The Effect of Cost of Distribution on the Pump Price of Petroleum Products in the South East Nigeria

Abstract

The public actors in the petroleum industries are the Ministries, Department and Agencies (MDAs) such as the Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR), Pipelines and Products Marketing Company Ltd (PPMC), Petroleum Equalization Fund (mgt) Board (PEF), Petroleum Products Pricing Regulatory Agency  (PPPRA) among others, while the private actors consist of both indigenous and expatriate firms such as independent petroleum marketers and major marketers. Both ensure that consumers got the products at the right quantity, right quality, right place and at right price. This paper aims to find out the effect of cost of distribution on the pump price of petroleum products. The only two government owned petroleum depots in the South East are located in Emene Enugu and Osisioma Aba, though moribund which compels marketers to travel very far away to source these essential commodities. Pipelines are the best and cheapest mode of distributing these products but, all have been vandalized but marketers bridge the products with trucks. The order price of products, transport freight, associations/unions levies and dues; rent, wages, salaries and allowances; spare parts, electricity, generator bills and maintenance, bank charges and interest rates and insurance premium; extortions from government officials have remain regular costs of distribution.

Keywords: Distribution, Price, Petroleum Products, South East Nigeria