EFFECT OF FUEL SCARCITY IN NIGERIA ECONOMY A CASE STUDY OF KANO STATE

EFFECT OF FUEL SCARCITY IN NIGERIA ECONOMY A CASE STUDY OF KANO STATE

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CHAPTER ONE

INTRODUCTION

1.1      Background of the study

The word “Scarcity” means when there is insufficiency of something. Since there is insufficiency of fuel it is termed as fuel scarcity.In the past Nigerians solely depended on the exportation of agricultural product for their source of income. This continued until the discovery of the presences of the presence of oil in our country, especially in Bayelsa. This made them (Nigerians) to divert from Agriculture to the exportation of oil to other countries, which was actually fetching them much money even till this present time. There are many subsidiary oil companies scattered all over the country but the biggest among them is in port-Harcourt and it is called the Nigerian National Petroleum Company (NNPC). It is from here that crude oil is extracted from the ground refined to get those components like fuel, kerosene and gas. There are depots scattered all over the country like shell Port-Harcourt, NNPC Kano, Eif oil Company, Warri Pipeline are directed towards these oil companies to facilitate distribution. Tanker drivers and other dealers will load form the depot and distribute to filling stations, then the consumers will buy form the filling stations.Fuel supply has been moving smoothly in the country before the announcement of the budget by the head of state in January last four year 1999. it was in February 1999 that the whole issue of fuel scarcity started. This has made it difficult for the government to accomplish that which it proposed to do I the budget.In the past, there has not been any services fuel scarcity, everything was moving smoothly, the industrialist both public and privates, does not have any problem. Economically the price of goods and services, were affordable by the people. Car owners can just go to filing station and buy fuel at a normal price of N22.00 per liter and with much ease.Things were moving smoothly in the country and in this part Kano environ until 1994 when we had one case of fuel scarcity not until on up till this movement of this study. Because of fuel scarcity, people are so desperate to by fuel for their business. For this reasons, whenever any information was passes concerning the presence of fuel in any filling station, car owners will go there and que -up. Some of them will have to sleep in the filling stations a day or more than two days while waiting for their turn. People or car owners when they cannot buy fuel in any filling station, are forced to buy from the black market at an exorbitant price. Some people use big gallons to buy fuel that will serve them for some days. For the reason that there is insufficient fuel in the filling station, makes people sell fuel in ration so that everybody present will buy. The car owners who think the fuel will not reach tem will start jumping the que, thereby causing fights among themselves. Because of this reason, the filling station owners invite soldiers so that there will be peace and orderly que in the filling stations. Fuel scarcity are sometimes artificial in the sense that during the Christmas period. Filling station owners will just hoard their fuel in order to sell at a high price.Just like water and air are important to the living human being for daily duties and hitch-free survival, the importance of fuel to automobile cannot be over looked. A typical situation is in the case halts because of the fact that there is shortage of fuel. The importance of fuel in this our developing and technically inclined economy is fast like the mixture of oil and salt as far as the economy forgets growth as one of its goals. Fuel is used in a variety of activities ranging from production, mobility, cooking, electricity supply, sources of foreign exchange, to mention but a few. To this extent one would accept that fuel plays a great role in the life of every citizen of the country and the country as a whole. However, in recent times, there has been a rampant shortage in the availability of the commodity. It is on this basis that the researcher intends to evaluate the causes and effects of fuel scarcity in the Nigerian economy, but shall concentrate on Kano as a case study due to time and financial constraints. Fuel is a form of energy, according to Longman English Dictionary; fuel is a form of energy used for the energizing of the machine used for production. In that case, its scarcity will affect the living standard of the people in various ways.

a.           It increases the cost of transportation

b.          Electrical faults

c.           The cost of food items and living

d.          Social unrest

e.           Adulteration of fuel and so on.

The effects of fuel scarcity in Kano metropolis cannot be over emphasized for it is one of the very prayers for the entire economic attribute to move about. During 1998 February 12, business activities in Kano State was brought to a light because there was no fuel. In the state, vehicles were seen in long queues in the filling stations even when there is fuel at the filling station or not. Commuters were stranded in the various bus stops with no hope of motor coming to take them to their various destinations

 Consignment upon this prices of commodities skyrocketed so much beyond the reach of the buyers “News watch publisher Vol.12 November in 1996”. The perennial fuel scarcity in Kano State has fired production companies to produce at a low capacity, with high price, since the fuel which is used as a nourishing material to the machine which is supposed to be used in production is scarce to get and when gotten the price is 300% (three hundred percent) increase more than the former price. This is why most companies’ products are costly and these tend to scare customers away from the products. Also from the statistics available transportation costs have gone up considerably, making it difficult for customers to get to their various destinations.  A journey that normally costs ten Naira (N10) a drop now costs twenty Naira (N20) to forty Naira (40) a drop, which represents a total increase of 200 percent. Conversely the daily spending of the average citizen has increased due to the sky rocketed increases in foodstuff, which was occasioned by the fuel scarcity. Furthermore, lateness to duty or offices has been heightened as a result of lack of commuter buses and taxis to take them to their various destinations. To this end, the effect of fuel scarcity is so great that most indigenes of Kano State and non-indigenes of Kano State metropolis are suffering untold hardship.

1.2 STATEMENT OF THE PROBLEM

Problems associated with the effect of fuel scarcity in Nigerian are as follows:

Lack of Qualified Personnel

Poor Management and Maintenance

Hoarding of Fuel

Inconsistent and Poor Government Responses

 All these draw a set back on the smooth running of fueling supply. Hoarding fuel is a big problem because it makes some drivers to pack their cars at home and break to where they are going or enter transport. It is also a problem to students because sometimes student don’t go to school simply because there is no fuel in the filling stations because vehicles cannot move without fuel.

1.3 OBJECTIVE OF THE STUDY

The objectives of the study are;

1.   To ascertain the effect of fuel scarcity to people of Kano state

2.   To ascertain the effect of fuel scarcity on Nigeria’s economy

3.   To ascertain the relationship between fuel scarcity and Nigeria’s economy

1.4 RESEARCH HYPOTHESES

For the successful completion of the study, the following research hypotheses were formulated by the researcher; 

H0: there is no effect of fuel scarcity to people of Kano state

H1: there is effect of fuel scarcity to people of Kano state

H02:there is no relationship between fuel scarcity and Nigeria’s economy

H2:there is relationship between fuel scarcity and Nigeria’s economy

1.5 SIGNIFICANCE OF THE STUDY

This study will be of great benefit to the Nigeria National Petroleum Company (NNPC) who is not the sole cause of fuel scarcity. This study will help them to find out those people or those things that contribute to fuel scarcity and take drastic measure to combat them.This study or research will be of immense benefit to the government because if there is fuel scarcity, it then means that crude oil is also insufficient by this; the government will not have enough oil to transport in order to get foreign exchange.This study will also be of great benefit to car owners and businesses because if the fuel scarcity is rectified and resolved all business will start improving and progressing.From this study, the rural drivers will find it easy to transport their farm product from the rural area to urban zones because the cost fuel will be on a lower side.Also from those research work, it will be kind of encouragement. In that when the cost fuel is low, the cost of transportation will be also low, and these can lead also to low price of commodity been transported.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers effect of fuel scarcity in Nigeria economy. The researcher encounters some constrain which limited the scope of the study;

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study       

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities. 

1.7 DEFINITION OF TERMS

FUEL: A fuel is any material that can be made to react with other substances so that it releases chemical or nuclear energy as heat or to be used for work.

SCARCITY: Scarcity refers to the limited availability of a commodity, which may be in demand in the market. The concept of scarcity also includes an individual capacity to buy all or some of the commodities as per the available resources with that individual.

ECONOMY: An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study


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