Forensic Investigation Into Petroleum Products Consumption, Subsidisation and Fiscal Spending in Nigeria by C. E. Alozie (PhD)
Abstract This paper analytically investigated petroleum products procurement, volume of consumption, fiscal expenditure on consumption subsidies, the utilisation of domestic crude-oil allocations in local refining production in satisfying consumption, discipline in the approved subsidy expenditure budget. Ex-post ‘facto’ materials were employed. Numerical descriptive statistics on volume of locally produced-supplied to imported products volume ratios, budget deviation indexing for fiscal discipline; simulated ‘produce or import simulation of prior fiscal expenditures. Results indicate that local refining output of petroleum products were partly the major root cause of insufficient source of supply of products procurements which in turn compelled Nigeria to be reliant on importation in satisfying consumption requirements. Domestic crude allocation utilisation for refining production indicates that only about 33 percent of average aggregate expected minimum refined petroleum products yields of average aggregate volume consumption requirements were recorded. Budget discipline is lacking. Gross undersupply of electricity induced constant rise in the consumption of petroleum products. The paper concludes that lack of proper routine maintenance of extant local refineries, production inefficiencies as well as grossly mismanagement of the daily domestic crude-oil allocations were primarily responsible for the huge fiscal subsidies expenditure. Nigeria’s indulgence in fuels importation and negligence of local refineries is tantamount to creating employment in those other refined fuels producing countries and escalating unemployment in Nigeria. T Fiscal spending on subsidies would have funded proper routine TAM and build four new refineries which is financing option that ought to have guaranteed ‘pareto optimality’ in the economy.