Project Description

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Nigeria is Africa’s largest oil producer and fifth supplier to the United States. She is rated among the 12 biggest oil producers in the Organization of Petroleum Exporting Countries, (OPEC), contributing about 2.5 million barrels per day (bpd) to the OPEC basket. She is the sixth largest oil exporter, “with a total of 173 oil blocks in operation, according to the Department of Petroleum Resources (DPR)” (Eboh, 2013:1). The OPEC’s Annual Statistical Bulletin 2012 shows that Nigeria has proven crude oil reserves of 37.2 billion barrels, while proven natural gas reserves stands at 5.154 million cubic metres, making it the eighth in the world gas reserves and first in Africa. Yet the country depends on fuel importation to meet local demands of petroleum products.

Crude oil production and export commenced in Nigeria in 1958. It accounted for 7.1 per cent of total exports in 1961, which was dominated at that time by cocoa, groundnut, rubber and palm oil, in that order. In 1965, oil constituted 13.5 per cent of the nation’s export earnings, and by 1970, it had become the leading source of foreign exchange, accounting for 63.9 per cent. By 1979, petroleum sales had completely overshadowed non-oil exports, as it then contributed about 95 per cent of the country’s export earnings. In 2012, oil and gas export accounted for almost 96 per cent of export earnings. Also, in 2013, “Nigeria budget is framed on a reference oil price of $79 per barrel, providing a wide safety margin in case of price volatility” (U.S Energy Information Administration (EIA), 2013:1). No wonder, Central Bank of Nigeria (CBN) reported in 2010 “that petroleum accounted for approximately 96 per cent of the country’s foreign exchange and 76 per cent of the total government revenue” (CBN, 2010:3). It is no surprise then that it was observed that “total oil revenue generated into the federation account amounted to N34.2 trillion while non-oil revenue was N7.3 trillion, representing 82.36 per cent  and 17.64 per cent  respectively between 2000 and 2009” (Ogbonna and Ebimobowei, 2012:34).

However, despite the above abundant oil resources and unprecedented wealth, “Nigeria depends eighty five (85) per cent and above on importation of petroleum products” (Nwachuku, 2012:2), with massive infusion of subsidies, introduced in 1973 to stabilize the price of fuel and insulate Nigerians from the wild fluctuation of global market price. Ploch (2013:9) observed that “Nigeria imports an estimated $10 billion of fuel annually for domestic consumption”. In 2012, “Nigeria consumed 270,000 bbl/d and in 2013, she imported slightly more than 84,000 bbl/d of petroleum products” (U.S. Energy Information Administration (EIA), 2013:13). She imports fuel from far away countries like United States, United Kingdom, Venezuela, Canada, Brazil, Netherlands and the Persian Gulf countries. The more worrisome is the fact that “Nigeria imports fuel from non-oil producing countries like Niger Republic, Cote d’Ivoire, Amsterdam, India, Korea, Finland, Singapore, France, Israel, Portugal, Italy, Sweden, Tunisia, and many more” (Chimezie, 2009:7).

Efforts to increase the refining capacity of the four refineries at Port-Harcourt, Warri and Kaduna in Nigeria for the past 40 years have proved abortive as subsidy on imported products became an avenue for patronage by successive Nigerian governments to their relatives and cronies. For instance:

From 2006-2011, about N3.7 trillion was spent on subsidy…In 2011, N1.348 trillion was spent between January and October and it is expected to reach N1.436 trillion by the end of the year. This represents 30 per cent of total Federal Government Expenditure; 118 per cent of the capital budget; and 4.18 per cent of GDP (Okonjo-Iwuala, 2011:2).

Successive civilian and military administrations in Nigeria depend mostly on the importation of  fuel. At independence in 1960, oil industry remained entirely in the hands of International Oil Companies (IOCs), who controlled production, importation and shipment of  fuel and pay taxes and royalties to Nigerian government. As such, Nigeria depended 100 per cent on these IOCs till 1973 for her fuel importation which is taken from Nigeria, processed, imported, and supplied to various places in Nigeria by these IOCs. Onimode (1983:87-90) attested to the above fact by stating that, “in road haulage, virtually all oil tankers for petrol haulage through the country were foreign owned until 1973”. By 1971, the Nigerian government was able to import fuel through the Joint Venture (JV) participation agreement between the IOCs and Nigerian National Petroleum Corporation (NNPC) which represents the Nigerian government. NNPC sold its own share of oil allocation in the international market and uses the proceeds to import  petroleum products. Nwokeji (2007:33) noted that “with the free allocation, NNPC is able to subsidize the products”.

Currently, NNPC is allocated 445,000 barrels per day (bpd) of crude oil known as “domestic crude allocation” and is intended to be processed by the 4 refineries to supply about 53 per cent to the domestic market and the SWAP/offshore processing arrangement of the balance of 47%. The above 53 per cent allocation to the NNPC is sufficient to provide the nation with the following products: “40 Million Litres Per Day (MLPD) of Premium Motor Spirit (PMS); 10 MLPD of kerosene House Hold Kerosene (HHK); 8.97 MLPD of Diesel Automotive Gas Oil (AGO); 0.62 MLPD of Liquefied Petroleum Gas (LPG) and 2.31 MLPD of Fuel Oil (FO)” (House of Representatives Ad-hoc  Committee  Reports (HRACR), 2012:9). In practice, the refineries meet at best “about 15 per cent of domestic demand” (EIA, 2010). This implies that over 80 per cent of petroleum products are imported. With this method, these civilian/military administration are able to sustain Nigeria’s political economy.

However, joining the Organization of Petroleum Exporting Countries (OPEC), has two noticeable effects on the country’s political economy. First, OPEC required member states to nationalize the oil industry. More far-reaching than that, Nigeria, in fact, came up with a sweeping, economy-wide nationalization program, “requiring all investment in the economy to have a minimum of 60 per cent Nigeria equity participation” (Nwokeji, 2007:33).

Second, it gave rise to the establishment of the Nigeria National Oil Company (NNOC) which effectively ensured direct marketing of its share of crude oil in 1971 and also direct importation of fuel from any country of her choice. Suspicion of corruption in importing and selling of crude oil led to the dissolution and replacement of NNOC by the General Olusegun Obasanjo military regime (1976-79), with Nigeria National Petroleum Corporation (NNPC) in 1977, following the recommendations of the panel set up by him to probe the company. With the establishment of NNPC by Decree 33, the Corporation has since then been saddled with full control of the activities covering the upstream, midstream and downstream sectors of the petroleum industry in Nigeria.

The civilian government of Shehu Shagari (1979-1983), imported an average of 71.5 per cent  (NNPC Annual Statistical Bulletin 2005 and 2006) of  fuel into Nigeria. The regime of General Buhari imported an average of 69.2 per cent   (NNPC Annual Statistical Bulletin 2005 and 2006) of fuel in Nigeria. General Babangida’s regime (1985-1993), imported an average of 89.4 per cent  (NNPC Annual Statistical Bulletin 2005 and 2006) of  fuel in Nigeria. He was the first President to popularize the word “subsidy” in 1987. He announced the removal of 80 per cent  of subsidy. When General Sani Abacha (1993-98) took over in another coup in 1993, fuel importation increased in magnitude and intensity with massive infusion of subsidies. For instance, he imported an average of 71.5 per cent  (NNPC Annual Statistical Bulletin 2005 and 2006) of  fuel in Nigeria. Like his predecessors, he removed subsidy and used it to establish Petroleum Trust Fund (PTF) to manage the extra money from the subsidy.

Nigeria returned to democracy in 1999 with Olusegun Obasanjo elected as President ending almost 16 years of military rule. Obasanjo abolished the monopoly of importation of fuel by NPPC and announced the take off of liberalization and deregulation of the oil industry by September 30^th 2003, followed by the setting up of Petroleum Stabilization Fund later tagged Petroleum Support Fund (PSF) to finance subsidies. The incessant crises in the Niger Delta region, militant attacks, blowing up of oil facilities and hostage-taking of oil workers paralyzed the oil sector, making Nigeria to depend solely on importation of fuel.  Thus:

NNPC Group Managing Director (GMD), Mr. Funso Kupolokun,  declared that Nigeria depends 100 per cent on imported  petroleum products for its fuel needs….that all the nation’s four (4) refineries in Warri, Kaduna and Port Harcourt were closed and that Nigeria is importing all of its fuel because its oil refineries are not working, even though $1 billion (about 129 billion) has been spent on Turn Around Maintenance (TAM) of the plants in the last eight years…they were closed after militants fighting for local control of the Niger Delta’s oil wealth blew up the main feeder pipeline (Izere, 2006:1).

The Yar’Adua administration’s amnesty deal in the Niger Delta resulted in minimal oil refining production in 2009. For example, “the Port-Harcourt refineries operated at about 9 per cent of capacity compared with about 18 per cent in 2008. Similarly, the Kaduna refinery operated at about 3 per cent of capacity compared to about 20 per cent in 2008. This reflected in the significant decrease in the output of refined petroleum products that was heavily subsidized by about 90 per cent of petroleum products needed in the country” (Mobs, 2011: np). In 2010, “the ailing refineries with a combined capacity of producing 445,000 barrels per day could only refine a mere 80,757 metric tones of petroleum products; 19,967 of PMS, 53,223.4 of diesel and 7,567 of liquefied petroleum gas” (Ololade, 2011:47). The balance volume of 8.1 million of petroleum products was imported into the country.

In the early years of Jonathan’s administration (2011-2012), “the state of refineries had considerably worsened and operated only 20 -30 per cent capacity” (Salau, 2012:46; Agande 2012:5), and importation of petrol increased to 70 per cent and above. This era witnessed worsened importation of petrol. The Lawan led Ad-hoc  committee discovered that in 2011:

Nigeria needs 35 million litres daily and government pays subsidy on 59 million litres daily, implying that the Federal Government was subsidizing as much as 24 million liters of petrol that Nigerians did not use daily, which lawmakers believe end up being smuggled out of the country, where some officials reap heavily at the expense of the nation… with the government paying N76 in subsidy, to lower the cost of fuel imported into the country, that translated to N1.9 billion daily, and N667 billion annually. N667 billion are wasted annually for importing petrol never consumed by Nigerians (HRACR, 2012:109).

Nigeria has subsidized fuel importation more between 1999 and 2010 than the past 35 years before 1999. Also, a parliamentary probe, in April 18^th 2012, found “that graft in the fuel subsidy scheme cost Nigeria $6.8 billion between 2009 and 2011” (Agande, 2012:5). Hence:

The oil sector is utilized as a conduit for patronage and cronyism, such that allocation of oil blocs and appointment as fuel importer/marketers are seen as spoils of office freely deployed by successive Nigerian governments to facilitate unbridled and mindless looting of the nation’s resources (Oluwajuyitan, 2011:2).

Through patronages, the ruling class makes huge sums of money through importation of fuel by way of inflation of contracts, importation of substandard fuels, underreporting of fuel import, to the neglect of building of new refineries in Nigeria.

In this light, this study investigates the relationship between the dynamics of the political economy of importation of fuel and refineries development in Nigeria

1.2 Statement of the Problem

The upstream oil and gas sector in Nigeria, involving exploration and production (E&P) of crude oil, condensates, natural gas or associated gas from the well, has attracted vast competing investors around the world, and obviously become the Jewel in the African oil crown, with the production capacity of 2.4 million to 2.85 million barrels per day in the past five years, as a result of new production from the deep offshore-Bonga, Erha and Abo. The seven early traditional MNOCs partners in Nigeria are: Shell-BP Petroleum Development Company of Nigeria, Gulf (now Chevron), Mobil (now Exxon-Mobil), Agip, Texaco and Elf (now Total). These MNOCs have been scrambling for “388 oil blocks in the Niger Delta, out of which, 173 of them have been awarded to individuals and corporations, while 215 blocks were yet to be awarded, according to Department of Petroleum Resources (DPR)” (Eboh, 2013:5). Of the 173 so far awarded, Nigerians owned 90 blocks while foreigners owned 83 blocks. These MNOCs pay the federal government royalties through the Joint-Venture (JV) agreement between the federal government and the MNOCs. However, since 1999, there is an entry of a number of Asian National Oil Company (ANOCs) from China, Taiwan, India and South Korea to acquire oil blocks in Nigeria which Vines et al (2009:7) argued “proved to be controversial but not for the usual reasons… to entice ANOCS for their commitment to invest in downstream and infrastructure projects”. All these MNOCs according to the data released in August 2013 by DPR “accounted for 90 per cent of Nigeria’s Total Crude Oil Project ion while Indigenous Oil Companies accounted for only 10 percent” (Eboh, 2013:24).

The downstream oil and gas sector, involves refining the products from crude oil and distribution until it reaches the final consumer. The Nigerian government recognized the importance of the downstream sector of the petroleum industry which  necessitated the building of four state owned refineries with an installed capacity of 446,000 barrels per day that scarcely function despite repeated investments in Turn-Around Maintenance (TAM). Unfortunately, problems ranging from sabotage, lack of timely TAM, poor management and endemic corruption ensured that these refineries operate far below their capacities, at times as low as 30 per cent of installed capacity. For instance, between 1999 and 2007, Funsho Kupolokun, NNPC’s Group Managing Director (GMD) during Obasanjo’s administration, reportedly testified to the Nigerian House of Representatives in January 2007 that “NNPC had spent over $ 1billion on its refineries over the previous eight years” (Isine and Nwankwo 2007:5; Daily Champion, 2007:3). Also, in “2009, $20 million was spent on TAM on Kaduna Refinery” (Nwachukwu, 2012:2). In October 2012, Alison Madueke, current Nigerian Minister of Petroleum said “government would spend $1.6 billion on turnaround maintenance to get the refineries operating at 90 per cent capacity by 2014” (Agande, 2012:5). When the four refineries operate at full capacity, they can only meet about 60 per cent of national demand for petrol. “In the past 20 years or so, they have operated under 40 per cent capacity and currently supply only about 20 per cent of Nigeria’s gasoline demand” (Balouga, 2012:33). The above statement was attested by the 2006 Nigerian Extractive Industry Transparency Initiatives (NEITI) report which emphasized the need for strengthening the refining capacity of the 4 refineries in Nigeria to meet domestic demand. The report, among other things, stated that “domestic demand for premium motor spirit (PMS –petrol) has risen so much that existing refineries cannot meet it even if they produce at full capacity” (NEITI, 2006:55). This implies that ‘‘for a considerable period into the future, Nigeria will have to import a significant proportion of its PMS product needs’’ (NEITI, 2006:56).

Over the years, the Nigerian government tried to deregulate the downstream oil sector to attract investors to resolve the lingering fuel scarcity. Successive civilian and military government in the 1970s and 1980s after joining the OPEC, concentrated on nationalizing the existing oil industry into a state-owned enterprise through the acquisition of shares. For instance, “in the first Joint Venture (JV) participation agreement in 1973, Federal government acquired 35 per cent equity share in the oil companies with NNOC as its JV manager. Government equity shares increased to 55 per cent in 1974 and 60 per cent in 1979 except in Shell –BP where the share rose to 80 per cent following the nationalization of BP shareholding” (Adiele, 2009: 6). Nigeria was not the only country that created state-owned enterprise. “In the 1960s and the 1970s, many of the newly independent African countries did the same” (Okonjo-Iweala, 2012: 36).  All these are, however, followed by “corruption which escalated in intensity and magnitude, yielding huge rewards for those connected to government” (Thurber et al, 2010:10). Babangida’s Presidency (1985-93) opened up the upstream oil sector to private Nigerian companies starting with the first public bidding for oil blocks in October 1990 without extending that to downstream sector. “This was also the first regime to consider privatizing the refineries as a way to resolve fuel scarcity” (Nwokeji, 2007:19).

Abacha (1993-98) had personal interest in the deregulation of the downstream oil sector, rather than the national interest of solving the excruciating fuel scarcity during his regime. He awarded licenses to two Private Firms-Qua Iboe Petroleum Refinery Limited and Brass Refinery Limited, to process 200,000 and 100,000 barrels per day, bpd, of crude oil respectively. David West, quoted in Ajanaku (2007:7) noted that “the licences abused the privilege by lifting crude oil rather than building refineries”. The interim government of Ernest Shonekan in 1993 pushed deregulation further, putting the refineries at the first line of its implementation, but the government was over thrown before it settled down. “The Abubakar Junta favoured partial privatization of the refineries and eventually partial privatization of all other NNPC subsidiaries and of the government’s stake in the JVs” (Nwokeji, 2007:96). For various reasons, however, no sustained results attended these plans of deregulation and privatization of refineries to attract investors in the development of refineries in the downstream sector. “For the Shonekan and Abubakar interim regimes, time was clearly a factor, but for the most part (General Obasanjo, Babangida and Abacha) shortage of will, vested interest, and naked corruption have been among the biggest obstacles” (Nwokeji, 2007:96).

Since 1999 change to democratic governance, little or nothing has been achieved in the building of new refineries to resolve the fuel scarcity in Nigeria’s downstream oil sector. The civilian regime of Olusegun Obasanjo (1999-2007) pursued substantial reforms in the development of refineries, yet in many ways business continues as usual. For instance, in 2001, following the recommendation of Special Committee On Petroleum Supply and Distribution (SCPSD), popularly called “mantu palliative” set up by Obasanjo, he announced the take off of liberalization and deregulation of the downstream oil sector, the setting up of the Petroleum Stabilization Fund, later tagged the Petroleum Support Fund (PSF), and the abolition of NNPC monopoly on importation of fuel. Yet, instead of these policies attracting investors in the building of new refineries in Nigeria, they succeeded in increasing the exploitative tendencies of the ruling class on the public treasury.

Also, in May 2003, Former President Olusegun Obasanjo issued 18 licenses to private investors to establish private refineries in the downstream sector. “Since these companies were still to show any tangible results in 2006, the Department of Petroleum Resources (DPR) withdrew the 18 licenses it had already issued” (Busch 2007:4). Also, Obasanjo in an effort to attract investment in the downstream oil sector came up with an initiative of an “oil- for- infrastructure” deal to entice Asian National Oil Companies (ANOCs) from China, Taiwan, India, South Korea and Malaysia. The arrangements are: “China-Core Investment in the Kaduna refinery; construction of double track, standard gauge Lagos-Kano railway; Construction of HEP complex at Mambilla (3 gorges project). Taiwan-core investment in Port Harcourt refinery; unspecified IPP (Power Plant). India-build a Greenfield refinery 180,000bd capacity; build a 2000mw independent power plant; feasibility study for a new east-west railway Lagos to Delta.  South Korea-gas pipeline from Ajaokuta to Kano via Abuja with Spur to Katsina; 2 integrated gas power stations at Abuja and Kaduna; Construction of the Port-Harcourt –Maiduguri railway. Malaysia-2.5 ton per petrochemicals project in Delta with creation of 7000 jobs” (Wong, 2009:6). However, the House of Representatives Ad-hoc Committee set up to enquire into NNPC and its subsidiary for the period of 1999 -2007 (Obasanjo years) recommended the cancellation of these oil blocs awarded to these Asian Companies which was obeyed by Nigerian government on the grounds that “the deals were opaque, that the financial arrangement were unsatisfactory and that due process had not been followed” (Wong, 2009:16). Nigerian ended up with no deal on any refinery for the past eight years of Obasanjo’s administration (1999-2007) to complement her domestic consumption.

The incumbent President, Goodluck Jonathan, in 2011 in a widely publicized press conference promised Nigerians three Greenfield refineries as part of his transformation Agenda to boost the refining capacity of the downstream oil sector. In early 2012, the Federal Government bemoaned the fact that “the three Greenfield refineries may not take off as planned because of some challenges it encountered with foreign investors” (Onyekpere, 2012:2). Also, another new promise was unveiled by Jonathan’s administration through his Minister of Trade and Investment, Olusegun Aganga, on July 2012, when he celebrated the signing of a memorandum of understanding between the Nigeria National Petroleum Corporation and a U.S. –Nigerian, Joint Venture to build six modular refineries with a combined capacity of 180,000 barrels a day at a cost of $4.5bn (about 700bn). “The Joint Venture Group, comprising Vulcan Energy Corp-and Petroleum Refining and Strategic Reserve Ltd signed the MOU to build the refineries in collaboration with state-owned NNPC. Two of the refineries were expected to be completed within 2012” (Onyekpere, 2012:2). Up till this 2014, the company has not moved as far as finding a site and starting construction to meet the deadline of 2012.

Thus, this study focuses on the relationship between the importation of fuel and the persistent neglect of the building of new refineries to meet domestic demand in Nigeria. Scholars on the allocation of  fuel licences and investments in the building of new refineries (NEITI, 2006; Nwokeji, 2007; Gillies, 2009; Thurber et al, 2010; KPMG Professional Services, 2010; Oluwajuyitan, 2011; House of Representatives Ad-hoc  Committee Report, 2012; Gboyega et al, 2011; Odeh, 2011 and Sanusi, 2011) harped on patronage allocation of fuel licenses based on private interests, corruption, mismanagement, lack of functional refineries, and looting. However, the relationship between allocation of importation of fuel licenses to independent marketers and discouragement of investors in the development of new refineries, is yet to be given a systematic treatment in Nigeria.

Scholars on fuel importation probes and the challenges to new refineries development (Aminu, 1993; Ola, 1998; Soyede, 2001; Alexander Oil and Gas Connections, 2004; NNPC, 2005; Otedola, 2009; Oniwon, 2009; Finlayson, 2009; KPMG Professional Service, 2010; Odeh, 2011; PENGASSAN, 2011; Okonjo-Iweala, 2011; Nwachukwu and Chike, 2011; Falana, 2011; Afonne, 2011; David-West, 2011; Ishiekwene, 2011; House of Representatives Ad-hoc  Report, 2012; Adejum, 2012; Agbon, 2012; Agbedo, 2012; Igbuzor, 2012; Kolawole, 2012; Adesua, 2012; Onwuemenyi, 2012; Ugolor, 2012; Odumakin, 2012; Aborisade, 2012 and Asobie, 2012), allude to corruption, inefficiency, mismanagement and sabotage in the policy process as the challenges hindering the development of new refineries in Nigeria. However, the structural challenges hindering the development of new refineries indicated by composition of petroleum matters board based on economic interest; lack of deregulation of downstream oil sector; lack of NNPC autonomy; dominance of foreign oil companies in the servicing and maintenance of the four(4) refineries in Nigeria and government policy of leaving oil companies in charge of transferring technical know-how, are not systematically explored.

Scholars on expatriates dominance and the integration of R&D in oil industry (Turner, 1980; Onimode, 1981; Obi, 1997; Hutchful, 1998; Chima et al, 2002; Omoweh, 2005; Wilson, 2005; Obasi, 2005; UNDP, 2006; Fanimo, 2009; Adiele, 2009; Akinyosoye, 2009; Ojo, 2010; Onyeagucha, 2010; NNPC, 2010; Joab-Peterside, 2010;  Edemhanria, 2010; Aturu, 2012 and  Maihankuri, 2012) focused on Nigeria ruling elites collaborating with MNC, Nigeria government complicity on Nigeria Content (NC) policy, lack of political will by Nigerian government to regulate MNOCs, lack of competitive financial capacity and oil major technological advantage and resistance. In this light, the link between the expatriates dominance of fuel importation and distribution and the contradiction of integration of R&D in Nigeria’s petroleum technology development, is yet to attract systematic investigation and analysis.

Overall, scholars on the importation of fuel focus on imperative of lapses in the policy process. However, the relationship between the dynamics of importation of fuel and structural contradictions of Nigeria’s political economy indicated by lack of investment, failure to adequately define the challenges hindering refineries development and integration of R&D in Nigeria’s Petroleum Technology, are yet to be given adequate systematic scrutiny between 1999 and 2013. This study set to investigate or evaluate this gap in the literature based on the following questions:

1. Did the allocation of fuel import licenses to independent marketers discourage investors in the development of new refineries in Nigeria?
2. Did fuel importation probes fail to adequately define the challenges hindering the development of new refineries in Nigeria?
3. Did expatriates dominance of fuel importation and distribution undermine the integration of Research and Development (R&D) in Nigeria’s Petroleum Technology Development?

1.3 Objectives of the Study

            The broad objective of this study is to evaluate the relationship between importation of fuel and the political economy of refineries development in Nigerian between 1999 and 2013. However, the specific objectives of the study are to:

1. Ascertain whether the allocation of fuel import licenses to independent marketers discouraged investors in the development of new refineries in Nigeria.
2. Establish whether fuel importation probes failed to adequately define the challenges hindering the development of new refineries in Nigeria.
3. Determine whether expatriates’ dominance of fuel importation and distribution undermined the integration of Research and Development (R&D) in Nigeria’s Petroleum Technology Development.

1.4 Significance of the Study

This study has both theoretical and practical significance. At the theoretical level, it offers a new insight into the dynamics of importation of fuel and political economy of refineries development in Nigeria. The extant literature on importation of fuel has largely focused on imperative of the policy process as patronage structure, massive corruption, inefficiencies and unsustainable subsidies without adequate systematic treatment of the issue of building new refineries to meet domestic consumption in Nigeria. Similarly, studies that have examined the issue of building new refineries in Nigeria have only looked at it from the obstacles of deregulation of downstream oil sector, fuel subsidy and government regulated pricing which drives away investors, without systematically exploring how private interest rather than public interest in fuel importation account for lack of investment opportunities, integration of R&D and adequate definition of challenges to petroleum refineries technology development in Nigeria. This study examined the effects of allocation of fuel importation licenses to independent marketers, fuel importation probes and the expatriates’ dominance in fuel importation and distribution, on investment opportunities, definition of challenges and integration of R&D in Nigeria’s petroleum technology development.  The ideas and insights generated in this study would add to the body of knowledge on the broad subject of importation of fuel. It will also stimulate further debate and research on the subject of political economy of the development of refineries and its ramifications for Nigeria’s economy and national security.

Practically, this study will provide valuable insights and strategy for policy makers, the Nigerian National Assembly, and practitioners in formulating and implementing practical measures that would address the problem of the development of refineries in Nigeria. Bye and large, the study will contribute to a better understanding of the political economy of importation of  fuel, building of new refineries, fuel subsidy fund (PSF) welfare and security of the citizens.

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