GOVERNANCE MECHANISMS AND FIRM OUTCOMES IN NIGERIA’S PETROLEUM DOWNSTREAM SECTOR

Abstract

This study focuses on the effects of regulation process on firm performance of the downstream sector in the Nigerian petroleum industry. The specific objectives are to examine the effects of legal framework on firm performance, to examine the effects of monitoring process on firm performance, to ascertain the effects of price fixing process on firm performance and to determine the effects of evaluation process on firm performance. The descriptive survey research design method was adopted. The population of this study consists of major petroleum marketers and tank farm owners in the South-South region of Nigeria; Matrix Energy, Rain Oil, Nepal Oil and Gas, Mainland Oil and Gas, Dozzy Oil and Gas, Masters Energy, Delmar Petroleum and their employees. The sample size of three hundred and sixty-two (362) was obtained using Krejcie and Morgan table. A stratified sampling technique was used to know the different subgroups or strata of employees in the selected firms of the study. The study was driven by primary and secondary data. The data were analyzed using correlation and regression analysis as analytical tools. Findings revealed that legal framework has significant effect on firm performance with (β= .136, P =.001 <.05), monitoring process has significant effect on firm performance with (β= .259, P =.000 <.05), price fixing process has significant effect on firm performance with (β= .075, P =.002 <.05), evaluation process has significant effect on firm performance with (β= .130, P =.001 <.05). The study concluded that the proxies of regulation (legal framework, monitoring, price fixing and evaluation) have significant effects on the performance of the downstream sector in the Nigerian petroleum industry. The study concludes that if the sector is fully deregulated, it will enable market forces of demand and supply to determine petroleum products prices; rather than the Federal Government fixing them. The study recommends that refineries should be made to work at full capacities to meet up with our daily fuel consumption capacity in the country through turn around maintenance. To end subsidy regime, it requires strong political will, sensitization of all stakeholder and Nigerians on the benefits of total deregulation in the sector. The study contributes to knowledge by demonstrating that the proxies of regulation process: legal framework, monitoring process, price fixing process and evaluation can predict firm performance and also it established a framework of regulation process dynamics and how they are related to firm performance.