Economic Implications of Petroleum Policies in Nigeria: An Overview
Onyemaechi Joseph Onwe

The Nigerian petroleum industry has been having major transformations since the discovery of crude oil in Nigeria in 1956. These transformations were no doubt due to observed lapses in administration of the petroleum industry. The lapses were often accompanied by policy implementation problems that lead to social, economic, and political issues on the specific benefits of petroleum policies in Nigeria. The argument has been that there are no recorded economic benefits from petroleum policies in Nigeria. In this presentation, we attempt to enumerate such benefits by examining some implications of the various petroleum policies. Our approach was basically descriptive in nature. Available time-series data on relevant variables were critically examined to ascertain the economic implications of the various petroleum policies. Our findings reveal three major economic implications: first is observed rapid expansion of the number of economic actors in the Nigerian petroleum industry; secondly, we observed rapid development of the transport system; and, thirdly, there were improvements in the gross domestic product (GDP), foreign direct investment, and employment levels. Some negative implications of the petroleum policies were also observed, especially in relation to consumption-related policies. A case in point was the fuel subsidy which had generated economic problems ranging from scarcity of petroleum products to loss of man-hours. There were also confusions on the actual beneficiaries of the said subsidy in Nigeria. The analysis also indicate that a major cause of these problems was ineffective administration of petroleum policies in Nigeria. For some ways forward, the paper proposes the following strategies for administration of the petroleum strategies in Nigeria. First is application of a disaggregated approach to policy formulation and implementation. Stakeholders should be allowed to be fully involved. Second is a total deregulation of the petroleum subsector, with the aim of minimizing free-market distortions. Third, we recommend strong emphasis on alternative sources of energy, given recent developments in the global market economy. The proposed emphasis on liquefaction of the Nigerian natural gas is a move in the right direction.

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