AN EXAMINATION OF THE LEGAL FRAMEWORK FOR THE MARKETING OF PETROLEUM PRODUCTS IN THE DOWNSTREAM SECTOR OF THE OIL AND GAS INDUSTRY IN NIGERIA

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ABSTRACT

Hitherto, to many, the concept of oil and gas was limited to the search for, work and win crude oil. So, for many decades, nations only concerned themselves with upstream petroleum activities. The availability of crude oil determines the extent of relevance a nation commanded at the global scene. This fact is amplified by the role Nigeria played in the struggle to rid Africa of colonial vestiges. The marketing of petroleum products (downstream sector activities) is therefore brought to the fore of the national petroleum industry. The issues of oil and gas in Nigeria are very topical and sensitive. The products of oil and gas are present in every home in Nigeria. Arising from this, the government became very much involved in the supply and distribution of its product. Various laws, including the Petroleum Equalization Fund (Act) Instituted as a result of the problems associated with the petroleum distribution, were put in place to govern the petroleum industry. However, there appear to be inconsistencies between these laws and what actually obtains. This research principally adopted a doctrinal research methodology which relied on existing statutes, subsidiary legislation and literature on petroleum products marketing. It analyzed the issues and drew inferences which culminated in the findings. This dissertation found that the legal framework for the regulation of the downstream sector of the petroleum industry is not robust and comprehensive; that there is conflict of functions between the Petroleum Minister and the Petroleum Products Pricing and Regulatory Agency. This is with respect to the fixing of the prices petroleum products. This conflicting function does not make for improvement of effective pricing of petroleum products as it does not allow market forces to determine the price; that the functions of government regulatory agencies such as the Nigerian National Petroleum Corporation (NNPC), the Department of Petroleum Resources (DPR), the Petroleum Products Marketing Company (PPMC) and the Petroleum Products Pricing and Regulatory Agency (PPPRA) are overlapping and therefore work at cross purposes; that the Petroleum Equalization Fund put in place for the sole purpose of unifying the pump prices of petroleum products across the country is ineffective, fraught with corruption and has resulted in waste of financial resources; and that government involvement in downstream activities makes law enforcement weak and ineffective. This research therefore recommended a restructuring and reforming of the legal framework and regulatory bodies for the Nigerian Petroleum Industry through the passage of the Petroleum Industry Bill (PIB); existing laws should be reviewed for effective regulation with the roles of government agencies clearly defined; that the Petroleum Equalization Fund be repealed; and that government should exit participating in the downstream sector (through the Nigerian National Petroleum
Corporation) and only be a regulator.

 

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