Deregulation of the downstream petroleum
sector refers to the reduction, or removal of government control, rules and
regulations that restrain free operational activities in the sector. This does not mean a complete elimination of the
laws that govern smooth operation of activities in the downstream oil or
petroleum sector. But in a non- shell, this means the role of government in
this sector will be limited mainly to providing regulatory oversight.
Deregulation of the downstream petroleum sector will
improve the efficient use of scare economic resources by subjecting decision in
the sector to the operation of the forces of demand
and supply. This will
attract new seller, buyers and investors into the market, thereby increasing
competition, promoting overall higher productivity and consequently, lowering
prices over time. The ultimate effect
of this chain of activities is increased gains for the people of Nigerians who
would be getting the most out of their
natural resources. The government
deregulation in the telecommunication,
there has been a reduction in call tariffs. The some similar
success has also been achieve by the
banking sector which brings the emergence of
stronger and better banks in the country, with unprecedented spread to several other
African Countries. These are classic
examples of kind of positive effects of deregulation oil sector.
Deregulation of the down stream sector will further
reduces economic waste and lighten social burdens caused by government control.
For several years Nigeria experienced scarcity of
petroleum products that crippled
national economic activities and increased the cost of doing business, several. The resulting scarcity inevitably leads to a flooding of the market with adulterated products, which
usually lads to the damage of
vehicle and machines. Several occasion,
and in many part of the country particularly outside of the big
cities and towns, a majority of Nigeria have been forced to buy petroleum products
at 300%
higher than their original price deregulation will help this price scalping and a host
of associated problem related to
the sector. Deregulation of the
petroleum down stream sector
promises to be the
way forward in expanding opportunities for
economic growth and a competitive down stream oil sector if regulation
in the downstream sector is limited to
oversight and supervisory functions, aimed
at guaranteeing quality of
products and preventing consumers exploitation
then the process of deregulation could help achieving greater cost effectiveness.