Banking & Finance

Nigeria Deregulation, Impact and Implications

Nigeria Deregulation, Impact and Implications



The petroleum oil sector is the major area where Nigeria’s income emendates. Before the discovery of crude oil, agriculture is the major source of income in this country and it forms the major exporting base in this country then. Right now, Nigeria exports more than 50, 000 barrels of oil a day to other countries in this country, the oil sector is controlled by the federal government under the direct supervision of Nigeria National Petroleum Cooperation, whose immediate chairman is chief fusnso Kupkolukun who succeed Pius Obaseki. The NNPC is vested with the power to refine Nigeria crude oil but other petroleum agencies like orient petroleum, chevron, EIF, Total, etc con embark on an exploration of land areas that might concern crude and possible extraction.

The oil sector is controlled by the federal and this makes them be the sole monopoly of this sector. Therefore, president Olusegun Obasanjo announced the deregulation policy which not only restricted to the oil sector but other sectors of the economy” commercialization and prostration of all the sectors of the economy. President Olusegun Obasanjo in Lagos on 27th February 2001, Obasanjo said that deregulation would mean the end of the existing subsidy system in the sector.

Due to the Noncompetitiveness of the fuel prices in Nigeria, no investor will establish refining in the country, said the president, instead, the government will subside the social services and improve public utilities like education, health, transport, power, and water Obasanjo said on the occasion.

Nigeria currently spends billions of U.S dollars on subsidization of oil products every year, but still experiences fuel shortages from time to time. So, this derogation policy aims to ensure that fuel shortages are curbed and that the constant labor stricken because of the incessant rise and hike in the fuel prices is also curbed.

Nupeng and pengassen are also involved in the regulatory process because both are indirectly involved in the supply of petroleum, thereby possible shortage in fuel supply might be triggered off by the anchovies of nupeng and pengassen.


There is the Ned to redress the issue of petroleum scarcity and the huge rise in pump prices in its country. The deregulation of the oil sector is meant to reduce this but the question now is what proper process should be involved in the deregulation. So the cause of scarcity and high-rise in pump prices might also be attributed to the monopoly of the oil sector, by the federal government, the scholiast of oil radials and bunkering, and almost, the improper management of our refining by NNPC.

The purpose of this study is to know whether the presidential proclamation on February 2001 on the deregulation will yield the desired results and to know its impacts and implication. This research project’s purpose is to bring to notice the impact deregulation has on the oil sector economy and the implication of such policy. Because deregulation is meant to end the existing obstacles and problems inherent in the oil sector.


The Nigeria National petroleum cooperation (NNPC) cooperation that controls the oil sector of this country, been involved in the reefing and supply of petroleum to every hook and corner of this country, since the 1960’s when Nigeria experienced the era of the oil boom, that is the period which the Mecum source of revenue shifted from commercial agriculture to oil because of the discovery of crude oil in Nigeria land.

The refineries in port court and Kaduna are the major refineries refining crude oil, in this country. So the major supplies of fuel, kerosene, diesel, and gas are based on the refining of petroleum, and this usage is also based on supply to various outlets in the country. The 1990s experience the shortage of petroleum and subsequent scarcity, which led to the hike in the price by the various presidents. So the oil sector curled not delivered its dividends, which are expected to it. So the announcement by president Olusegun Obasanjo that the oil sector should be deregulated was met by missed feelings by all and supply in this country. This missed feeling has to do with the fact that it is a wise decision or a very wrong decision since the oil sector is a major income earner in this country.

So this has led to this research project which is geared towards knowing the impact and implications of the deregulation policy, this is to ascertain whether the policy when and if implemented is the right decision that will permanently solve the issue of scarcity and hike in pump prices or whether such decision is bound to compound the problem of pump hike and scarcity.


This study is to ascertain whether the deregulation of the oil sector yields what is supposed to yield and also to know the benefits that are accruable to all and sundry because of policy.

Therefore, the rationale for this study is to check the oil sector and to find out the following:

· The causes of incessant fuel like and fuel scarcity.

· Deregulation policy, is the best policy needed in reshaping and redirecting our oil sector

· Can this deregulation curb this frequent issue of scarcity

· Will this deregulation strengthen our oil sector and bring equilibriums in the economic balances of this country.

So this research report is based on the following retainable, so that in the end, we can be able to distinguish more clearly the deregulation policies and the policies that accompany it, coupled with the fact that the positive and negative impacts and implications of this policy will be noted so, the rationale will be specifically on the impacts and implications of oil sector deregulation.


It is aimed that this deregulation of the oil sector will help in tackling the issue of scarcity. The real aim of the oil sector is the provision of a steady supply of petroleum so since this aim was unable to be achieved before the presidential announcement on 21st Feb. 2001, the aim is to deregulation the oil sector. So the significance of this study is to find out whether the aim of the deregulation is achieved or will be achieved and whether the aim of the deregulation is the aim in such a total flap. This project topic will significantly portray the impacts and implications of such a deregulation policy. So whether the deregulation of the downstream sector of oil will yield the required dividends will be found out at the end of this project research. Even this research is also significant because the problems that our industry is suffering will also be determined and known whether such problems can be curbed.


1. Oil sector is the part of or field of business activity that is concerned with the refining and supplying of petroleum to all parts of the country.

2. Deregulation according to Advanced learners dictionary deregulation means the amendments or making of another regulation in respect to existing issues or programs

3. Impacts and implications of the effect of such deregulation policies on the oil sector whether policies were able to yield its required results.

4. Implication can also be defined as the tendency in which the deregulation is to be blamed or not be blamed in the problems encountered by the oil sector especially that of fuel scarcity.

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