Description
TABLE OF CONTENT
Title page
Approval page
Dedication
Acknowledgement
Table of con tent
List of table
Abstract
CHAPTER ONE
- Introduction
1.1 Background
- statement of the problem
- objective purpose of the study
- scope of the study
- research questions
- significance of the study
CHAPTER TWO
- Review of related literature
2.1 Historical perspective of the oil industry development in Nigeria
- The beginning of petroleum product scarcity in Nigeria
- Petroleum products requirement and in Nigeria
- Causes of petroleum product scarcity
- The role of government its agencies and other organizations in ensuring availability of petroleum product in Nigeria
- Overview of companies in Nigeria
- The concept of capacity utilization
- The impact of petroleum product scarcity on capacity utilization of companies
- Summary of the review literature
CHAPTER THREE
- Methodology
3.1 RESEARCH DESIGN
- Area of the study
- Population of the study
- Sample and sampling procedure
- Instrument for data collection
- Validation of the instrument
- Reliability of the instrument
- Method of data collection
- Method of data analysis
CHAPTER FOUR
- Data presentation and results and summary of result
4.1 presentation and analysis of data
- Analysis of data
- Summary of result
CHAPTER FIVE
5.0 Discussion implication and recommendation
- discussion of result / findings
- conclusion
- implication of the study
- recommendations
- suggestion for further research
- limitation of the study
Reference
Appendix
LIST OF TABLE
4.1 Response rate of the Distributed Questionnaires
- Demographic Characteristics of the respondents
- Distribution of respondents by Age group
- Distribution of respondents y educational qualification
- Distribution of respondents by number of years worked in the organization
- Effects of constrains on the Availability of petroleum products
- Problems militating against the availability of petroleum products.
- Identifying the impact of petroleum products scarcity on the capacity utilization of EMENITE Nigeria limited
- Evaluating the role played by government and its agencies to Ensure the Availability of the products
ABSTRACT
The topic of this project report is impact of petroleum product scarcity on capacity utilization. A case study of Emenite Nigeria limited.
The purpose of the study is to identify the impact of petroleum products scarcity on the capacity of utilization of Emenite Nig. Ltd.
In carrying out this study the researcher will adopt the survey and historical researcher methods. This will enable researcher to access and sample size as well as review of existing literature on the topic. It will also afford the researcher the opportunity to source data from respondents through interviews administration of questionnaires and visit to libraries to review the existing for literature from books periodicals magazines etc.
Answers would be sought to the formulated research questions and the positive hypothesis tested. The research report would be broken down into five chapters.
CHAPTER ONE
1.0 INTRODUCTION:
1.1 BACKGROUND OF THE STUDY
Prior to the discovery of oil in Nigeria in 1956 by shell B.P, coal was the primary source of energy. Oil exploration in Nigeria stated as far back as (1908) although the discovery of minerals was reported the earlier in 1903.
According to Ofurhie (2000;6) the petroleum industry in Nigeria dates back to 1956 when shall D, Archy now shell petroleum development company of Nigeria discovered oil commercial quantities of Oloibiri the present Bayelsa state in 1958.
However, Nigeria national petroleum corporation (NNPC) (1990;2-3) reported that over 12 million barrels of oil was produced in Nigeria all from the Nigeria Basin are, production was increased from a mere 5.000 barrels per day in 1966; The report stated that the increase was through slowed down by the civil war by 1970 daily production level of 2 million barrels per day had been achieved.
In 1965 when Nigeria first petroleum refinery was established in Port Harcourt by shell and the British petroleum (BP) petroleum products used in the country was imported. The supply of the imported petroleum products all over the country was through multination also like shell ESSO, B P among others before the commissioning of the old Port Harcourt refinery in1966. The old port Harcourt refinery was damaged during civil war and the marketers and consumers of petroleum products in Nigeria in depended on external sources without experiencing serious shortages (pipelined products marketing company PPMC 1993 a = 1 )
Recently the marketing companies are supplied most of the products by the Nigeria national petroleum corporation (NNPC) subsiding company pipeline and products marketing company limited (PPMC) that is responsible for the primary distribution of petroleum products in Nigeria.
The importance of petroleum products in Nigeria can be fully appreciated when viewed against the dominant role of the use of the products especially in the manufacturing section and revenues generating from the marketing of the products play in the economy.
Ose (2000;) suggested that apart from contributing the revenues of over 90%of the aggregate of the nations export earnings the productive and social activities in the domestic and industrial sectors of the Nigeria economy many grind to a halt, without revenues and benefits accruing to the nation from sales and energy supply from petroleum products usage.
Since oil revenues and domestic energy consumption took center stage in the nation’s economy government interest in the up stream and down stream sectors of the oil industry have increased tremendously over the years.
The erstwhile department of petroleum resources in the ministry of mines and power in 1970 handles government’s interest in the oil industry. The them Nigeria nation oil corporation (NND) which transformed into Nigerian national petroleum corporation (NNPC) was formed in 1971 primarily to market crude oil and supervise all oil operations in the country.
According to PPMC Aronimic (1994)28) it was in 1988 in major reorganization of NNPC that the government established the pipelines and products marketing company (PPMC) as one of it’s eleven subsidiaries. It was charged with the sole responsibility of ensuring efficient distribution and timely availability of reformed products across the country.
Despite the establishment of PPMC and the high volume of oil production in Nigeria there have been intermittent scar city of petroleum products and its attendant adverse effects on the economy especially in the industrial sector where large volumes of these products are consumed.
PPMC Aronimic (1995: 45) reported that a total of 100, 656, 381barrelsof crude oil to be was received in 1994 from local consumption out of a planned 109,500.00 barrels expected to be consumed leading to a short fall of 8,843, 6519 barrels. Also out of the 19583, 869 metric barrels (tones) of refined product expected from the refineries only 7,853, 304 metric tones reforesting 41% were products out of the targeted local consumption output. To achieve this the refineries processed 7,998,428 metric tones of crude oil 1.e (60,388,131) barrels representing (55.5%) in order to augment the shortfall in the refineries output, the company (PPMC) spent the sum of USD 543.5 million to import 2, 850, 800 metric tones of various petroleum products.
However there is apparent shortfall in quality of petroleum products available for industrial usage and most industrial concerns in Nigeria involved in manufacturing solely on one form of refined petroleum products or the other for their operations infect most heavy and light industry power generating sets are run mainly by these petroleum products. The resultant negative effect of the scarcity of the products have led to the malfunctioning of these industry equipment which resulted in low productivity low capacity utilization and down ward turn on the over all economy and industrial performance in Emenite Nigeria limited.
The failure of the oil refineries in the country and the electricity generating and distribution system occurred due to lack of commitment to maintenance culture (MAN; 1998: P).
The domestic capacity constraint has curtailed the limit of achievement in local raw material souring and employment generation.
The researcher therefore decided to investigate and study the problem associated with petroleum product scarcity on the capacity utilization of companies. A case study of Emenite Nigeria limited.
1.2 STATEMENT OF THE PROBLEM
The rapid decrease in the economic activities in the country resulted by the shortage of petroleum products which was reflected in an accentuated economic recession. The across domestic product (GDP) productivity reduction in industrial capacity utilization and discourage inventory building up expectedly the unemployment problem became more explosive increasing poverty situation profits and investments for expansion diminished.
Further more the collapse of the oil refineries randomization’s of oil pipeline sharp practices in the distribution net work lack of maintenance culture all these gave rise to the acute shortage of products and consequently resulted in under capacity utilization of Emenite Nig ltd.
Moreover it’s necessary for Emenite Nig. LTD to provide for alternative source of power through the purchase of generating sets and plants which are run by the consumption of Automotive Gas oil (AGO) and premium motor spirit (PMS). Also most plants on these factories use one from of lubricating oil or the order for it to function at all. But the scarcity of these products causes the machines to be out of use with its attendant problems. These problems, which the researcher seeks to find answers to.
1.3 PURPOSE OF THE STUDY
The specific purpose of the study includes:
- To identify the problem militating against the availability of petroleum products in Emenite factory.
- To identify the impact of petroleum products scarcity on the capacity utilization of companies: The case of Emenite Nigeria
- To evaluate the role played by government and its agencies to ensure availability of petroleum products.
- To make suggestion and recommendations based on the data generated by this study.
1.4 SCOPE OF THE STUDY
The study covers the impact of petroleum products scarcity on capacity utilization of companies. A case study of Emenite Nigeria limited Enugu. It does not cover other factories in the country.
Although the areas of coverage are Emenite Nig Ltd, its findings are the overall national view of the impact of petroleum products scarcity on capacity utilization of companies in Nigeria.
- RESEARCH QUESTIONS
The critical appraisal seeks to give answer to the following questions
- What makes you think that Emenite Nig Ltd, failed to meet the desired capacity utilization inspire of measures by government to boost the industrial sector.
- To what extent does the non-availability f petroleum product affect the capacity utilization of Emenite Nig Ltd
- What are the role of government and its agencies in helping to ensure availability of petroleum products?
- What should be done to ameliorate the problems of scarcity of petroleum products in order to improve capacity utilization with the industry sector?
1.6 SIGNIFICANCE OF THE STUDY
This study very important in much respect
Moreover the oil sector is a key player in the Nigeria economy. In that regard anything that affects its in variable touches every sector. Therefore to the manufactures it’s of great interest to know possible solution to the persistent and intermittent supply of the petroleum products as a means of enhancing their capacity utilization profit level and output.
Furthermore, since the manufacturing industries especially Emenite Nigeria Limited are major source of employment apart from the public sector and also contributes product in the economy for these reasons it is of immense important to government and society at large.
For researcher the study will provide useful materials for researchers who may wish to deve into the study in the future for policy makes the study in formulations modify and even streamline existing government policies which will help solve or of least reduces the problems facing petroleum products consumers operations and government in its determination to achieve regular supply and availability of petroleum products.
Finally the study will also help government achieve its target for the industry sector increase put level which will generate more employment opportunities in the industry.
DEFINITION OF TERMS
For the purpose of the study the following terms used defined in the context in which they were used.
- M.S it is known as premiums major spirit or alternatively petrol
- MARKETER:- a company licensed by the department of petroleum resource operating under pipelines and product marketing company of NNPC to market and distribute petroleum
- NNPC : Nigeria national petroleum corporation
- MAN: manufacturers association of Nigeria
- AGO: automobile Gasoline oil literally called diesel used by have duty truck engines.
- DPK: dual purpose kerosene used for domestic cooking and aviation flue and other industry uses.
- NEPA: national electrical power authority
- GDP: Gross domestic product
- NNOC: Nigeria national oil corporation
- PPMC: pipeline and product marketing company.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
- Historical perspective of the oil industry development in Nigeria.
- The beginning of petroleum product scarcity in Nigeria
- Petroleum products requirement and supply in Nigeria
- Causes of petroleum product scarcity
- The role of government its agencies and other organizations in Ensuring availability of petroleum products in Nigeria.
- Overview of companies in Nigeria
- The concept of capacity utilization
- The impact of petroleum product scarcity on capacity utilization of companies
- Summary
- Historical perspective of the oil industry development in Nigeria
Ofurlie (20006) observed that petroleum industry in Nigeria dates back to 1956 when shell D. Archy (Now shell petroleum development company of Nigeria discovered oil in commercial quantities at Oloibiri in the present bayelsa state of Nigeria oil in the present bayelsa state of Nigeria oil production therefore commenced in 1958.
In Nigeria government participation in the oil industry was through a member of department including hydrocarbons in 1963 and the department of petroleum in the federal ministry of mines marketing company. Araromi (1995);36) stand that the establishment of Nigeria national petroleum corporation (NNPC) was preceded by Nigeria national oil corporation (NNOC) which was established by decree No 18 of 1971. However on the 21st April 1977, the federal military government promulgated a decree which abolished the Nigeria national oil corporation and in place established Nigeria national petroleum corporation (NNPC).
The decree stipulated the functions of the contraption to include the following the refining of petroleum for the manufacture of petroleum products and its derivatives.
To engage in production and marketing of petroleum and its bye products such as
- Premium motor spirit (P M S)
- Automotive gas oil (AGO)
- Dual purpose kerosene (D PK)
- Low pour fuel oil (LPFO)
- High pour fuel oil (H PFO)
- Aviation turbine kerosene grades
- Parrafin wax
- Bitumen and other petrochemicals.
To construct equip and maintenance and other facilities for the handling and treating of petroleum its products and derivatives as well as to carryout research in connection with petroleum or its derivatives.
To enhance the petroleum interest of government for overall benefit of the country.
The decrees also provided for an inspectorate department of the corporation the department carries out duties such as the issuance of licenses for all activities connected with petroleum exploration and exploitation and distribution of petroleum as well as the enforcement of the provisions of the decree.
In pursuit of these objectives, NNPC was re-organized into even subsidiaries. Kiyamo (1991 b. 1) observes that NNPC was recognized into the market 1998 for the purpose of proper capitalization and commercialization of one of the subsidiaries created in the process of reorganization was the pipeline and products marketing company Ltd (PPMC). The creation of NNPC is perhaps the most significant event in 1998 reorganization of NNPC. This is because the subsidiary was made to be responsible for the comparative ease with which petroleum product are soured and distributed to all parts of the country at uniform prices a phenomenon which Nigeria have come to take for granted. The outfit ensures that among other things Nigerians including industrialist have petroleum products not only to move their vehicle fiy from place to place using Aircraft but more importantly engage in manufacturing activities to produce goods of various kind.
2.2 THE BEGINNING OF PETROLEUM PRODUCT SCARCITY IN NIGERIA
Up till 1965 when Nigeria first petroleum refinery was established in port-Harcourt by shell and British petroleum (BP) petroleum products seed in the country were imported.
Araomi (1995 6.1) observes that the importation of petroleum products continued even after the refurbishing of the old port-Harcourt refinery which was damaged during the Nigeria civil war. For quite sometime therefore marketers and consumers of petroleum product in Nigeria depended on External sources for the products they marketed and consumed without experiencing serious shortages.
Okigbo (1996a.1) contended that Nigeria industrial sectors was supplied with petroleum products through imports by multinational like shell, Esso, Bp among others, prior to the commission of the old port Harcourt refinery in 196.As the economy expanded in the seventies the production from 35,00barrels per day became grossly inadequate to meet the demand. As a result serious national shortage where recorded.
In a sharp reaction to the shortages of petroleum products supply to the economy, the federal government appointed the oputa panel of Enduing in 1975 to examine the root case of shortage and accepted the panels main findings as follows
- Domestic demand had out stripped refining capacity.
- Marketing companies possessed inadequate financial resources to undertake the importation of the substantial quantities of petroleum products required to augment domestic production construct the practically non existent infrastructures and distributed products to the geographically wide spread consumption centers in the hinter land
The panel in its wisdom recommendation three- proofed solution which was accepted by government
Government is to take over the importation of petroleum products from oil marketing companies.
Government is to expand domestic refining facilities as part of a nation wide system of pipelines to facilitate petroleum products distribution in the long run.
Consequently government using its parastatal NNPC took over the importation of petroleum product into Nigeria and commenced the construction of refining and storage facilities and pipeline to link these storage facilities centers
Accordingly this culminated In the construction and commissioning of 125,000 barrels per day capacity warred refinery in 1978 the phase and 2 pipeline systems along with 17 storage deports in 1979 and 100,000 barrels per day capacity Kaduna refinery on 1980. The commissioning of the Kaduna complex enabled the manufacture of engine oil for abreaction purposes and bitumen in road construction.
Okigbo (1986a:3) observes that government interest in availability and pursuit of self sufficiency of refined petroleum products led to the expansion of the old port Harcourt refinery to 60,000barrels per day the construction and commissioning of the new 150,000 barrels per day capacity port Harcourt refinery in 1989 and the phase 3 pipelines and deport inter link in 1995.
The pipeline and products marketing company limited as it is called pipelines and products marketing section (PPMS) of the NNPC in march 1998 during the NNPC re-organization exercise the establishment of the company was a logical response to development in the petroleum product consumption in Nigeria. The process of establishing the company began with the putting in place of a petroleum products distribution pipeline and storage deport systems by government to solve some of the problems created by rapid growth in petroleum products demand in Nigeria in the mid 70’s
Araromi (1995 b. 12) contended that at that time petroleum products demanded in the country before the civil war were used mainly for operations motor vehicles electric power generators heavy industrial plants and for lighting and heating cooking gas in homes with all these uses meeting the demand for petroleum products did not even need to be an issue of concern to government.
However by the end of Nigeria civil war in mid 1970’5 demand country had outstripped the products petroleum production capacity of Nigeria’s only refinery. In real times products consumption took virtually a vertical climb to an all time high level rising from 21, 516 barrels per day in 1970 to 68,217 barrels per day in 1975.
Consequent upon this development petroleum product marketing activities as it embraced the full range of petroleum products distribution with eight major marketers.
Kigamo (19956.12) observes that the pipeline system which was constructed between 1976 and 1979 is made up of over 3001 kilometers of pipelines and 19 storage depots with the pipeline and deports system in place. It became necessary to establish a proper bureaucracy to direct the petroleum products distribution sectors.
According to PPMC initially seemed to provide logical solution to that problem. But surprisingly the problem of incessant scarcity of products has continued to defy solutions. The second major development is the need to
Introduce uniform pricing for petroleum products in the country. Once again PPMC has endeavored to provide the bureaucratic option for a permanent solution to the problem. But quite unfortunately these spirited efforts on the part of what experts have described as inappropriate pricing of petroleum products in Nigeria.
Aluko (1993.3) was of free opinion that pricing in most other sector have been deregulated, but remains regulated in the marketing of petroleum products. He further buttressed this assertion by stating that the 70 kobo per litter of petroleum products (PMS) or petrol s the result of system of regulated pricing. The selling price of NNPC to marketers then was 51.7 kobo per liter of petroleum products (p m) or petrol is the result of system of regulated pricing. The selling price of NNPC to marketers them was 51.7 kobo per liters of petrol. Therefore the difference of 18.3 kobo for a liter was the margin allowed for marketers to cover their over head cost transpositions and other incidental.
Adekeye (2000. 21) observes that despite the increase in price of petroleum products from N22 per liter in 2000 which caused NLC to embank on a nation wide strike which brought economic activities in the country to a stand still NNPC has continued to argue that the long standing low petroleum product pricing in Nigerian is responsible for most of the problems now associated with the incessant scarcity of petroleum products.
In the same vein, Oshiomole (2003-1) contended that fuel price increase had always weakened the purchasing power of the poor as such the Nigeria labour congress downed tools for over a week in protection over the percent increase in pump price of premium motor spirit from N26liter to N40 per liter
Obasanjo (2003.1) contended however that government was subsidizing fuel to the tune of over N250 billion sustain hence review of the pump price of oil.
Okin Baloye (2001.7) contended that the product non availability refineries breakdown or short down for turn around maintenance (TAM) NNPC therefore resorts to importation to make up for the short fall from the refineries.
Also the vandalization of pipelines by vandals to steal products is also part of the problem and accounts for why products are not allowed to be pumped through the pipelines in some areas of the country other causes identified include smuggled and division of products delays due to number of days- trucks take to bridge products from south to northern part of the country. Another problem is the incessant down tooling by tanker drivers and crisis caused by ethnic groups such as the odua people congress (OPC) on the distribution of products.
2.3 PETROLEUM PRODUCTS REQUIREMENT
Ndubuisi (2001;10) observes that the efficient and interrupted operations of these various social economic and industrial activities requires that necessary measures that these products ensure that these products are made available at the consumption outlets in a manner that must be:
Timely and reliable of optimum quality and quantity Affordable
Okigbo (1996a.7) observes that against the background of the complexities of compliance with safety standard maintenance of efficient network, customer and community relations provisions of adequacy with the guideline in the environment impact Assessment (EI A ) reports supply of required quality of personnel accountability and transparency.
Okigbo (199a:7) further stated that for the purpose of self sufficiency the government recently increased the crude oil allocation to be refined for domestic and industrial used from 240,000 to 300,000 barrels per day. But national demand as per installed capacities and projections for premium motor spirit (petrol) and Dual purpose kerosene (Dok) exceed the production levels by about 5 million litres a day for petrol and 1.3 million liters per day for DPK (kerosene) the deficit was to be met by imports.
2.4 CAUSES OF PETROLEM PRODUCTS SCARCITY:
Adetunyi (1998a.2) contended that the scarcity of petroleum products has become a persistent phenomenon in Nigeria in recent times. The worsening petroleum products energy crisis that assumed an uglier dimension with the passages of time.
However kiyamo (1995 b.13) in apparent reaction to the problem has attributed the seeming shortages of petroleum products to face the nature of the Nigeria refineries. By this it is meant that the nations refineries were not interconnected by pipelines shortages occasioned by disruptions in prediction operations in whatever form e.g routine maintenance in one refinery could not be quickly offset through supply from another. at such times trucks were used to “bridge” products to deports severed by non functioning refineries; these trucks travel long distance say from Kano to depots in the south such as port Harcourt Warri or Ibadan to lift petroleum products. However the bridging process is not only expensive but also ineffective
Further more it has to do with the design capacity of some of the existing was designed. It was meant to meet known demand at various regions in the country plus estimate for growth in demand currently there is a rapid jump in the quantity of petroleum demand giving rise to shortages
Obasseki (2001.3) contended that the isolation of the different products pipelines and depot systems is another problem. Before June (1995) the products pipeline network was made up of the three separate unconnected systems. Each system was meant to supply products from each of the three refineries to depots under their control in the North West and east. There was also need to link up the refineries because a problem with any of them would mean that all deports served by that system would not have products.
Lukman (1994.2) observes that the analysis of the operational problem product militating against petroleum products distributions, it was found that interconnecting all refineries at all times will resolve the regular petroleum product shortage.
Oknbaloya (2001:7) contended that the disturbance and hardship which incessant scarcity of petroleum product meets on Nigeria and in line with their constitutional responsibility of the houses of representative committee on petroleum under took a nationwide four of PPMC facilities to find out for themselves the causes. Of scarcity and at the same time find a permanent solution of the problem.
Accordingly the committee was told that scarcity of products is as a result of products non availability refineries break down and short down for turn Around maintenance. It was further stated that NNPC resorts to importation to make up for the short fall from the refineries.
Also the frequent vandalization of the pipeline is responsible for scarcity of products and account for why products are not allowed to be pumped through the pipelines 90 bridging is done through road transportation instead of 90% bridging by pipelines obliviously bridging through the pipelines would make for products availability.
Obaseki (2001.10) observes that since the last five months of 2000, it has Warri, Suleja and Benin because of vandalization of pipeline between Warri and Benin pumping cannot also be done between port Harcourt and Warri, Enugu to Auchi due to numerous drills on the pipeline scarcity is also caused by the number of days trucks spends in bridging products from south to the North. It takes average of four (4) days journey from Apapa to Suleja and them distributions is done on the fifth day scarcity also attributable to the scarcity is the incessant downscaling by tanker drivers along with the crisis by (OPC) Odua people congress on the distribution of products.
Okinbayo (2001:10) observes that during a visit to the Atlas cove by the committee members it was reported that the import has number of problems ranging from collapsed tankers non serviceable from collapsed tankers, non serviceable values because of old age some of the generating sets are down diesel driven booster pumps are down.
Also there are constant damages to jetty by import vessels and often vandalization of Atlas cover mosini line near the perimeter fencing among others.
At Warri and environs it was stated that the main problem is constant vandalization of he pipelines. The situation has become so bad that as the maintenance crew and safety personnel are repairing damage line at a point the vandals are damaging the line at the other end.
The situation up North is quite different as cases of vandalizations of pipelines are near zero. However, problems of diversion, road side sale of products in the surface tanks against availability at the filling stations are very rampant (Okmbaloye, 2000 1.11) there is also the problem of smuggling products across the border to carry down which has defined the department of petroleum (DPR) and the state government .
Nzelu (2001-11) stated that the primary objective of PPMC was to products to the domestic market and efficient transportation of crude oil to the refineries at minimum cost. But currently, PPMC is facing challenges posed by vandalization of pipeline which has resulted to huge losses.
Obaseki (2001.130) observes that NNPC has a dream to be shared organization to excellence. To achieve this dream, NNPC requires a lot of hard work discipline and sacrifice. He contended that the refineries have performed very poorly due to long standing neglect, misplacement of priorities by past government and us. The consequence is that NNPC have sustained the country’’ petroleum products requirements mainly through massive importation which has been big burden to the corporation and government.
Finally from the contributions be observed that the factors responsible for petroleum product scarcity can be identifies as
- Frequent breakdown of refineries; Nigeria refineries except the new port Harcourt refinery are saddled with obsolete equipment resulting to frequent breakdowns.
- Poor distribution logistics: The movement of vessels and tankers carrying coordinated and have been poorly coordinated and organized. This has led to lapses in the distribution systems. This manifested as a result to this mansion of they boats by Nigeria ports Authority (NPA) non payment of berthing fees to NPA by NNPC, unavailability of trucks for bridging and high cost of birding.
- Over- interference of government the activities and operation of the oil industry in Nigeria is largely a government affair thereby regulated and monopolized by government parastatals (NNPC) perhaps this is responsible for the current thinking of government to commercialize and if possible privatize NNPC.
- Managerial and personnel problem due to poor management of both human and material resources of NNPC like the government owned parasitical in Nigeria inefficiencies wastage of resource and content actions and corruption have associated with the operation in the This has hindered smooth supply and invariably led to scarcity of petroleum products.
- Inadequate funding and maintenance the refineries are not adequately funded resulting to delays in executing the mandatory shut downs for turn around maintenance (TAM).
- Sharp practices in the distribution system it has been identified that the distribution network is fraught with a lot of problems caused by the operations. Such problems are diversion hoarding profiteering snuggling of products across Nigerian boarders; bribery and corruption among officials of NNPC and vandalization of pipeline with the aim of sighing products illegally.
2.5 THE ROLE OF GOVERNMENT IT’S AGENCIES AND OTHER ORGANIZATIONS IN ENSURING AVAILABILITY OF PETROLEUM PRODUCTS IN NIGERIA.
Araromi (1995 a –1) observes that the primary objective of pipeline and products marketing company (PPMC) and by extension that of Nigeria national petroleum corporation (NNPC) is to provide uninterrupted supply of petroleum products to the industries and domestic market and efficient transportation of crude oil to the refineries at minimum cost. The federal government of Nigeria in pursuit of this objective has through federal ministry of petroleum resources put some institutional structures to management of the various aspects of productions distributions and pricing of the petroleum sector in Nigeria principally under the petroleum ministry there is the department of petroleum resource (DPR0 charged with the responsibility of inspecting and monitoring the operation in the oil sector to ensure compliance with laid down rules and regulations and also the Nigeria petroleum corporation decree No, 33 of 1977.
Lukman (1994:2) observes that today the NNPC operates through six and eleven subsidiary companies charged with execution of the company businesses. The subsidiaries are:
- Nigeria petroleum development company Ltd (NNPC)
- Integrated data services limited (IDSC)
- Warri refinery and petrochemical co. Ltd. (WRPC)
- Kaduna refinery and petrochemical co. Ltd (KRPC)
- PORT Harcourt refining company limited (PHRC)
- National Engineering and technical company (NETCO)
- HYSON (Nigeria) limited in affiliation with calcon Bermuda
- Government in a bid to ensure sanity and safe operation in the oil sector has made particle efforts in enacting some lows to guide the industry.
These laws are as follows.
- Mineral oil (safety )regulation 1963
- Oil terminal dues decree 1968
- Petroleum (drilling and production) regulations 1979.
- Petroleum decree (51) 1969
- Offshore oil revenues decree, 1973
- Petroleum (Amendment ) decree 1973
- Petroleum (Drilling and production ) Amendment regulation 1973
- Petroleum (refining ) regulation 1974
- Petroleum product and distribution (Antisabotage ) Act 1965
- Petroleum (Drilling and production ) Amendment regulation 1988
The provisions made under these laws guide and regulate the complex process of refining importation and distribution of petroleum products in Nigeria. These laws vest finally on government of Nigeria acting mentioned above.
Okigbo (1996.12) observes that in compliance these enabling provisions under the law the D.P.R, PPMC, refineries major and independent markets customer and exercise. Nigeria port plc, Nigeria p0ipe services carryout the distribution and sale of petroleum product to consumer outlets through a broad network of pipeline and deports, marker- outlets bridging trucks etc.
2.6 OVERVIEW OF COMPANIES IN NIGERIA
Alifu (1990:2) contended that rapid industrialization has been given high priority in Nigeria’s development plans and goals since 1960. However the buoyant oil revenue and heavy public investments have encourage rapid growth in Nigeria’s industry sector at an average growth rate of about 12% per annum between 1973 and 1982 compared with a cross domestic products (GDP). The share of Emenite Nig. Ltd in GDP 4% in 1973 to a peak of 12% in 1982 is commendable.
Aluko (1993.2) observes that Nigeria’s industrial sector is made up of a wide range of industry activities ranging from enterprise in the informal sector using simple technology to heavy capital goods .The consumer goods industries dominated the industrial sector in both relative share value added and employment.
Emenite Nig Ltd in the consumer goods industry accounting for 20% of the industrial sector value added they are followed by textile and wearing apparels paper products and panting plastics and rubber products wood and furniture and metal product in that order.
Edozien (1996.86) contended that the clear picture of the structure of Emenite Nig Ltd has emerged by late (1970). The sector was production cost high geographical concentration in certain areas and high dependence on imported raw material. Hardly any production for export and low levels of foreign investments. This structure has not changed since 1960’s
Luka (1969.10) contended that the reducing the activities encourages increase private on market forces and partial deregulation instead of government control.
Aboyade (1968;279) observes that the government is commissioned to play a catalytic role in establishing new core but limited number of industry providing and improving infrastructure facilities so as to have a positive implication overall performance. However achieving accelerated pace of industrial development remains the main objective of government industries basically the same as those listed in the third and fourth national development plans they include provision of grater employment opportunities in increasing export of industrial goods bridging regional disparities of Emenite Nig. Ltd available in the country increased local content of industrial output and increased capacity utilization.
2.7 THE CONCEPT OF CAPACITY UTILIZATION
Webster encyclopedia dictionary defines capacity as the ability of a factory to manufacture or process its products especially this as a maximum. It also defined utilization as making use of something. Therefore capacity utilization could be defined as the extent to which a factory can produce to its maximum levels.
According to Iwu (1998 67) observes that every industrial outfit looked at from various time intervals one day one week, one month one year etc. Has got a definite production ability called its capacity
Veilrose (1970.2) observed that the production cost of any industry is dependent on the degree to which it’s capacity is utilized. This low capacity utilization will be reflected in the cost of product as overheads will be bore by few output quantities capacity utilization is therefore the measurement of performance of an industrial outfit based on its ability to produce according to its installed production levels.
Merhav (1990.28) described capacity utilization as one of the growing point of rapidly expanding economy. It can be used as both an indication of the industrial patterns of an economy. Indeed it now seems to be a general belief that the prevalence of under capacity utilization’s industrial development organization (UIDO) asserted that every under development country with a significant programmed greased towards industrialization like Nigeria complains of low capacity utilization. A thorough assessment of capacity utilization required first a classification of the used tend to capacity which being variously used tend to create a general difficulty amongst economist engineers, businessmen and statisticians in commendation with each other the engineering concept for instance refers to what a machine can produce under the ideal situations. It is a concept for determining what a machine can produce but not what it should produce particularly since conditions are rarely ideal.
Veirose (1970. 148) has identified three approaches for calculating capacity utilization which can be applied where necessary data to be used are not only available but highly reliable.
IWU (1998.68) contended capacity as a cost influencing factor. The productions cost levels of an industry is not only dependent on capacity utilization’s of the industry itself but also on the capacity of technical installation of the industry but more importantly are of the main cost influencing factor of any industry is the level of its capacity utilization. Therefore one can conveniently argue that production of different quantities of any products will give rise to different levels of cost. This total cost can be irregular dependent on the production levels.
2.8 THE IMPACT OF PETROLEUM PRODUCTS SCARCITY ON CAPACITY UTILIZATION OF COMPANIES: A CASE STUDY OF EMENITE NIGERIA LIMITED ENUGU.
Major (2000. 7) observed that the growth of Emenite Nig. Ltd sector has continued to be impeded by persistent energy shortage and collapsed infrastructure. These resulted to increase in cost of doing business and factory close downs, worsening the unemployment situation with it’s attendant in societal impacts obviously this explains why Emenite Nig Ltd capacity utilization dropped further from an already low 32% in 1999 to 30% in 2000.
Obaseki (1998 b.2) observes that the depended economic malaise which Nigeria has witnessed in the worst in 1998 major devastating factor was the energy the impact on Emenite Nig Ltd was particularly ravaging. There was virtually due to lack of improvement in industrial capacity utilization local souring of raw materials Emenite Nigeria Ltd industry employment and finished goods investment build up. The average capacity utilization in the last six months of 1908 was 3.0 percentage points lower than the level of 34.32 percent recorded in the same period of 1997.
Obaseki (1998. B.7) contended that the virtually collapsed social and economic energy crisis laid the economy prostrate the sharp slow down in the economy precipitated by shortage of petroleum products and collapsed electricity supply was reflected in an accentuated economic recession. The GDP declined of course Emenite Nig Ltd production stagnated staguated in the face of low productivity decline in industrial capacity utilization and worsened inventory build up. Expectedly the unemployment problems because more explosive. This made the poverty situation more prin. as the various measures of poverty. Alleviation lacked effective implementation.
Onosode (1997.2) observes that there was slow growth in Emenite Nig Ltd industrial output of 10.7 percent in 1997 which was essentially a reflection of the low levels of industry capacity utilization which stood an average of 34.32 percent in December 1997. Obviously this low level of industry capacity poses real problem not only for output growth in Emenite Nig Ltd sector but also for capacity expansion. The existence of idle capacity exerts a negative effect on investment for the creation of new capacity.
Adetunji (1998 a.2) contended that virtually all factors of the national economy had been adversely affected by energy crisis at Emenite Nig. Ltd sector has suffered the greatest set back; hence local souring of raw material due to enhanced local souring of raw material has continued to be contained by member of factors among which area uncertainty of supplies arising from irregular production and supply scheduled from producers. This situation was compounded energy crisis intermittent operations or out right inactivity of feeder industries and relatively exorbitant price of some local raw materials compared in imported counterparts occasioned by high cost of doing business in Nigeria.
Manufacturing industry output and business inventories economy give rise to low capacity utilization was the nominal output which declined from N31.488 billion in the first six months of 1997 to N30, 643 billion in June 1998. Obviously this is a clear indication of the degree to which production was constrained by firm problem of energy crisis and weak aggregate demands.
Just like in the case of nominal output inventories of finished goods witnessed a decline. The problems of souring implanted tools turn out for the worst.
As true trend of low demand heightened many firms close to keep their inventories in raw materials rather than finished goods. Having examined the works of various authorities like Adetunji Aluko Araromi Ofurlie, Okigbo, Aboijde, Iwu, Lukeman. There is need for further studies in the area in view of the fact that the objectives of this research work was not fully addressed by this privies authors
29 SUMMARY OF THE RELATED REVIEWED LITERATURE
Petroleum industry in Nigeria dates back to 1956 when shell D Archy now shell petroleum development company of Nigeria discussed oil in commercial quantities at Oloibiri in the present Bayelsa state of Nigeria oil production commenced in 1958.
However in a sharp reaction to the shortages of petroleum products supply the federal government appointed the oputa panel of Enquiry in 1975 to examine the causes of shortage. Following the findings of the panel government using its parastatal NNPC took over the importation of petroleum product into Nigeria.
Every industrial outfit looked at from various true intervals one day one week one month; one year has got a definite production ability called its capacity.
Virtually all sectors of the national economy had been adversely affected by energy crisis but the manufacturing section has suffered he greatest set back hence local souring of raw materials has continued to be constrained by number of factors among which is uncertainty of supplies arising from irregular production and supply this situation was compounded by energy crisis intermittent operations or out right inactivity of feeder industries and relatively exorbitant price of local raw materials.
Manufacturing industry output and business inventories gave rise to low capacity utilization with normal output which declined from N31.488.billlion in the first six months of 1997 to N30.643 billion in June 1998, obviously this is an indication of the problem of energy crisis and weak aggregate demand.
Having examined the works of various authorities like Adetunj; Iwu Lukemen Ofurlie etc. there is the need for further studies in the area in view of the fact that the objectives of this research work was not fully addressed by the pervious authors
CHAPTER THREE
3.0 METHODOLOGY
This chapter deals with the methodology that was adopted for the purpose of this study. It covers the size of the population sampling techniques data collection instrument and method of data analysis.
- RESEARCH DESIGN:
Tull and hawking (1982:2) described research design as the specification of procedures for the collecting and analyzing data necessary to define and solve the problem
Further, Osuala (1980.10) defined research design as the arrangement of conditions for the collection and analysis of data in a manner that aims to combine relevance of research purpose with economy of procedures.
The design of the study is the questionnaires which include dichotomous open ended questions and close and open ended questions.
3.2 AREA OF THE STUDY
This research work will examine the impact of petroleum product scarcity on capacity utilization of Emenite Nigeria Ltd Enugu.
3.3 POPULATION OF THE STUDY
Emenite Nigeria limited as at the time of this study was so diverse that data on the number of manufacturing industry in the country was not available. However for the purpose of analysis the population of the study is the members of senior staff from supervisor managers and top management and the junior staff of Emenite Nigeria limited Enugu. The total number is three hundred and eight (308)
3.4 SAMPLE AND SAMPLING PROCEDURES/TECHNIQUES
We study a sample because it would be virtually impossible to study the entire pupation due to constraints of time and cost. However the sample must be representative of the population from with the draw in other to determine the sample size the researcher used a 5%level of significance. The sample size was derived using the Bowleys formular.
N = n
1 + n (e)2
where n= sample size
n = population of the study
e = error estimate (5%)
I = constant
Therefore to substitute for the value
N = 308
1 +308 90.025)
= 308
1 + o. 77
= 308
1.77
= 174
This study is based upon data analysed from both primary and secondary source of information. Essentially the gathering of relevant data is the bedrock upon which any good study rest.
In selecting the respondent a simple random sampling procedure was adopted to ensure representative of the sample.
3.5 INSTRUMENT FOR DATA COLLECTION
This study is based upon data analysed from both primary and secondary sources of information.
The research project is to be approached using
- primary data personal interviews observation and use of questionnaires.
- Secondary data newspaper magazine in houses journal of NNPC, PPMC and publication from the federal ministry of statistics.
3.6 VALIDATION OF THE INSTRUMENT
Validation as used here is the degree of extent to which an instrument actually measures what it is intended to measure.
Therefore an instrument is tailored to achieve research objective. This research was validated by ensuring that the questions was preceded by an introductory appeal letter and by ensuring that the questions are structured in a manner which enabled the researcher to obtain information relevant to the purpose and objectives of the study.
3.7 RELIABILITY OF THE INSTRUMENT
in order to maximize reliability of the instrument used from the research the investigator ensured that questions were not ambiguity presented to respondents in a manner likely to communication different meaning that could generate inaccurate and inconsistent responses. The researcher also maintained objectivity by not fielding leading questions. A plot survey using the instrument was carried out to test the reliability of the testing fifty members of staff in Emenite Nig Ltd the questionnaires administration on them this pre-testing was for the following.
- METHOD OF DATA COLLECTION
The nature of the research work made it imperative that can be carried out with all sense of carnation and carefulness. To this and the research made use of both primary data and secondary data in writing this research work.
- Primary sources: In the course of this study the researcher use collected primary data through the structured of questionnaires and personal interview.
- Secondary sources: The facts that are presented in this study are secondary soured from text books publications in Journals magazines newspapers statistical bulletins especially from NNPC and PPMC, Journal and annual reports of manufacturing association of Nigeria.
3.9 METHOD DATA ANALYSIS
The chi-square (x2) statistic was employed in testing the operational hypothesis. The chi-square (x2) is a sample statistical measure used in testing hypothesis concerning the significance of any difference between a set of observed frequencies (0) of a sample and a corresponding set of expected frequencies (E)
Osuala (1982:72) observed that it is represented by the following formula
X2 = (o-E)2
E
Data on which the chi- square test is to be applied are arranged in a contingency table. It the computed x2 value is praetor than the critical value (obtained from x2) at the particular degree of freedom (df) and level of confidence of significance the null hypothesis being tested is rejected and the alternative is a accepted. It would then be held that the relationship or association being investigated is statistically significant at that degree of freedom (df) is obtained using the formular
Df = (r-1 ) (c-1)
Where r = number of rows in the contingency table c = number of columns throughout the work the level of significance is o.05
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
In this last chapter we indicated how data in to be collected. In this chapter the information gathered for the study are analyzing data more emphasis was laid on those questions that are directly related to the objective and problem under study.
4.1 PRESENTATION OF DATA
(a) Response rate of the distributed questionnaires.
A question sought to ascertain the rate of responses of the questionnaire distributed responses are indicated in table 4.1 below.
TABLE 4.1 RESPONSE RATE OF THE DISTRIBUTED QUESTIONNAIRE
| Items | Number sent out | Number returned | Response rate |
| Emenite nig ltd | 92 | 78 | 91.46 |
| Emenite nig ltd | 82 | 75 | 84.78 |
| Total | 174 | 153 | 87.93 |
Source: field survey by researcher.
From table 4.1 above it was observed that majority of the respondents in Emenite Nig Ltd returned their questionnaire this was indicated by 91.46 percent of the espouse on the other hand 84.78 percent return from Eminite Nig Ltd a subsidiary of Eminte Nig Ltd.
4.2.1 CHARACTERISTICS OF THE RESPONDENTS DEMOGRAPHIC
Table 4.2 distribution of respondents by six.
| Item | No of respondent | Percentage % |
| Male | 119 | 77.78 |
| Female | 34 | 22.22 |
| Total | 153 | 100 |
Source: field survey by the researcher.
From table 4.2 it was observed that majority of the respondents were male this was indicated by 77. 78% of the respondents on the other hand only 22.22% of the female respondents responded.
4.3 DISTRIBUTION OF RESPONDENTS BY AGE GROUP
Table 4.3age distribution of respondents
| Age group | No of respondent | Percentage % |
| Below 20 | 9 | 5.88 |
| 20-29 | 25 | 16.34 |
| 30-39 | 80 | 52.29 |
| 40 and above | 59 | 25.49 |
| Total | 153 | 100 |
Source: Field survey by researcher.
From table 4.3 above it was observed that majority of the respondents were between 30-39 years of age this was indicated by 52-29 percent of the responses on the other hand 25. 49% of the respondent was forty years and above which 16.34% of the respondents were between 20-29 years old and 5.88 percent were between 0-20 years of age.
4.4 DISTRIBUTION OF RESPONDENTS BY EDUCATIONAL QUALIFICATION
TABLE 4.4 DISTRIBUTIONS OF RESPONDENTS BY EDUCATIONAL QUALIFICATION
| QUALIFICATION | NO. OF RESPONDENTS | PERCENTAGE |
| First sch. Leaving cert | – | – |
| WASC/GCE/ O/C cert | 27 | 17-65 |
| OND/A level cert | 44 | 28.76 |
| First degree/ HND cert | 58 | 37.91 |
| Postgraduate degree | 17 | 11.11 |
| Others | 7 | 4.57 |
| Total | 153 | 100 |
Source: field survey by researcher
From table 4.4 above it was observed that the respondents hold divergent qualification however majority are first degree holder this was indicated by 37.91 percent of the respondents and 28.76 percent are OND /A levels certificate holders while 17.65 percent are WASC/GCE O/C certificate holders, 11.11 percent are post graduate degree holders, and 4.57 percent hold other qualification than the ones specified
4.5 DISTRIBUTION OF RESPONDENTS BY NUMBER OF YEARS WORKED IN THE ORGANIZATION
Table 4.5- distribution of respondents by number of year worked.
| Age group | No of respondents | Percentage |
| 15 years and above | 33 | 21,57 |
| 10-14 years | 65 | 42.48 |
| 5-9 years | 41 | 26.80 |
| 4 years and above | 14 | 9.15 |
| Total | 153 | 100 |
Sourer field survey by researcher
From table 4.5 above, it was observed that respondents belonging to the majority were of the ages of 10-14 years this was indicated by 42- 48%F the responses 21.57% percent were is years and above which 26. 80% were 5-9 years while 9.15 % were 4years and above.
4.6 EFFECT OF CONSTRAINTS ON THE AVAILABILITY OF PETROLEUM PRODUCTS
A question sought to ascertain from respondents on the effect of constraints on the availability of petroleum products responses are indicated in table 4.6 below
TABLE 4.6 CONSTRAINTS ARE RESPONSIBLE FOR SCARCITY OF PETROLEUM PRODUCTS
| OPTIONS | RESPONSES | PERCENTAGE |
| YES | 150 | 98-04 |
| NO | 3 | 1.96 |
| TOTAL | 153 | 100 |
Source: field survey by researcher
From table 4.6 above 17 was observed that majority of the respondents are of the view that constraints are responsible for scarcity of petroleum product this was indicated by 98.04 percent of the responses on the other hand 1.96 percent of the respondents hold a contrary view.
4.7 PROBLEM MILITATING AGAINST THE AVAILABILITY OF PETROLEUM PRODUCTS
A question sought to ascertain from respondents on the problem militating against the availability of petroleum products responses are indicated in table 4.7 below
| Options | Response | Percentage | |
| A | Sharp practice in distribution system | 45 | 29.41 |
| B | Inadequate funding / maintenance | 30 | 19.61 |
| C | Managerial and personal problem | 24 | 15.69 |
| D | Over interference Ind. By govt. | 25 | 16.34 |
| E | Frequent breakdown of refineries | 29 | 18.95 |
| Total | 153 | 100 |
Source field survey by researcher
From table 4.7 above 17 was observed that the respondents had divergent opinion on the problems military against the availability or petroleum products. However majority are of the opinion that sharp practice in the distribution system is responsible for the scarcity of the petroleum products.
On the other hand 19, 16 percent are of the opinion that the problems is with inadequate funding and maintenance of equipment 15.69 percent are of the opinion that the problem is managerial and personnel problem while 16.34 % believes that it has to do with over interference in the industry by government and 18.95 percent are of the opinion that the problem has to do with the frequent breakdown of refineries.
4.8 IDENTIFYING THE IMPACT OF PETROLEUM PRODUCTS SCARCITY NIGERIA LIMITED
A question sought to ascertain from respondents on the impact of petroleum products scarcity on the capacity utilization of Emenite Nigeria Limited response are indicated in table 4.8 below.
Table 4.8:
Impact of petroleum product scarcity on the capacity utilization of Emenite Nigeria limited
| Options | response | Percentage % |
| yes | 115 | 75.16 |
| No | 38 | 24.84 |
| Total | 153 | 100 |
Source field survey by the researchers
From table above it was observed that majority of the respondents are of the opinion that the impact of petroleum products scarcity on the capacity utilization of Emenite Nigeria limited is the fact that there is low capacity utilization this was indicated by 75.16 percent of the responses on the other hand 24.84% of the respondents hold a contrary opinion.
4.9 EVALUATING THE ROLE PLAYED BY GOVERNMENT AND ITS AGENCIES TO ENSURE THE AVAILABILITY OF THE PRODUCTS
A question sought to ascertain from the respondents in whether government and its agencies have been paying its role in the availability of petroleum products responses are indicated in table 4.19 below.
Table 4.19:
Government and its agencies ensure the availability of petroleum products.
| OPTION | RESPONSE | PERCENTAGE |
| YES | 14 | 91-50 |
| NO | 13 | 8-50 |
| TOTAL | 153 | 100 |
Source field survey by the researcher
From table 4.9 above it was observed that majority of the respondents are of the opinion that government and its agencies have played its role effectively this was indicated by 91. 50 percent of the response on the other hand 8.50 percent are of the opinion that government agencies have not played its role effectively.
4.2 ANALYSIS OF DATA
In this section the researcher tested the hypothesis which where formulated earlier on the research work.
- Ho: There is no significant relationship between petroleum product scarcity and manufacturing industry low capacity utilization
H: There is a significant relationship between petroleum products scarcity and manufacturing industry low capacity utilization.
CONTINGENCY TABLE
| RESPONSE | COMPANY | ||
| EMENITE LTD | EMENITE LTD | TOTAL | |
| YES | 76 | 74 | 150 |
| NO | 2 | 1 | 3 |
| TOTAL | 78 | 75 | 153 |
Ho: P1 – p2 = o
H1 = p1 p2 = 0
Drawing samples
Emenite Nig. Ltd. (ni) = 78, Emenite Ltd = 75
X1 = 76 X2 = 74 p = X
N
Sample proportions = P1 = 76 and P2 = 74
- 75
= P1 – 0.97, P2 = 0.99
Then pooled P = ni pi + n2 p2
Ni n2
P = 78 (0.97) + 75 (0.99)
- 75
= 149 .91
= 153
= 0.98
Calculating test statistic
z = P1 – P2 – O
P (1 -P) + P (1 – P)
N1 N2
= (0.97 – 0.99) – O
= 0.02
- = 1.25
z = (2/2) = + 1.96 (critical value)
z = – 1.25
Since z = – 1.25 > -z (2/2) = – 1.96
We accept this because it fails within the acceptance region. Since z calculate is = – 1.25 is greater than the critical value of – 1.96. We accept the null hypothesis. And conclude that the constraints of petroleum products scarcity results in low capacity utilization of the manufacturing industry.
(2)HYPOTHESIS TWO
HO: There is significant relationship between the role of government and its agencies and the availability of petroleum product.
CONTINGENCY TABLE
| RESPONSE | COMPANY EMENITE NIG. LTD. | EMENITE NIG. LTD | TOTAL |
| YES | 76 | 64 | 140 |
| NO | 2 | 11 | 13 |
| TOTAL | 78 | 75 | 153 |
Sources: field survey by researcher
Ho: P1 –P2 = 0
Hi: P1 – P2 = 0
And levels of significance = 5%
Critical value = z> (Z x/2) or Z < – Z (X/2)
Drawing random samples
Emenite Nig. Ltd (n1) = 78, Emenite Nig. Ltd (n2) = 75
X1 = &6, X2 = 64
P= x/n
Sample proportions = P1 =76/78 an P2 – 64/75
P1 = 0.97, P2 = 0.85
Pooled P = n1 P1 + n2 p2
N1 n2 = 78 (0.97) + 75 (0.85)
- 75
= 137b . 33
153 = 0.897 = 0.90
Z test statistic
Z =P1 – P2 – 0
P(1 – P) + P ( 1 – P)
N1 N2
= (0.97-0.85) – 0
0.90(0.1) + 0.90(0.10)
- 75
= 0.12 – 0
0.18
153
= 0.12
0.034
Companion
Z (x/2) = 1.96 critical value
Z = 3.53 (Z – test calculated) Z = 3.53 is greeted than 1.96
Z = 3.53 >Z (x/2) = 1.96
Z = test statistic is greater than the critical value which is 1.96, we therefore reject the null hypothesis (Ho = P1 – P2 = 0) and accept the alternative (Hi = P1 – P2 = 0) because it falls within acceptance region, we therefore conclude that there is a significant relationship, the role of government and its agencies and the availability of petroleum products.
- SUMMARY OF RESULTS
From the study, majority of the respondents are of the view that constraints responsible for the scarcity of petroleum products includes sharp practices in the distribution system inadequate finding and maintenance, managerial and personnel problem over interference by the government frequent break low of refineries.
The respondents are of the opinion that the impact of petroleum product scarcity on capacity utilization of Emenite Nigeria limited is the fact that there is low capacity utilization due to the constraint earlier identified.
However the respondents are of the opinion that government and its agencies have played its role effectively in petroleum marketing and distribution.
Also the study found that constraints pf petroleum products scarcity results in low capacity utilization of the manifesting industries.
Furthermore, the study found out that there is a significant relationship between the role of government and its agencies and the availability of petroleum product.
CHAPTER FIVE
5.1 DISCUSSIONS OF RESULT/FINDINGS
From the study it was found that certain constraints are responsible for the non – available of petroleum products some of these problems include sharp practices in the distribution system, inadequate finding and maintenance of facilities/equipment, management problems, frequent breakdown of refineries and over interference by government. It was observed that unless a more serious attention was given to the problem areas; we cannot have abundance of petroleum products for the use of industries.
Furthermore it was found that government and its agencies play prominent role in ensuring petroleum products availability. Majority of the respondents affirm that government have actually done a lot to ensure that petroleum products are available, these roles includes the establishment of institutional framework like pipelines and products marketing company ltd. Department of petroleum resource, price equalization fund, task force / monitoring teams on supply and distribution of petroleum products, enactment of legal framework to guide the operation in oil industry the development of refineries, depots and pipeline network across the country.
Moreover it was found to that prior to the emergence of independent marketers, suppliers from depots trucks made by network of pipeline trucks owned by pipelines and product marketing company.
Further more it was found out that the department of petroleum resource have not lived up to expectation this is because cases of product adulteration, diversion singling, hoarding and profiteering has become the DPR officials suggesting collusion with operation to perpetrate the evil.
Moreover from the study it was observed that the scarcity of petroleum products is actually responsible for low capacity utilization witnessed by manufacturing sector has continued to be impeded by persistent petroleum products shortage. This has resulted to increase in the cost of production of output and factory closing down resulting in increasing unemployment situation with attendant societal negative effects.
It was also discovered that when there is constant power cuts, the costs incurred on petroleum products increase and the manufacturing industry spends much to maintain their generating set monthly.
Finally it was observed that the decline in Emenite Nig. Ltd. Output was essentially a reflection of low level of industrial capacity utilization emanating from petroleum products crisis, the existence of idle capacity gave rise to low volumes resulting to high unit cost and therefore high prices of products.
5.2 CONCLUSIONS
The project work examined the impact of petroleum products scarcity on the capacity utilization of companies: A case study of Emenite Nigeria Limited.
From the study it was discovered that scarcity of petroleum products obviously impact negatively on the smooth and efficient operation of Emenite Nigeria Limited. This is because petroleum products provide the energy and power to run the machine and engines in the factory.
Moreover the problem of scarcity can be traced to the collapse of oil refineries, randomization distribution network and lack of commitment to maintenance of facilities in the oil industry.
Furthermore the non-availability of petroleum products affected the industrial sector as result it led to decline in industry capacity utilization and consequent low productivity in Emenite Nig. Ltd.
However, government has played some role in ensuring the availability of petroleum products. These include the establishment of structures in the production and distribution network, development of refineries depots and pipelines network.
From the analysis and evidences it was observed that Emenite Nig. Ltd. Has a bright future the problems besetting it for now are not insurmountable, only if clear identification of these problems is anything to go by than it can assumed that the solutions will not be farfetched.
5.3 IMPLICATIONS OF THE STUDY
The oil sector is a key player in Nigerian Economy. In that regard, anything that affects it, invariability touches every sector of the economy including the manufacturing sector.
Therefore the research finding will be of great use to the manufacturing sector so as to know the possible solutions to the persistent and intermittent supply of the petroleum product as a means of enhancing their capacity utilization, profit level and output.
Moreover, the study will also help government achieve its target, Economic activities sector, increase output levels, which will generate more employment opportunities in the manufacturing sector.
5.4 RECOMMENDATIONS
In view of the foregoing review the following recommendations are suggestions for improvement of the impact of petroleum product scarcity on the capacity utilization of companies: A case study of Emenite Nigeria Limited.
- Re- organization of the department of petroleum resources to ensure that it sits up to its statutory responsibility in checking the excesses of the operations such as practices of diversion, adulteration of products and snuggling.
- Government should provide adequate funds for Turn Around Maintenance (TAM) of existing refineries and facilities on a more regular basis by reputable foreign firms. This would prevent complete break down of facilities and equipment before repair and maintenance works are carried out.
- More stringent surveillance of the pipeline should be embarked upon to prevent incessant breakdown and randomization.
- Deregulation of the oil industry to ensure licensing of private refineries to break the monopoly of NNPC petroleum marketing and distribution would entrench healthy competition among refineries and thereby ensure availability of products and price reduction.
- Privatization of the Nigeria National Petroleum Corporation (NNPC) so as to stimulate the need for efficient and cost effective operations and also expand the capacity’s of existing refineries depots and pipeline.
- Emenite Nigeria Limited should establish large storage facilities in their factory to ensure interruption production during emergency periods. This will go a long way to maintain the stability of industrial capacity utilization.
- Pipeline and product marketing company limited should establish retail outlets in some strategic locations to serve the general public during emergency periods. This will not only help to minimize the suffering of the general public and in and in particular, the industrial operators as partials production would be maintained instead of complete shut down.
- The pipeline and products marketing company limited should explore the possibility of entering into an agreement with some major industrial concerns like manufacturing companies for direct petroleum product supply especially during emergency periods. This would eliminate the exploitative tendencies of middle men in movement of products to these industrial consumers like manufacturers in the country.
- SUGGESTION FOR FURTHER RESEARCH
Areas that other researcher need to delve into further includes the area of petroleum marketing and distribution, the impact of hostility of the host community on the petroleum product scarcity, and the impact of depreciating machinery on the capacity utilization of companies in Nigerian.
- LIMITATIONS OF THE STUDY
The research encountered a number of constraints in the process of carrying out this study. These problems constitute the limitations of the entire research work. They are as follows.
- Time: A study of this nature requires a lot of time for souring of materials for the study. This research work was carried out alongside with academic course work.
- Fund: This study was solely by the researcher without any government assistance and as such money was required for stationers, photocopying, typing, cyclostyling of questionnaires and other writing materials and transportation costs.
- Dearth of Data: A study of this nature requires data on which to raw generalization upon, the researcher found it difficult in souring for the material required for the study.
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Ceilrose, E. (1970). Manufacturing Industries in Nigeria Lagos Jess Public
Department of business
Administration and management
Institute of management and technology, Enugu
August 2004.
Dear respondent,
PROJECT QUESTIONNAIRE
The researcher is an OND 11 (pt) student of the above institution carrying out a research on products scarcity on the capacity utilization of companies .A case study of Emenite Nigeria limited.
In partial fulfillment for the award of ordinary national Diploma in Business Administration and management.
Your cooperation is highly solicited in completing the attached questionnaire as honestly as possible you are assured that the responses will be treated in confidence as this is purely an academic exercise.
Yours faithfully
Joy .P. Eze
INSTRUCTION
Tick against the box for whichever option you select. You are expected to select one option from each question
Section A. personnel Data.
1 What is your sex? (a) Below 20 year ( )
(b) 20- 29 years ( ) (c) 30 – 39 years ( )
(d) 40 and above ( )
(2) What is your sex (a) male ( ) female ( )
(3) What is your educational qualification ?
(a) First school leaving certificate ( )
(b) WASC/GCE O’ levels ( )
(c) OND / A’ level ( )
(d) First degree / HND ( )
(e) Postgraduate degree ( )
(f) Others please specify ( )
- How many years have you worked with this organization?
(a) 15 years and above ( )
(b) 10-14 years and above ( )
(c) 5-9 years ( )
(d) 4 years and above ( )
- Does your company make use of petroleum products in its operation?
(a) Yes ( ) (b) No ( )
- What petroleum product do you plants and machinery use in it’s operation?
(a) Petrol (premium motor spirit) ( )
(b) Gas (A automotive gas oil) ( )
(c) Kerosene (dual purpose kerosene) ( )
(d) LPPO (low pour fuel oil) black oil ( )
(e) Lubricants ( )
- do you experience scarcity of petroleum products
(a) Yes (b) No (c) No idea
- Do you have problems with the procurement of petroleum products for your use?
(a) Yes (b) NO (C) No yet decided
- If your answer above is yes how you do procure your petroleum product?
(a) From major oil marketing ( )
(b) Retail and filling stations ( )
(c) Independent oil marketers ( )
(d) Direct black market operators ( )
- do you think that there are certain contrast responsible for the pronominal problem of scarcity of petroleum products
(a) Yes (b) No idea (c) Not yet decided
- What are the reasons responsible for the perennial shortage of petroleum products in Emenite Nigeria limited?
(a) Inadequate funding / maintenance of equipment
(b) Sharp practices in the distribution system ( )
(c) Management and personal problems
(d) Frequent breakdown of refineries ( )
(e) Over regulation / interference of the industry by the government
(12) Does your company have large storage facilities for petroleum products (a) yes (b) No (c) No Idea
- How often do you need petroleum products?
(a) Daily ( )
(b) Weekly ( )
(c) Fortnightly ( )
(d) Monthly ( )
(14) Does the scarcity of petroleum products have impact on capacity utilization of your factory (a) yes (b) No
(c) Not yet decided
- Do constant power cuts increase your cost of procuring petroleum products?
(a) Yes (b) No (c) No idea
(16) If your answer to the question above is yes do you think the scarcity of petroleum products is responsible for how capacity utilization / output witnessed in your factory? (a) Yes ( ) (b) No ( )
(17) Does constant power cuts increases your cost of procuring petroleum products? (a) Yes ( ) (b) No ( ) (c) Not yet decided ( )
(18) What is the estimated cost of maintenance of your generating sets with frequency of power cut?
(a) N 300, 000 and above
(b) N100,000-N299,000
(c) N 50,000- N99,000
(d) N49,000
- Do you think that government and its agencies have played any note in ensuring the availability of petroleum products?
(a) Yes ( ) (b) No ( ) (c) No idea ( )
- In your assessment what do you suggest should be done to solved or reduce the problem of scarcity of petroleum products in order to attain high capacity utilization?
(a) Privatization of NNPC through prudent management of refineries ( )
(b) Adequate funding of the oil industry for
regular turn around aintenance ( )
(c) Deregulation of the oil sector ( )
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