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THE EFFECT
OF FUEL SCARCITY ON NIGERIAN ECONOMY
CHAPTER ONE
1.0 Introduction
The word
“Scarcity” means when there is insufficiency of something. Since there is
insufficiency of fuel it is termed as fuel scarcity.
In the past
Nigerians solely depended on the exportation of agricultural product for their
source of income. This continued until the discovery of the presences of the
presence of oil in our country, especially in part Harcourt. This made them
(Nigerians) to divert form Agriculture to the exportation of oil to other
countries, which was actually fetching them much money even till this present
time.
There are
many subsidiary oil companies scattered all over the country but the biggest
among them is in port-Harcourt and it is called the Nigerian National Petroleum
Company (NNPC). It is from here that crude oil is extracted from the ground
refined to get those components like fuel, kerosene and gas.
There are
depots scattered all over the country like shell Port-Harcourt, NNPC Enugu, Eif
oil Company, Warri Pipeline are directed towards these oil companies to
facilitate distribution. Tanker drivers and other dealers will load form the
depot and distribute to filling stations, then the consumers will buy form the
filling stations.
Fuel supply
has been moving smoothly in the country before the announcement of the budget
by the head of state in January last four year 1999. it was in February 1999
that the whole issue of fuel scarcity started. This has made it difficult for
the government to accomplish that which it proposed to do I the budget.
In the past,
there has not been any services fuel scarcity, everything was moving smoothly,
the industrialist both public and privates, does not have any problem.
Economically the price of goods and services, were affordable by the people.
Car owners can just go to filing station and buy fuel at a normal price of
N22.00 per liter and with much ease.
Things were
moving smoothly in the country and in this part f Enugu metropolis until 1994
when we had one case of fuel scarcity not until on up till this movement of
this study.
Because of
fuel scarcity, people are so desperate to by fuel for their business. For this
reasons, whenever any information was passes concerning the presence of fuel in
any filling station, car owners will go there and que -up. Some of them will
have to sleep in the filling stations a day or more than two days while waiting
for their turn. People or car owners when they cannot buy fuel in any filling
station, are forced to buy from the black market at an exhobitant price. Some
people use big gallons to buy fuel that will serve them for some days.
For the
reason that there is insufficient fuel in the filling station, makes people
sell fuel in ration so that everybody present will buy. The car owners who
think the fuel will not reach tem will start jumping the que, thereby causing
fights among themselves. Because of this reason, the filling station owners
invite soldiers so that there will be peace and orderly que in the filling
stations. Fuel scarcity are sometimes artificial in the sense that during the
Christmas period. Filling station owners will just hoard their fuel in order to
sell at a high price.
1.1 Background of Subject Matter
Just like water and air are important
to the living human being for daily duties and hitch-free survival, the
importance of fuel to automobile cannot be over looked. A typical situation is
in the case halts because of the fact that there is shortage of fuel. The
importance of fuel in this our developing and technically inclined economy is
fast like the mixture of oil and salt as far as the economy forgets growth as
one of its goals. Fuel is used in a variety of activities ranging from
production, mobility, cooking, electricity supply, sources of foreign exchange,
to mention but a few. To this extent one would accept that fuel plays a great
role in the life of every citizen of the country and the country as a whole.
However, in recent times, there has
been a rampant shortage in the availability of the commodity. It is on this
basis that the researcher intends to evaluate the causes and effects of fuel
scarcity in the Nigerian economy, but shall concentrate on Enugu urban as a
case study due to time and financial constraints.
Effects of
Fuel Scarcity
Fuel is a form of energy, according to
Longman English Dictionary; fuel is a form of energy used for the energizing of
the machine used for production. In that case, its scarcity will affect the
living standard of the people in various ways.
a. It increases the cost of
transportation
b. Electrical faults
c. The cost of food items and living
d. Social unrest
e. Adulteration of fuel and so on.
The effects of fuel scarcity in Enugu
metropolis cannot be over emphasized for it is one of the very prayers for the
entire economic attribute to move about.
During 1998 February 12, business
activities in Enugu State was brought to a light because there was no fuel. In
the state, vehicles were seen in long queues in the filling stations even when
there is fuel at the filling station or not. Commuters were stranded in the
various bus stops with no hope of motor coming to take them to their various
destinations
Consignment upon this prices of
commodities skyrocketed so much beyond the reach of the buyers “News watch
publisher Vol.12 November in 1996”. The perennial fuel scarcity in Enugu State
has fired production companies to produce at a low capacity, with high price,
since the fuel which is used as a nourishing material to the machine which is
suppose to be used in production is scarce to get and when gotten the price is
300% (three hundred percent) increase more than the former price. This is why
most companies’ products are costly and these tend to scare customers away from
the products. Also from the statistics available transportation costs have gone
up considerably, making it difficult for customers to get to their various
destinations.
A journey that normally costs ten Naira
(N10) a drop now costs twenty Naira (N20) to forty Naira (40) a drop, which
represents a total increase of 200 percent. Conversely the daily spending of
the average citizen has increased due to the sky rocketed increases in
foodstuff, which was occasioned by the fuel scarcity.
Furthermore, lateness to duty or
offices has been heightened as a result of lack of commuter buses and taxis to
take them to their various destinations.
To this end, the effect of fuel
scarcity is so great that most indigenes of Enugu State and non-indigenes of
Enugu State metropolis are suffering untold hardship.
1.2 Problems of Subject Matter
Problems associated with the effect of
fuel scarcity in Nigerian are as follows:
Lack of
Qualified Personnel
Poor
Management and Maintenance
Hoarding of
Fuel
Inconsistent
and Poor Government Responses
All these draw a set back on the smooth
running of fueling supply. Hoarding fuel is a big problem because it makes some
drivers to pack their cars at home and break to where they are going or enter
transport. It is also a problem to students because sometimes student don’t go
to school simply because there is no fuel in the filling stations because
vehicles cannot move without fuel.
1.3 Objective of this Study
The objective of this study is to
provide solutions to the above problems the following hypothesis will be looked
into.
Good
management and maintenance
Consistent
and good government response
Government
should enact embark on policies
that will facilitate easy flow
Government
should try and reduce the price of
fuel to be affordable by everybody.
1.4 The Importance of this Study
Fuel scarcity is a big problem now in
Nigeria and it has caused so many things in our country Nigerian. The
importance of studying the area is:
To know how
to organize things in other to achieve the set down goals or objectives.
The fuel industry is not a place to
exhibit favoritism.
There was a
case of a young daughter of a Minister,
a graduate of English in one of the Nigerian Universities. She was employed in
the fuel industry to head a department tagged with the allocation of fuel to
different parts of the country. Is she supposed to be there? No is the answer.
She messed up the economy by not allocating purely on the basis but on a system
no one can explain. “Tell on 24 Nov. 17, 1996”.
Moreover, the important is to know how
to handle the facilities used for production of fuel;
to avoid the
increasing breakdown of facilities and consequently going up in flames like
Kaduna refinery. The fuel is very important product to the country’s economy
and for its economic attributes to work out well, it must be readily available
anytime it is needed.
Another importance of studying the
areas is to know knowledge of does and don’t of the fuel industry not to be
interested on how to make our own quick money by all available means.
To stop hoarding of fuel so that there
will be easy flow of fuel, because this hoarding of fuel contributes in
punishing the innocent citizens by creating artificial scarcity.
To stop struggling of fuel because it
is now a common thing in the society. The news is not new to the people.
In 1992
Nigerian lost about N54.8 million out of N22.1 million due to smuggling of
fuel.
1.5 Research Question
This study
will be guided with some basic research question which will be administered to
the respondents.
1. If hoarding and smuggling of fuel should stop
especially in Enugu, can fuel scarcity stop equally.
2. Can any of our President’s contribution in
Nigerian especially in Enugu help to stop fuel scarcity?
3. Can none payment of salaries to the
distributors of fuel lead to fuel scarcity?
4. If the government should reduce prices of
fuel, will fuel scarcity continue?
1.6 Significance of the Study
This study
will be of great benefit to the Nigeria National Petroleum Company (NNPC) who
is not the sole cause of fuel scarcity. This study will help them to find out
those people or those things that contribute to fuel scarcity and take drastic
measure to combat them.
This study
or research will be of immense benefit to the government because if there is
fuel scarcity, it then means that crude oil is also insufficient by this; the
government will not have enough oil to transport in order to get foreign
exchange.
This study
will also be of great benefit to car owners and businesses because if the fuel
scarcity is rectified and resolved all business will start improving and
progressing.
From this
study, the rural drivers will find it easy to transport their farm product from
the rural area to urban zones because the cost fuel will be on a lower side.
Also from
those research work, it will be kind of encouragement. In that when the cost fuel
is low, the cost of transportation will be also low, and these can lead also to
low price of commodity been transported.
1.7 Limitation of Study
The research
work is limited to fuel scarcity in Nigeria with a case study of Enugu
metropolis. This study was carried out purely as an academic exercise and
therefore could neither receive any financial support form the government or
any private enterprise. The limited financial resources of the researcher is
thus a major handicap and thereby resulted in limiting the study only to Enugu
metropolis. Time factor also proved a major constraint.
1.8 Definition of Terms
It is a person who makes a regular
journey of some distance between home and work especially by trains.
Rocketed
It is the rising quickly and suddenly
of the price.
Consignment
It is the act of sending something to
person or place for sale
Economic
Punishment
of another country by reducing or stopping trade with it.
Effect
Change
produced by a action or cause
Fuel
Mineral
resources that provide nuclear or internal energy requirement.
Scarcity
Something
not been enough, that is difficult to obtain and much less then is needed.
Depot
A place
where fuel or oil is being store. Or A warehouse of anything.
Middlemen
Trader who
passes goods form the producers or form place where they are produce to the
final consumer or final buyer.
Metropolis
It is a chief city or the capital city
to a country
Rampant
Widespread and impossible to control.
Constraints
It is the threat or use of force to
direct the action of others.
Hitch
It is to fasten by looking a rope or
metal part over another object.
Mobility
It is the state or quality of being
movable or able to move quickly and easily. Not fixed on one position.
Smuggling
It is the act of taking from one
country to another unlawfully especially goods without paying the necessary
tax.
Hoarding
It is the act of storing secretly
especially more than is allowed.
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