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:
(a)
To identify the problem militating against the availability
of petroleum products in Emenite factory.
(b)
To identify the impact of petroleum products scarcity on the
capacity utilization of companies: The
case of Emenite Nigeria
limited.
(c)
To evaluate the role played by government and its agencies to
ensure availability of petroleum products.
(d)
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.
1.5
RESEARCH QUESTIONS
The critical appraisal seeks to give answer to the
following questions
(a)
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.
(b)
To what extent
does the non-availability f petroleum
product affect the capacity utilization of Emenite Nig Ltd
(c)
What are the role of government and its agencies in helping
to ensure availability of petroleum products?
(d)
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.
1
P.M.S it is known as
premiums major spirit or alternatively
petrol
2
MARKETER:- a company
licensed by the department of petroleum
resource operating under pipelines and product marketing company of NNPC
to market and distribute petroleum
3
NNPC : Nigeria
national petroleum corporation
4
MAN: manufacturers association of Nigeria
5
AGO: automobile Gasoline oil literally called diesel used by
have duty truck engines.
6
DPK: dual purpose kerosene used for domestic cooking and
aviation flue and other industry uses.
7
NEPA: national electrical power authority
8
GDP: Gross domestic
product
9
NNOC: Nigeria
national oil corporation
10
PPMC: pipeline and product marketing company.