Full Project – AN EVALUATION OF THE DISTRIBUTION STRATEGIES ADOPTED BY OANDO PLC FOR THE MARKETING OF PETROLEUM

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CHAPTER ONE

INTRODUCTION

This chapter consists of details of the topic under research.  Here the background of the study, statement of the problem, objectives and significance of the study will be revealed along with research question so as to enable the researcher know what the research work is all about.

1.1       BACKGROUND OF THE STUDY

As a result of petroleum products being the major exporting product among others, of our country.  Our country solely depends on it as the highest percentage revenue on the overall percentage of the total exportation products or items.

In the 1979s after the civil war, Nigerians have Agricultural products as the dependent product in both domestic and international uses.  But today due to greater lucrative of this product all over the world, abandoned the former for the latter.

As the uses is universal, the extractive regions which are at South east and south west encountered a difficult impact to be supplied or distribute to various areas of other regions of the country, due to mainly mismanagement and other opposing factors.  The transportation of this extracting products from the originated area to the refinery was a great problem in the country, because of its form bulky and channel of distribution.  The government them employed foreign bodies to refine this product in order to reach to the hook and of the country.  The refinery built and managed by government admitted a foreign firm to have a part in the refinery for the bases of their services as regards to importation.  Still not adequate as the dealer divert this product to their own perspective regions where they expect to dispose it in a high value.

At times, this petroleum products ie fuel, kerosene, diesel, bitumen to mention but few do change totally the generic colour used to it to another unpredicted colour thereby caused a harm to human body.  These dealers were formerly the staffs of one firm and another for years, left their various perspective offices for the marketing of these products thereby formed one organization and another to impose the prices on this products.  The region that is basically not interested in the use of this product by their majority because of their belief or customs has low cost and optimal quantities than other regions.

From the facts, it becomes clear that if the left cream of the nation is to be feasible accordingly, a great percentage or rate of the standard of living would have been a something of smile to the populace.

OANDO PROFILE

Oando’s earliest roots can be traced to the formation of ESSO Africa in 1956. ESSO Africa was a petroleum marketing company, a subsidiary of the Exxon Corporation on U.S.A.  In 1976, the Nigerian government purchased a controlling stake in the company and rebranded the company as Unipetrol Nigeria.  On 1st March 1991, Unipetrol became a Public Limited Company, later on in the same year, the Nigerian government sold 60% equity to the Nigerian Public in an initial public offering.  By February 1992, Unipetrol was listed on the Nigerian Stock Exchange.

In 1999, Unipetrol acquired a 40% stake in Gaslink Nigeria Limited, a gas utility company.  The acquisition was motivated by a desire to utilize its excusive gas sale and purchase agreement with the Nigerian gas company.  In 2001, the company increased its stake to 51 percent.

In 2000, ocean and oil, a private investment company led by Nigerian entrepreneurs, Adewale Tinulu and Omamofe Boyo acquired a 30% controlling interest in Unipetrol Plc.  In 2001, Ocean and Oil increased its stake in Unipetrol to 42%  via on irredeemable convertible loan  stock issue.

In 2002, Ocean and Oil led Unipetrol’s bid for a 60%  stake of Agip Nigeria Plc, a rival petroleum marketing firm, owned by Agip petroli  BV, an Italian-based oil company.  The merged company was named Oando Plc in 2003, making the company the largest downstream petroleum marketing company in Nigeria.

In 2005, Oando Energy services was incorporated as an integrated oilfiled services company to achieve the groups objectives in the upstream services industry.   In 2007, Oando Energy services acquired two oil drilling rigs in Nigeria’s Niger Delta.  In 2008, the company emerged Nigeria’s first indigenous oil company with interest in producing deep water assets through the acquisition of equity in two oil blocs.  By 2009, the company had acquired 5 swamps rigs and in 2010, the company launched its first independent power plant for the Lagos water corporation.  The project involved the construction of a 12.5mul power plant to provide uninterrupted power supply to the Lagos water corporation.

HISTORY AND BUSINESS OF THE COMPANY (OANDO)

The company commenced business operations as a petroleum marketing company in Nigeria in 1956 under the name of “ESSO” West Africa Incorporated” a subsidiary of Exxon Corporation of the United State of America.  In 1969, the company was incorporated as ESSO standard Nigeria Limited, and in 1976, the Nigerian Government acquired all of ESSO’s shareholding interest, thereby fully indigenizing the company whose name was subsequently changed to unipetrol Nigeria limited.  It become a public limited liability company in 1991, when the federal government divested 60% of its shareholding to the general public, and was quoted on the Nigerian stock Exchange in February 1992.  In 2000, the federal government divested its remaining N0% shareholding in the company, 30% of which was acquired by ocean and oil investment limited whilst the balance of 10% was taking by the Nigerian public.

In 2002, the company acquired Agip Petroli International BV’s 60% shareholding in Agip Nigeria Plc (Agip) and subsequently merged with Agip to become the second largegst player in the downstream petroleum marketing industry.  In December 2003, the company announced the launch of “Oando Plc” its new corporate identity to signify the creation of a proudly West Africa brand.  The new corporate identify and branding exercise portrays the values and brand essence of the company service excellence, performance – driven, dynamic and progressive, consistent quality experience and proudly West African.

1.2       STATEMENT OF THE PROBLEM

Petroleum products have a numerous problems on marketing on its distribution, it is the only and major exporting product of our country, which is disposed in a high rate to another country thereby expect the citizening to do the same the tendency of distribution strategy to the Northern and Southern regions of the country is much more sufficient than other regions, which causes scarcity of the product in these areas.  Some quantities of these products are being diversified to other different stations for a tremendous income, impact on hoarding which reveals the control is not effective.

Many of the distribution channels are being vandalized by unscrupulous individuals in the area which stagnantly affects its distribution and transportation.  Moreover, there is weights and measures on the quantities of this petroleum products making the dealers to have different prices of disposing this product in their various areas.  Finally, the Boards that deals on the marketing of this petroleum products (NUPENG, PENGASIN, etc) do impose some requisitions from the federal government which may not come forth, affect its distributions.

1.3       OBJECTIVES OF THE STUDY

The objectives of this study are:

1.           To ascertain whether there is an effective and efficient distribution of petroleum products, all round the country.

2.           To determine if sufficient production of petroleum products are sold at a cheaper rate and curls the trend of scarcity on the country as the sixth oil producing nation of the world, and the first in Africa.

3.           To find out whether the various refineries of the country are put in shape thereby limiting the services of other countries in refining our own petroleum products in terms of trade.

4.           To ascertain whether what we produce is satisfying the citizen.

5.           To identify a post-mortem to the present situation, and that of the future, and many years to come.

6.           To determine how the supervision of distribution of petroleum product is done to curls fore outbreak, and the cost of resuscitating the damages.

7.           Moreover, to identify the availability of petroleum product to minimize traffic hold-ups, queuing for a long time, unavailable means of transportation, wastage of hire in transporting oneself, and its high cost.

1.3    SIGNIFICANCE OF THE STUDY

It requires a little reasoning to discover that this research will be of immense benefits to the public government, Oando and its numerous branches, and as well other petroleum dealers.  It will enable them to discover the disequilibrium on the effective.  Marketing on various petroleum dealers in the country and outside.  It will enable them also to monitor the petroleum marketers on their channel of distribution in order to reach the purposely masses.

The Niger-Delta populace will benefit through establishment of various facilities in their area.  The public will discover the information of the petroleum dealers as regards to the rate of its consumption and the standard of living in the country.  Furthermore, this research will be immense benefits to Onado on improving their management functions or activities in all ramifications.  It will also help in the offer for future benefits.

Finally, many forming will benefit for easy mobility of their business activities and operation especially on those that have petroleum dump in their environment (UNEC, IMT etc).

1.4       RESEARCH QUESTIONS

1.           Do the faults in our refineries affect the distribution of petroleum products?

2.           Can the attitudes of these petroleum Boards circument the government intervention on the problem?

3.           What can be the effect of.

4.           Can it affect Oando on their struggling to be the petroleum leaver in the country and Africa?

5.           Can the discriminations in the political affairs of our country affect Oando in their business activities?

6.           Can we boast of sixty percentage (60%) satisfaction of these petroleum products by the average populace?

7.           Can we ensure a constant petroleum products in all regions of our country i.e improve in scarcities?

8.           Do you think that Bakaassi-Penusla area will be benefited from b this distribution of petroleum products?

9.           What measure can we take against the perpetrators that engaged in black marketing, this making a high percentage gain?

10.        What can we do to have a stable price of petroleum products in our country?

1.5       HYPOTHESIS FORMULATION

Hypothesis as we all know is an intelligent guess, a tentative statement, and a conjectural statement of the relationship between two or more variable.  Therefore, the hypothesis of this study was stated like these:

Ho:    Oando Plc cannot improve on the distribution channel for the marketing of petroleum product in our country. Null hypothesis.

H1:    Oando Plc can improve on the distribution strategy for the marketing of petroleum product in our country.  Alternative hypothesis.

Ho:    The Boards of petroleum dealers cannot stabilize the price, and rate of petroleum products in Nigeria.  Null hypothesis.

H1:    The Boards of petroleum dealers can stabilize the price, and rate of petroleum products in Nigeria.  Alternative hypothesis.

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Full Project – AN EVALUATION OF THE DISTRIBUTION STRATEGIES ADOPTED BY OANDO PLC FOR THE MARKETING OF PETROLEUM