The Domestic and International Relations of Nigeria’s Ministry of Petroleum Resources, 1971-2015

Abstract

As a major oil producing state, there exists in Nigeria a plethora of academic literature on a range of important subjects relating to the political economy of oil and its relationship with growth and development. Similarly, in terms of theorization, uncommon scholarly attention has been devoted to the ‘resource curse’ – a seemingly absurd situation in which resource-abundant states tend to register negative political and economic outcomes than those with less resources. Although some of the propositions of resource curse theorists, particularly the logic of the contradictory relationship between natural resources and ‘curse’ have been debated and challenged, the relevance of the theory continues to endure among academic and policy domains mainly due to widespread corruption in resource-abundant states. One major challenge that limits the usefulness of the existing literature on Nigeria’s oil relates to the concentration on the upstream sector of the oil industry. This situation has led to a situation where academic literature treats the Nigerian oil industry as a monolithic enterprise – a single or unified industry. Consequently, little or no attention has been given to the downstream sector that deals with refining, transportation and marketing of refined petrol. This is in spite of the overwhelming challenges of petrol shortages that have continued to inhibit socio-economic and political activities for most of the post-independence life of Nigeria. Therefore, this study aims to explain the paradox in which a country that has some of the largest oil reserves in the world continues to experience chronic and perennial shortages of petrol. The study notes the influence of forms of politics on the complex nexus that exists between and power and how this relationship has continued to engender thirsts for petrol within the domestic economy of Nigeria. The study argues that the governance system in place for the downstream sector has stifled growth and legitimized political interference by powerful elites across different political administrations. To advance this argument, I turn to the literature on resource curse that explained the effect of the ‘curse’ on ‘institutions’ to highlight how agencies in the downstream sector have been weakened by the dominant political culture in Nigeria. In the same manner, I employed the literature on resource curse that explained the effect of the ‘curse’ on public policies to account for the formation and implementation of subsidy policy in Nigeria’s downstream sector that serves special interests. While the study established the rationale for the popularity of the policy, I posit that previous attempts to resist the removal of subsidy on petrol by certain stakeholders and the mass of the Nigerian people is misguided and counterproductive. The study contends that the activities of nonstate actors such as petrol marketers is characterised by sharp practices that adds pressure on the system of distribution obtained in the downstream sector. Though the study is preoccupied with the study of the domestic challenges inhibiting distribution of petrol, I argue that since Nigeria is an exporter of crude oil and an importer of refined oil, it is subjected to the vagaries of international oil market, a factor that has no doubt contributed to the challenges of petrol shortages within its domestic economy. To explain how Nigeria got hooked in the international market, I traced the foundation of Nigeria’s entanglement in international politics that is supported by oil wealth, something that has become a constant behaviour of Nigeria cutting across various administrations since the 1970s. The study concludes that entrenched interests of powerful elites in the downstream sector that has served as a conduit pipe for draining public funds has consistently opposed reforms, sometimes using fronts. The factors noted above combined to challenge the governance of Nigeria’s downstream sector leading to persistent petrol shortages. In all, I employed a qualitative method of research where semi-structured interviews were used to generate empirical data which were subsequently triangulated with archival and secondary sources to validate the research findings.