MARKETING OF PETROLEUM PRODUCTS ABSTRACT This research work dwells marketing of petroleum product in Edo state. The objectives of the study are to ascertain the extent to which marketers are satisfied with the supply of petroleum products, to determine the extent to which marketers are involved in unfair practices and to identify the critical factors that limits the effectiveness of petroleum products distribution. The survey research design was used and a total of 50 questionnaires were administered and used. The finding reveals that marketers are significantly satisfied with the supply of petroleum products,and significantly involve in unfair practices and also, there are critical factors that limit the effectiveness of petroleum distribution in Edo State The study concluded that a lot need to be done to resuscitate the oil industry so as to alleviate the suffering of the people and to better foster economic development, it is hereby concluded that the research has answered the questions to the distribution difficulties and major challenges faced by marketers in the state. TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION 1.1 Background to the Study - - - - - - 1.2 Statement of the Problem - - - - - - 1.3 Objective of the study - - - - - - - . 1.4 Research questions - - - - - - - 1.5 Research Hypothesis- - - - - - - 1.6 Scope of the study - - - - - - - 1.7 Limitation of the Study - - - - - - 1.8 Structure of the Study - - - - - - - CHAPTER TWO: LITERATURE REVIEW 2.1 Conceptual framework - - - - - - 2.2 Petroleum Products Marketing and the Nigerian Economy - - 2.3 Theory of Demand and Supply - - - - - 2.4 Exhaustible Resources Theory - - - - - 2.5 Refining and Distribution - - - - - - 2.6 Oil Marketing and Export Process - - - - - 2.7 Gas Supplies and Transmission System - - - - 2.8 Petroleum Products Pricing - - - - - - 2.9 Haulage of petroleum products in Nigeria and elsewhere - - 2.10 Petroleum products distribution in Nigeria and the role of oil marketers- 2.11 Review of Empirical Literature - - - - - CHAPTER THREE: METHODOLOGY 3.1 Introduction - - - - - - - - 3.2 Research Design - - - - - - - 3.3 Population of Study - - - - - - - 3.4 Sources of Data - - - - - - - 3.5 Sample Size - - - - - - - - 3.6 Sampling Technique - - - - - - - 3.7 Research Instrument - - - - - - - 3.8 Reliability of the Research Instrument - - - - 3.8.1 Validity of the Research Instrument - - - - - 3.9 Method of Data Analysis - - - - - - CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS 4.1 Introduction - - - - - - - - 4.2 Presentation of Data - - - - - - - 4.3 Test of hypothesis - - - - - - - - 4.4 Discussion of findings - - - - - - - CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.1 Summary of findings - - - - - - - 5.2 Conclusion - - - - - - - - 5.3 Recommendations - - - - - - - BIBLOGRAPHY - - - - - - - - APPENDIX I - - - - - - - - - APPENDIX II - - - - - - - - LIST OF TABLES Table 4.2.1: Distribution of Questionnaires - - - - - Table 4.3.1 How frequent do you get petroleum products - - - Table 4.3.2 : How long does it take you to get your petroleum products- - Table 4.3.3 How satisfied are you with the frequency of supply - - Table 4.3.4 Do you usually get the quantity you desire each time you place order- Table 4.4 Below examines responses of respondents as regards the extent to which marketers are involved in unfair practices - - - Table 4.4.1: Ranking of response to challenges that affects petroleum product- Table 4.4.2 Ranking of response to factors which hinder the smooth running of business and the extent to which respondents take them into consideration- Table 4.5 The final third objective of this study was to identify the critical factors that limit the effectiveness of petroleum distribution - - - Table 4.5.1 On the average how often do you buy adulterated product from the depot or your suppliers - - - - - - - Table 4.5.2 To what extent to what extent do you think dealers adulterate petroleum products - - - - - - - - Table 4.5.3 To what extent do you think the adulteration of petroleum products can be tackled successfully - - - - - - Table 4.5.4 To what extent do you think petrol dealers/markets are involved in the hording (artificial scarcity) of the petroleum products - - Table 4.5.5 To what extent do you think petrol dealers are involved in the adjusting their meters gauge - - - - - - - Table 4.6: Class of marketers - - - - - - - Table 4.7: How long has the petrol station been in existence - - - Table 4.8 What Petroleum products sell - - - - - Table 4.9 How frequent do you get petroleum products - - - Table 4.10 Are you faced with any challenges during transportation of products to destination - - - - - - - - Table 4.11 What in your opinion is the cause of scarcity of petroleum Products in Nigeria - - - - - - Table 4.12 To what extent do you think government should depend on local supply fuel for the control - - - - Table 4.13 To what extent do you think foreign supply should be used- - Table 4.14 To what extent do you need financial support from government to serve your customer - - - - - - - - Table 4.15 What form of assistance do you need from the government - Table 4.16 To what extent do you think the activities of vandals are affecting your business negatively - - - - - - Table 4.17 To what extent do you think government should continue to subsidize supply of petroleum product - - - - - Table 4.18 How satisfied are you with the monitoring service of petroleum Task force - - - - - - - - Table 4.19 How satisfied are you with the income generated from the business- Table 4.20 To what extent can you report unfair/corrupt practices of co-dealer- Table 4.21 To what extent do you think a marketer is protected after making report of illicit and corrupt practices of co-dealers - - - - CHAPTER ONE INTRODUCTION 1.1 Background to the Study Nigeria oil and gas sector has predominantly dominated the pivot of Nigeria economy for decades. The operators are in the Downstream, Midstream and upstream saddled with opportunities and challenges. The on going reform in the oil and gas sector through the proposed Petroleum Industrial Bill (PIB) will reshape the totality of Nigeria oil and gas sector for the benefit of Nigerians. The country is blessed with abundant natural resources of which petroleum products are important factors in her domestic economy. According to Odularu (2008), Nigeria is the eight among the world’s oil producing countries. The Nigerian economy is heavily dependent on petroleum products, which account for over95 percent of export earnings and about 85 percent of government revenues (World Bank Report, 2010). Petrol or Premium Motor Spirit (PMS), Diesel and Kerosene are the basic products used in road transport services, manufacturing industries, power generation, household cooking and private vehicles. The petroleum marketing companies’ sourced products themselves, transport and distribute them using their own distribution and retail outlets. There are now in place about 3000km of petroleum products pipelines network, 21 storage depots, 9 Liquefied Petroleum Gas (LPG) depots and associated facilities that have been added to facilitate production, storage, distribution and marketing of petroleum products to meet growing demand. However, pipeline distribution has been suffering persistent disruption in the decade. About 2,258 incidences of pipelines vandalization was reported in 2005 by NNPC as against 1121 cases in 2000. In 2005, NNPC recorded a loss of over 650,000 metric tons of products to theft through pipelines vandalization and explained that it was unsafe to pump products through pipelines (Ntiense, 2006). In Nigeria, about 80% of petroleum movements are done on the road and there has been a steady growth in number of road tanker vehicles. There is an estimate of 5,000 tankers involved in wet cargo haulage, to move about 150 million litres of fuel and 2,500 trailers in dry cargoes plying Nigeria roads daily. However, bad roads, poor road networks and also various hindrances such as delays at police and customs check points obstructs an effective and efficient logistics (Olagunju, 2011), all of which are a major challenge to the marketers of the products. Since the collapse of the rail system in Nigeria, road haulage has assumed a wider dimension and has become the most utilized way of intercity movement of goods and services, which has also led to the inflation of transport cost. 1.2 Statement of the Problem On various occasions in the period under review: (2000 to 2015), BeninCity have experienced frequent scarcity and acute shortages of fuel. The major problem was that some of the petroleum products, especially the premium motor spirit (PMS) were very limited in the market it hardly reach the final consumers. Therefore, motorists spent hours, sometimes days queuing at the filling stations. Most motor parks were empty; offices were closed as people moved out in search of fuel. Travellers’ and inhabitants of towns and cities found it difficult to get transport services to different destinations. Nigeria seems to be a society that is constantly in petroleum scarcity crises. It is regrettable that in the nation nothing follows the normal pattern; petroleum products prices are arbitrarily increased several times in a short period and each time government has given flimsy reasons for the upward adjustment (Dike, 2011). However, the leaders do not seem to realize some of the distributive consequences of the constant petroleum price hikes in the nation that has for sometimes now been experiencing decay of infrastructure, high crime rate, poverty and weak economy. Many studies like Raymond (2010), Ehinomeri and Adeleke (2012) and others were carried out to investigate the implication of the effect of petroleum price changes on different variables such as the effect of price hike on poverty, on economic development, on inflation and many other variables. Based on the foregoing therefore the challenges faced by petroleum marketers in Benin have been summed up below: Pipeline vandalisation. Trucking of petroleum products from coastal depots to hinterland. Scarcity of petroleum products in Nigeria. This study focused on investigation of the challenges of marketing petroleum products in Nigeria using Edo state as a case study 1.3 Objectives of the Study Generally, this study seeks to explore the challenges faced by petroleum products marketers in Edo. However, it is set to achieve the following specific objectives: i. To ascertain the extent to which marketers are satisfied with petroleum products supply ii. To find out the extent to which marketers are involved in unfair practices. iii. To identify the critical factors that limits the effectiveness of petroleum distribution. 1.4 Research Question i. What is the extent to which marketers are satisfied with the supply of petroleum products? ii. What is the extent to which marketers are involved in unfair practices? iii. What are the critical factors that limit the effectiveness of petroleum distribution? 1.5 Research Hypothesis In view of the foregoing study, with respect to The Challenges of Petroleum Marketers in Marketing Petroleum Products in Nigeria the following hypothesis will be tested: H1: marketers are not significantly satisfied with the supply of petroleum products in Edo State H2: marketers do not significantly involved in unfair practices in Edo State H3: there are no critical factors that limit the effectiveness of petroleum distribution in Edo State. 1.6 Scope of the Study The main focus of this study is to investigate the challenges faced by petroleum products marketers in Benin City. The selection of these location was based on the fact that majority of the petroleum marketers have their base in Benin City. The specific petroleum products considered in this study are Premium Motor Spirit (PMS), Automotive Gas Oil or diesel (AGO), and Dual Purpose Kerosene/House Hold Kerosene (DPK/HHK). The issues that will be addressed in the study are cost per km ton; timeliness of delivery, and constraints associated with petroleum products haulage. 1.6 Significance of the Study The study is justified in that it promised to highlight some of the challenges faced by marketers of petroleum products in the Benin metropolis as well as attempt to proffer solutions to these problems The study further shows that the nation stands to gain significantly by ensuring that the network of pipelines and depots are made to work and the railway is resuscitated. The study is an eye-opener to policy makers and should make them appreciate the need to put in place appropriate policies to correct most of the anomalies faced by these marketers in Benin and Nigeria as a whole 1.7 Limitation of the Study Some of the limitation that might occur in the course of the study might be the collection and collation of data on the challenges faced by petroleum products marketers in Benin for the entire period of our study. Due to this constraint, we therefore propose the use of primary data with structures questionnaire been the major instrument of data collection for our study. The shortage of time available to carry out a detailed analysis will also pose a serious constraint on this study as the researcher has to combine challenging final year work with the research. And lastly, the Money available to carry out this study effectively was not sufficient hence; finance availability posed another limitation to our study. 1.8 Structure of the Study The study is organized into five chapters. Chapter one is the introduction. Chapter two review the literature relating the challenges faced by petroleum products marketers in Nigeria. Chapter three entails the model specification, methodology and sources of data. Chapter four is the presentation, analysis and interpretation of results. Finally, chapter five consists of the summary, recommendation and conclusion of the study.
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