politically , economically, and socially. If this sector is neglected, the whole nation is neglected, and thus the country Could be put into jeopardy. 

The study will be of benefit to the academic community as it will contribute to the existing literature.

1.7 Scope of the study

The study will exmine the causes of scarcity of petroleum product in Nigeria. The study will also find out the problem of petroleum product distribution during the Goodluck Jonathan administration. The study will further  investigate the challenges of petroleum product distribution during the Muhammadu Buhari administration. Lastly, the study will  recommend ways the distribution of petroleum product can be improved in Nigeria. Hence, the study will be delimited to the Goodluck Jonathan and Muhammadu Buhari administration.

1.8 Limitation of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.9 Definition of terms

Petroleum: a liquid mixture of hydrocarbons which is present in suitable rock strata and can be extracted and refined to produce fuels including petrol, paraffin, and diesel oil; oil.

Product: an article or substance that is manufactured or refined for sale

Distribution: the action of sharing something out among a number of recipients.

1.10 Research Methodology

Research methodology deals with the different ways or methods the researcher applied in order to carry out the research as well as the instrument used for gathering the data. There are several research methodologies appropriate for answering the research questions. The type of research methodology used in this research to gather data and relevant information is the historical research and the study will adopt descriptive method of data collection. This will involve the collection of materials from secondary sources, such as books, journal articles, magazines, internet sources, international and national conference proceedings, published and unpublished articles.

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