ABSTRACT
The perennial problem of petroleum products scarcity in Nigeria has instigated technocrats and scholars to take a critical look into the distribution system of petroleum products in the country. Seeing that other countries are exploiting the advantage of using railway transportation for distributing petroleum products this research project examines the suitability of distributing petroleum products through railway transportation in Nigeria. By employing the use of questionnaires, feedback was obtained from technocrats in the oil industry. Major stakeholders covered included the Retail outlets, Jetty, Refinery, Product depot and Tanker drivers. The results obtained were compared with those from a study of the Indian and American rail transport systems. It was found that rail transport will play a healthy role in the transport of petroleum products since it is safe and fast and has a potential of buffering the stress on the other modes of transportation and bringing sustained stability in the oil and gas sector of the Nigerian economy. Recommendations were made for the revitalization of the rail transport system and channelling resources into research on areas that will bring about a total overhauling of the system.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Abstract vi
Table of contents vii
List of Figures……………………………………………………………………………. ix List of Tables ……………………………………………………………………………….x CHAPTER ONE 1.0 Introduction 1 1.1 Background of the Problem 1 1.2 Statements of the Problem 2 1.3 Present Research 2 1.4 Aim and Objectives of the Study 3 1.5 Significance of the Study 3 1.6 Research Hypotheses 4 1.7 Scope of the Study 4 1.8 Definition of Terms 5 CHAPTER TWO 2.0 Literature review 8 2.1 Introduction 8 2.2 Petroleum Distribution Network of the Downstream Sector 8 2.2.1 Petroleum products transportation 8 2.2.2 Petroleum products 9 2.2.3 Delivery process 9 2.3 Railway activities in Nigeria 10 2.3.1 Railway technology 12 2.3.2 Current state of Nigerian railway 13 2.4 Road accidents statistics 14 2.5 Pipeline vandalisation statistics 15
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2.6 Desk Study 17 2.6.1 A Study of the Indian system 17 2.6.2 A Study of the American system (USA). 19 CHAPTER THREE 3.1 Materials/Resources Required 21 3.2 Methods 22 3.3 Source of Information for Desk Study 22 3.4 Data presentation 23 3.5 Calculations 25 3.5.1 Computation formulae 25 3.5.2 Computation values 25 CHAPTER FOUR 4.0 Results and Discussion 26 4.1 Field Study 26 4.2 Discussion 29 CHAPTER FIVE 5.0 Conclusion and Recommendations 33 5.1 Conclusion 33 5.2 Recommendation 35 References 37 Appendix A 41
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CHAPTER ONE
INTRODUCTION 1.1 Background to the Research Petroleum products can be conveyed and distributed by various means under land and sea transportation, and even air transportation. As advanced countries in Europe, Asia and the United States of America take cost-advantage of every means necessary to convey petroleum products, Nigeria is still lagging behind. Petroleum products are mostly transported in tankers and pipe lines in Nigeria and seldom transported by ferries and rail wagons. It is widely speculated that rail transportation of petroleum products will go a long way to stabilize petroleum products delivery in Nigeria and restructure the entire downstream sector for good.In spite of the huge resources spent on subsidizing petroleum products by the Nigerian government, the country still suffers perennial scarcity of the products. The government will more often blame the scarcity on hoarding of the products. To ensure prompt, adequate and uninterrupted supply of petroleum products, technocrats have argued that the supply chain of Nigerian petroleum downstream sector has to be totally overhauled. Meaning: privatization of existing refineries, setting up more refineries, increasing our current depot capacity, integration of railway transportation into the current delivery system and ensuring a transparent regulatory framework. Whilst there are sufficient grounds to look into cases of corruption, product theft and diversion, pipeline destruction, proponents of deregulation and privatization seem to agree on fully incorporating railway transportation for petroleum products delivery.
Nigeria currently delivers most of its petroleum products through tanker trucks and pipelines. The inland water ways and rail systems are rarely used for delivery. With rising cases of road
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accidents as well as pipeline destruction in the country the need to explore and probably develop other systems of delivery has come to the fore. 1.2 Statement of the Problem/Research Questions Rail transport is usually the most suitable mode of transportation for heavy traffic flows when speed is also an advantage because of the lower cost per person per load as the train load increases.
1. Is it possible to replicate this cost advantage in the delivery of petroleum products to consumers in Nigeria?
2. In what ways can railway transportation tackle the lingering issues of petroleum product scarcity?
3. To what extent will railway delivery of petroleum products alleviate/solve the perennial problems of scarcity bearing in mind that railway transportation is not the panacea to this problem?
1.3 Present Research
The present research singles out railway transportation system for petroleum products delivery in Nigeria. Issues involving the gains and setbacks of integrating railway delivery of petroleum products, the intended role of railway transportation in the supply chain of Nigerian petroleum downstream sector and its acceptability will be examined. This research will compare and contrast rail transportation with existing transportation mode of petroleum products in Nigeria and how best it can solve present delivery problems. Finally this research will establish whether or not rail transportation is a viable means of delivering petroleum products to the end users.
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1.4 Aim and Objectives of the Study The aim of this research is to establish whether or not rail transportation is a viable means of delivering petroleum products to the end users in Nigeria. This research intends to achieve the following objectives:
1. To determine the potential gains of distributing petroleum products through railway transportation.
2. To identify the current problems of petroleum products delivery in Nigeria.
3. To identify the past and present problems of the railway sector vis-à-vis petroleum products delivery.
1.5 Significance of the Study Nigeria lacks a well-planned petroleum products distribution system which can serve as an area of research interest to the university. Furthermore the distribution of petroleum products in the Nigerian economy is fraught with complex problems resulting sometimes in petroleum products scarcity and shortages, hording products, inflated prices of products and contentions on the pump price of products. Nevertheless, it remains a lucrative business. Some school of taught argue that scarcity of petroleum products is more often a distribution problem than non-availability of the products themselves. It is hypothesized that the integration of railway in the existing distribution system will address the perennial problem of petroleum products scarcity.
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The findings of this research will chart a way forward for private investors and the Nigerian government. It may possibly open up a new business frontier in the distribution of petroleum products and expand railway activities into the petroleum downstream sector. Government policy and regulatory framework on railway as well as the petroleum downstream sector may well be redefined by the findings of this research. 1.6 Research Hypotheses What are the current problems in the delivery of petroleum products in Nigeria? How can railway transportation help in resolving these problems? Is transporting petroleum products by railway cost effective? Is railway transportation present in the distribution system of petroleum products in Nigeria? How can railway system be fully integrated in the delivery of petroleum products in Nigeria? To answer the aforementioned questions, this research is developed based on the hypotheses that railway transportation is a viable means of delivering petroleum products in Nigeria. 1.7 Scope of the Study
1. This research covers both primary and secondary aspects of distribution of petroleum products by railway transportation in the Nigerian downstream sector.
2. For the purpose of this research, petroleum products will be generalized as petrol also known as gasoline. Whatever success is recorded in petrol distribution can be replicated with the other petroleum products.
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3. The methodology in this research will exploit the wealth of knowledge of stakeholders in the petroleum downstream sector for opinions bordering railway delivery of petrol through a well-constructed questionnaire.
4. It will also limit itself to assessing the current delivery system of petroleum products through statistical reports of road accidents and pipeline destruction.
5. The research will be limited to the following areas: The downstream sector of the Nigerian petroleum industry. The distribution of the supply chain within the downstream sector.
1.8 Definition of Terms Petroleum products distribution is concerned with the movement of refined petroleum from the refinery to the final consumers across various locations of delivery in the country (Ehinomen and Adeleke, 2012). The following are terms frequently used in the discus of the oil economic sector vis-à-vis petroleum products and their transportation. The Upstream Sector: Is concerned with exploration and production of petroleum (crude oil). The Downstream Sector: Is concerned with refining petroleum, distribution of petroleum products, and marketing and sales of petroleum products. Primary Distribution of petroleum products involves delivery of refined products from the refinery or loading terminals to the depots (also known as wholesale marketers)
Secondary Distribution involves the transportation of petroleum products from depot points to retail outlets (also known as service points or petrol stations).
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Supply-Chain Link in the Oil and Gas Industry Exploration → Production (Storage) → Refining → Marketing (Distribution) → Consumer Refinery: A facility which produces products from petroleum. Product Depot: A facility which stores petroleum products in large volumes for wholesales purposes to retail outlets and others. Retail outlets: Are facilities which store petroleum products for sales to the final consumer. Jetty: A facility located on the docks for loading and offloading of petroleum products to ships for transportation. Tanker truck: A vehicle used for conveying petroleum products on land. Transportation is an essential part of human activity, and in many ways form the basis of all socio-economic interactions. Indeed, no two locations will interact effectively without a viable means of movement. Rail Transport: Is a means of conveying passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks on which they run. Track usually consists of steel rails installed on sleepers/ties and ballast, on which the rolling stock, usually fitted with metal wheels, moves. However, other variations are also possible, such as slab track where the rails are fastened to a concrete foundation resting on a prepared subsurface.
Tank wagon: A type of railroad car or rolling stock designed to transport liquid and gaseous commodities.
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NNPC: Nigerian National Petroleum Company. This is the national oil company (NOC) for Nigeria, involved in both upstream and downstream petroleum operations. DPR: Department of Petroleum Resources. This is the nation‟s regulatory agency for the petroleum industry. NRC: Nigeria Railway Corporation. This agency manages the entire railway transportation in Nigeria. GDP: Gross Domestic Product. This is the market value of all officially recognized final goods and s
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