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The Impact Of Petroleum Subsidy On The Consumption Of Petroleum Products In Nigeria
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It is self-evident that as at the year 2000 there is no subsidy removal
or whatsoever on Petroleum products in Nigeria. Indeed, from current
cost of refining at $10 per barrel sold to the NNPC refineries, the
price of petrol (PMS) should be #15 per liter as against the pump price
of #22 per liter. Thus the current price of PMS includes sufficient
government task indicating that no subsidy exists on the current product
prices.
More so, when the naira hopefully recovers its lost grounds,
a new (reversed) twist may be given for the problem of petroleum
subsidizes. It goes to show that whatever the action the government may
take on petroleum between 2000 and the year 2003, it probably will not
be the last word on the matter
1.1 BACKGROUND OF THE STUDY
Nigeria
is one of the major sources of crude oil in the world. The importance
of petroleum to Nigeria can only be appreciated when one realizes the
dominant role it plays in our economy. Petroleum products and export is
the main stay of the Nigerian economy providing almost 90% of our export
earning locally petroleum products are used as major sources of energy
for the industry.
Petroleum is an international commodity, which is
highly politicized since variation is supply of the commodity has been
known to cause ripples in the international commodity is evident for the
cartel cliché that exist to bring about a measure of control in the
supply price marketing of petroleum. Petroleum prices are based on the
dollar currency.
It has been believed in the past that Nigeria stood
ready and in fact subsidized petroleum products. This accounted for low
prices of petroleum products. this accounted for low prices of petroleum
products in Nigeria and comparative prices obtained in other countries
their oil glut which had affected the Nigerian economy adversely has
caused the country to reduce the subsidy on petroleum products. Of later
Nigeria has sought assistance from world international financial
institution.
The aid has required that the nation reduce or reduce or
remove entirely subsidy on petroleum products before any assistance can
materialized Thus, so that the country can earn more income to solve
its debt problems.
The dollar removal of subsidy and thus, increase
in local prices of petroleum products has generated a lot of attention
lately. All this reduced us to delve into the study of the economies
petroleum subsidies in Nigeria
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ABSRACT - [ Total Page(s): 1 ]The petroleum sector is an indispensable body in Nigeria economy. It has remained the Nigerian biggest revenue earner. It still brings in more than 80% of the foreign exchange earned by the country. However, this resulted in the shortage of the quantities of petroleum products consumed locally in the country. Hence, the problem of development is generally faced in Nigeria. This work will as well go to show what actually constitute the petroleum subsidy in Nigeria. It will analyze the cost to the ... Continue reading---
