




































American Research Journal of Economics, Finance and Management 

Volume 12 Issue 2, April-June 2024 
ISSN: 2836-9416 
Impact Factor: 5.57 
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REGULATORY MANAGEMENT PRACTICES AND 

ORGANISATIONAL PERFORMANCE IN NIGERIA’S 

DOWNSTREAM PETROLEUM SECTOR 
 

 

Akeni Obaro Kingsley 
Department of Business Administration, Delta State University Abraka, Nigeria 

Email: koakeni2@yahoo.com 

DOI: https://doi.org/10.5281/zenodo.12168184 

 

Abstract: This study examined the impact of the regulatory process on organisational performance 

in Nigeria’s Downstream Petroleum sector. The aims are to investigate the effects of the legislative 

framework, the monitoring process, and the price-fixing mechanism on organizational performance 

in Nigeria’s downstream petroleum sector. The Nigeria downstream sector is the portion of the oil 

and natural gas industry responsible for refining, distributing, and retailing. This portion of the 

industry includes oil refineries, petrochemical plants, petroleum products distributors, and natural 

gas distribution companies. The descriptive survey research design methodology was used. The 

study's population includes key oil and gas servicing companies operating in downstream activities 

in Nigeria's South-South and South-East regions, such as Con Oil, Rain Oil, Oando Oil and Gas, Ascon 

Oil and Gas, Dozzy Oil and Gas, Geo Links, and Forte Oil, as well as their workers. Krejcie and 

Morgan's table was used to acquire the 362 samples. A stratified sampling strategy was utilized. Both 

primary and secondary data drove the study. The data were examined utilizing correlation and 

regression analysis as analytical techniques. The study found that the legal framework (β=.136, P 

=.001 <.05), monitoring process (β=.259, P =.000 <.05), and price fixing process (β=.075, P =.002 

<.05) all had a substantial impact on organisational performance. The study revealed that price 

fixing has an impact on organizational performance in the oil and gas sector. The research concluded 

along the road of policy implementation and proposed that legislative framework, monitoring and 

price fixing should be reasonably applied, consistent and improved, upon systematically to avoid any 

mismanagement and its antecedent issues. 

Keywords: Management strategies, oil and gas, price fixing, legal framework, monitoring 

 

Introduction 

Every country has its regulatory system for enacting laws, regulations, and rules, as well as a set of 

review procedures. Countries are increasingly implementing regulatory management policies and 

improving their institutions to ensure that their Regulatory Management Strategies (RMS) in the oil 

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and gas sector are very successful. Regulatory management ('controlling the regulation makers') is a 

type of meta-regulation that encompasses both regulatory policymaking ('governing regulation 

developers') and regulatory administration and enforcement ('regulating the wielders of regulatory 

authority') (McMahon 2015). According to Olujobi, Olujobi, and Efua (2021), each country has its 

method for enacting and reviewing laws, regulations, and guidelines. These RMS are then integrated 

into a larger public management system, which functions under the overarching constitutional 

framework. It is difficult to define exactly what an RMS is and how it differs from other systems. There 

is no formal definition of an RMS that sufficiently separates it from the larger public management, 

public policy, and public law systems within which regulatory management occurs. Gill (2011), in his 

assessment of Regulatory Management in New Zealand, highlighted that structuring will comprise the 

distribution of authorities, responsibilities, and tasks among the many players. It will consist of both 

centrally defined and general rules and processes, as well as decentralized and personalized rules and 

processes." 

Nigeria is ranked ninth in the world regarding oil and gas production capabilities, below Iran, and 

second to none in Africa, ahead of Angola, Libya, and Algeria (OPEC, 2018). The Department of 

Petroleum Resources (DPR) reports that it imports around 75 million litres of refined petroleum each 

day. There appears to be an unwritten conspiracy involving only a few individuals from the ruling and 

running of the state-owned Nigerian National Petroleum Company (NNPC), which has historically 

grounded Nigerian refineries and served as a cog in the petroleum sector's development. 

The excitement and intensity that normally characterize petroleum debate in Nigeria stem from 

unexplainable deprivations and sufferings of Nigerians during plenty and prosperity. Nigeria has large 

petroleum reserves and is a major oil exporter in the Organization of Petroleum Exporting Countries 

(OPEC). Since oil was found in large amounts in Nigeria, it has generated billions of dollars in cash, but 

this has not resulted in any significant economic progress. To solve the challenges plaguing many 

countries' petroleum sectors, structural reforms have become required, leading to the adoption of 

deregulation. Markets are deregulated, and the government's role in the sector is redefined (state 

interventions such as preferential treatment of state-owned oil corporations, price restrictions, and 

monopolies are eliminated). As originally conceived in 2003, deregulation of the Nigerian petroleum 

industry's downstream sector entailed removing government control over petroleum product prices, as 

well as restrictions on the establishment and operation of refineries, jetties, and depots, while allowing 

private sector players to participate in petroleum product importation and exportation and leveraging 

market forces to prevail. The downstream industry operates by converting crude oil into refined and 

petrochemical goods, as well as treating gas, transporting petroleum products, and selling them. 

Effective leadership and governance are necessary for rapid and sustainable economic growth and 
development. A country afflicted by inadequate leadership and management, such as Nigeria, is certain 
to face widespread poverty and other socioeconomic ills. Bad leadership has afflicted Nigeria's 
downstream industry, with people whose responsibilities and actions have hampered the sector's 

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expansion. One of the key reasons Nigerians oppose full deregulation is because those in positions of 
power, who are supposed to properly manage the country's natural resources for socioeconomic growth 
and development, deliberately undermine the sector. Leadership responsibilities are critical in all 
organizations, whether private or public because how well or poorly they are carried out directly affects 
the company's performance. The notion of leadership is difficult to grasp. As a result, leadership roles 
are critical to the organization's survival, growth, and achievement of objectives. A leader's 
responsibilities include decision-making, communication, motivation, selection, and development of 
others to fulfil objectives or policies. Because of the foregoing, the study will investigate the impact of 
regulatory management practices on organizational performance in Nigeria's oil and gas industry. 
The Problem 
Nigeria's oil and gas industry, which accounts for a large portion of the country's foreign income and 

more than half of its government revenues, is in horrible health. Although Nigeria's National Statistics 

Bureau reported $45.6 billion in income last year, a 46% increase over 2021 levels, those figures conceal 

a sad truth: Nigeria's oil output has been progressively declining in recent years. In April, the nation 

produced less than 1 million barrels of oil per day, significantly below its OPEC quota of 1.8 million bpd. 

So, even though oil prices rose in 2022 because Russia invaded Ukraine, Nigeria's energy business has 

had a lengthy history of missed opportunities. According to former finance minister Zainab Ahmed, the 

entire impact of high pricing has been “nil or negative”. 

The country's oil output has been hampered by widespread theft and vandalism, as well as decades of 
underinvestment in infrastructure. As a result, the state-owned oil corporation NNPC cannot reach its 
output objectives. Mele Kyari, the chairman of the NNPC, has claimed that government and security 
officers, as well as religious members, steal up to 600,000 barrels of oil every day. The security situation 
is so dire that ex-militants oversee the affairs and protect pipelines Similarly, official figures suggest 
that Nigerians now consume about 68mn litres of petrol daily, compared with about 49mn in 2015. Yet 
there has not been a commensurate increase in population or economic activity. Some believe that the 
numbers have been fiddled and that oil distributors sell subsidized oil in neighbouring countries at a 
huge profit.  
President Bola Tinubu, the new president, removed subsidies on his first day in office. Nigeria's 
operational environment no longer supports efficient oil production. "Vandalism and theft have 
severely constrained production, causing production shutdowns for months on end," she said, citing 
disruptions at major export terminals. Fractious government agencies and the resulting regulatory 
ambiguity have also harmed investor trust, and "there's no clarity on who regulates what. “The gas 
industry is not doing much better. Analysts believe that a price ceiling on the domestic market has 
constrained investment. However, the export market is stronger, particularly since the Russia-Ukraine 
crisis has forced the EU to shop for gas all over the world. 
Study Objectives 

1. Examine the effects of legal framework on organisational performance in the oil and gas sector 

2. Examine the effects of monitoring process on organisational performance in the oil and gas sector 

3. Ascertain the effects of price fixing process on organisational performance in the oil and gas sector 

 

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Research questions. 

1. What are the effects of the legal framework process on organizational performance in the oil and gas 

sector? 

2. How does the monitoring process affect organizational performance in the oil and gas sector? 

3. What are the effects of price-fixing on organizational performance in the oil and gas sector? 

Hypotheses 

Ho1: Legal framework process has no significant effect on organizational performance in the oil  

        and gas sector  

Ho2: There is no significant effect of the monitoring process on organizational performance in the  

         oil and gas sector.  

Ho3: Price fixing process has no significant effects on organizational performance in the oil and  

         gas sector 

Literature Underpinning the Studies. 

Conceptual Review 

Concept of Regulation Process 

The government exerts significant influence on the market economy through regulation. The extent of 

government rules is immense, affecting all sectors of the economy and every facet of our everyday life. 

Merriam-Webster defines regulation as: "an official rule or legislation that specifies how something 

should be done." Dudley and Brito (2012) extend on the concept and describe regulations, often known 

as administrative laws or rules, as the major vehicles through which the federal government 

implements laws and agency objectives. They are precise rules or instructions that specify what people, 

businesses, and other organizations may and may not do. To function correctly, market economies need 

clear rules. Without a legislative framework establishing and enforcing what and what not, as well as 

the "rules of the game," a free business system or mixed economy, such as Nigeria's, could not exist. 

The executive branch of government produces rules that affect many facets of our lives. Regulations 

influence everything you do, from the moment you get up to the time you go to bed. However, most 

people are uninformed of the consequences of regulations or the process by which they are developed. 

(Dudley & Brito, 2012). 

Regulation Process 

The regulatory process is the process of developing rules to govern actors in a certain business. It is also 

commonly referred to as the "rulemaking" process (Ekhator, 2016). Nigeria's regulatory procedure is 

complicated since the country has a bicameral legislature at the national level but a unicameral 

legislature in the states and local governments. Nigeria has a federal legislative structure; therefore, 

laws can be passed at the national, state, and local government levels. However, we will focus on the 

national level, which is relevant to our study. As previously indicated, Nigeria has a bicameral 

legislature on the national level. This implies that the national legislative actions are divided between 

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two independent assemblies: the Senate and the House of Representatives. The National Assembly, 

which includes both houses, is Nigeria's principal legislative body. The Nigerian economy is hea0avily 

regulated in various sectors. The oil and gas business is one of them. While certain regulatory 

requirements are only applicable once, others must be renewed after a given period to continue 

functioning in that business. Under the existing Petroleum Act of 1969, the Minister of Petroleum 

Resources has extensive authority to set rules and grant and cancel oil licenses and leases (Resolution 

Law Firm, 2021). President Muhammadu Buhari altered the Petroleum (Drilling and Production) 

Regulations, 1969 ("the 1969 Regulations") while serving as Minister of Petroleum Resources. The 1969 

Regulations, among other things, advise on the execution of Petroleum Act provisions governing 

applications for oil exploration and prospecting permits, as well as rules for oil drilling and extraction 

activities. 

The President is currently the de-facto Petroleum Minister, acting under advice from the Minister for 

State, Petroleum. The National Assembly as the Legislative arm of government is empowered to pass 

legislation on Petroleum matters – which is on the Exclusive Legislative List. 

Legal Framework Process 

A legal framework, also known as a regulatory framework, can be defined as a combination of 

constitutional, legislative, regulatory, jurisprudential, and managerial norms that collectively 

constitute the laws that regulate the functioning of a certain business or activity (Olujobi 2012). Nigeria 

has a variety of laws governing oil and gas. The Petroleum Act, which granted the Federal Government 

ownership and control of any oil discovered in Nigeria, and the 1999 Nigerian Constitution (as 

amended) are two of the most important of these laws. This comprises oil discovered on Nigerian 

territory, in the country's territorial waters, on the continental shelf, and inside its exclusive economic 

zone. According to the 1969 Petroleum Act, the Nigerian government currently owns and controls all 

petroleum on, beneath, and inside Nigerian territory. Nigeria joined OPEC in 1971. OPEC was 

established to assist oil-producing countries by adopting a "group" approach (all resolutions passed are 

binding). 

Monitoring Process 

Monitoring is the systematic gathering, analysis, and use of data to follow a program's progress toward 

its objectives and assist management in making decisions. Monitoring often focuses on processes, such 

as when and where activities take place, who delivers them, and how many people or organizations they 

contact (Cage and Dunn 2009). Acting on the advice of the Minister of State Petroleum, the President 

is now the de facto Petroleum Minister. The National Assembly, as the government's legislative arm, 

has the jurisdiction to pass legislation on petroleum-related topics that are contained on the Exclusive 

Legislative List.  

Price Fixing Process 

The word "price fixing" comes from economics and is commonly defined as an agreement (written, 

verbal, or implied by action) among rivals to raise, reduce, or stabilize prices or competitive terms. Price 

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fixing regulation, on the other hand, is when the government or its agency sets the price of a product or 

service rather than allowing it to be established spontaneously by free-market forces. In other words, it 

occurs when the government establishes the price at which something should be sold by its policy. 

Although there is law that prohibits firms from fixing their prices in some instances, there is no legal 

protection against government price fixing (Hayes, 2018). Price fixing regulation refers to regulatory 

strategies for determining and applying limitations on businesses or sectors (Dunne, 2017). The term 

"regulatory" refers to the degree to which the public is involved in the price formulation process. The 

immediate goal of most price fixing legislation is obvious: to limit independent price-setting; in other 

words, to prohibit regulated enterprises from charging higher or, more unusually, lower prices for 

goods or services. This might include a fixed price or rate of return, a maximum price ceiling or 

minimum price floor, or more ambiguous types of control. 

Conceptual Framework 

Independent Variables      Dependent Variable 

 

Regulation Process 

 

 

 

 

 

 

 

 

 

Fig 2.1: Conceptual Model 

Source: Researcher’s field survey (2024) 

Legal Framework Process and organizational performance of the oil and gas Sector 

Before 1965, local petroleum product requirements were met by importation in a controlled system, 

with the private sector solely responsible. However, the Organisation of Petroleum Exporting Countries 

(OPEC) Resolutions of 1960 and 1971 ushered in a substantial shift in Nigeria's petroleum industry 

ownership structure. Resolutions pushing member states to engage in oil operations by acquiring 

concessions owned by foreign businesses prompted the Nigerian government to develop a more 

uniform downstream approach. In 1971, the government established the Nigerian National Oil 

Corporation (NNOC), now the Nigerian National Petroleum Corporation (NNPC), under Decree 

Number 33. The Nigerian government authorized the NNOC to purchase any asset or liability in 

existing oil organizations, as well as to operate in all phases of the petroleum business. The first 

Nigerian government-owned refinery was established in 1978 in response to the need to participate in 

Legal Framework Process 

Monitoring Process 

Price Fixing Process 

Organizational 

Performance  

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downstream sectors. Following it, there were three further refineries, twenty-one (21) depots, and 

around 5001 kilometres of strategically essential pipeline. 

Monitoring Process and Organizational Performance of the Oil and Gas Sector 

The Federal Ministry of Petroleum oversees the establishment and executing of government policies. 

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is the 

regulatory body for the oil and gas industry. The power to supervise activity in the petroleum 

downstream industry has puzzled the NMDPRA. The lack of adequate control in the petroleum 

downstream sector has caused significant damage to the industry (Ogunjubi, 2011).  

The Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) oversees day-to-day 

petroleum industry monitoring and supervision, including monitoring oil company operations, setting 

and enforcing environmental standards, collecting royalty and rents, supervising and ensuring 

compliance with oil industry regulations, issuing licenses and permits, and protecting all oil and gas 

investments. Governments take involvement in oil and gas operations through the Nigerian National 

Petroleum Corporations employ a range of contractual forms to develop oil and gas resources.  

Price Fixing Process and Organisational Performance of the Oil and Gas Sector 

The government subsidy system had the direct consequence of boosting consumption, resulting in 

Nigeria's unreliable refineries seldom producing enough to meet local demand. Furthermore, large 

volumes of petroleum goods made their way into adjacent markets, where petroleum product prices 

were up to fifteen times higher. The subsidy plan imposed a substantial strain on the Nigerian economy. 

A Petroleum Argus assessment from 1993 estimated that the damage to the Nigerian economy was USD 

1,606 million. This accounted for around 17% of the country's oil export revenues (Wapner, 2017). Price 

fixing, also known as price ceiling, is a type of price control/regulation that "sets a level above which 

prices are not allowed to rise," according to Taylor (2005). This type of law can prevent prices from 

achieving equilibrium, resulting in a situation in which the amount offered does not equal the quantity 

requested. Price limits are frequently employed to protect clients from circumstances in which they may 

be unable to get necessities. (Bobai, 2012). 

Theoretical Framework 

Resource Curse Theory 

This study was based on the Resource Curse Theory, also known as the Paradox of Plenty or the Poverty 

Paradox, which was developed by Richard Auty in 1993. It refers to the paradox that countries with an 

abundance of natural resources, particularly oil and gas, have lower economic growth and worse 

development outcomes. The resource curse concept, often known as the paradox of plenty, refers to 

many resource-rich countries' failure to fully capitalize on their natural resource abundance, as well as 

their governments' inability to appropriately respond to public welfare needs (NRGI, 2015). According 

to the Resource Curse Theory, the presence of minerals and fuels in Less Developed Countries (LDCs) 

results in negative development consequences such as poor economic performance, growth collapses, 

high levels of corruption, ineffective governance, and increasing political violence. This simply means 

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that natural resources are viewed as a "burden" rather than a "gift" in most poor countries. While the 

discovery of natural resources may lead to better development outcomes, resource-rich nations have 

higher rates of conflict and authoritarianism, as well as worse rates of economic stability and growth, 

than their non-resource-rich neighbours (NRGI, 2015). This explanation also suited the research since 

the petroleum industry, which should be the driving force behind the long-term development of other 

sectors of the economy, has an albatross around its neck despite the government's numerous laws 

Empirical Review 

Ekeinde, Adewale, Diepiriye, and Dumbili (2022) investigated the deregulation of the downstream 

sector of the Nigerian oil industry and its influence on pump prices of petroleum products. The oil sector 

is certainly the cornerstone of the Nigerian economy, accounting for more than 80% of the country's 

foreign exchange and GDP. The significance of the petroleum sector to Nigeria's growth and economic 

strength cannot be overstated. This article covers the deregulation of the downstream sector of the 

Nigerian petroleum industry, with a focus on petroleum products' pump prices. Over the years, it has 

been noticed that, despite the massive quantities of income generated by the petroleum sector, the price 

of petroleum products in Nigeria continues to climb, despite large sums of money being spent on 

subsidizing product prices to make them affordable to Nigerians. The study examines the notion of 

deregulation and how a well-planned deregulation strategy may be implemented to accomplish the 

desired objectives of product availability and low pump costs. It posits that a totally and completely 

deregulated downstream will not always result in product pump prices that are cheaper than the 

existing ones both in the short and long periods, but in a competitive market with many firms 

competing, it will result in product availability and competitiveness. It proposes that the government 

implement steps to combat corruption and collusion, which might undermine the subsector's successful 

deregulation. It proposes that if downstream deregulation is to produce the best results, particularly in 

terms of product pump prices, then having an effective domestic refining capacity is critical, which 

would include revamping state-owned refineries, issuing licenses for the construction of new refineries, 

and operating them efficiently. It advises that the deregulation of the downstream be gradual to 

accomplish the intended aims. 

Olujobi (2021) carried out a study on Deregulation of the downstream petroleum industry: An overview 

of the legal quandaries and proposal for improvement in Nigeria. The study investigates the necessity 

for deregulation of the downstream petroleum sector to tackle shortfalls and to enhance quantities of 

petroleum commodities in Nigeria. The goal is to improve industry competency through governance, 

legislative changes, and fierce commercial rivalry by benefiting from the expertise of other advanced 

nations in transforming and strengthening downstream oil sector rules. The study takes a conceptual 

legal approach, drawing on existing materials to support a doctrinal legal research method. The study 

also draws on primary and secondary sources of law, such as the Constitution and case law. The 

research discovered that the government's absolute authority in the industry, as well as incongruent 

valuing of oil commodities, made the industry unappealing to financiers seeking to establish private 

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refineries that would ensure adequate supply of petroleum and reasonable profits on their investments, 

due to the government's excessive regulation of the industry. The research devised a methodology to 

limit the constant rise in petroleum prices while still ensuring the proper operation of the downstream 

petroleum industry. The study concludes with recommendations, such as the need for a high-tech 

fusion of policies and incentives for downstream investment to help speed up the enactment of the 

pending Petroleum Industry Governance Bill 2017 and complete deregulation of the industry to 

encourage private investment and stop subsidy disbursements from becoming a new source of 

corruption. 

Abdurrahman, and Shuaibu, (2021), the long-run and short-run dynamics of petroleum downstream 

deregulation: An ARDL Approach. This paper investigates the application of ARDL Technique to 

determine “The long-run and short-run dynamics of petroleum downstream deregulation Spanning the 

period 1991-2014: Secondary data were used, and econometrics models were analyzed through the 

application of Augmented Dickey-Fuller in testing the stationarity of the time series. Based on the 

findings of the study, the results of the unit root indicate that the variables have mixed degree of 

integration I(0), I(1); The bound test cointegration procedure revealed the presence of long-run 

relationship among the variables. The study revealed that importation of refined premium motor spirit 

(PMS) grossly affects the GDP of the economy negatively both in short and long run; the study therefore 

recommends total deregulation of the downstream sector must be gradually and consistently pursued 

to deliver maximum result to all stakeholders and the nation. While that is being pursued, adequate 

infrastructure, especially refineries, should be put in place. 

Tools and Materials 

The research design method that was adopted for this study was the survey research design method. 

The population was drawn from registered major petroleum marketers and tank farm owners in 

southern part of Nigeria as listed below. From informal interviews on the company’s website sources 

and with key personnel who are privy to the employees’ registers in their respective companies, the 

population figure is estimated at six thousand eight hundred (6,800). 

Table 1: Distribution of the Population 

S/N Names of Firms Population Per 
Firm 

1 Con Oil and Gas 840 
2 Rain Oil and Gas 720 
3 Oando Oil and Gas 1220 
4 Ascon Oil and Gas 860 
5 Dozzy Oil  1410 
6 Geo Links  760 
7 Forte Oil and Gas 990 
 Total 6800 

Source: Researcher’s Field Survey (2024) 

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The research's sample size is a fraction of persons recruited from the population to investigate the 
impact of the regulation management approach on the organisational performance of the enterprises 
chosen for the study. Krejcie and Morgan's (2017) statistical table for estimating sample size from a 
given population, where N is the population and S is the sample size, was used. In the Krejcie and 
Morgan table, each population figure corresponds to a sample size figure. For a population of 6,800, 
the sample size (S) is 362. As a result, this study's population-based sample size is 362 workers. 
To allocate the sample size of 362 to the firms and their location, the study adopts the stratified 
sampling method to give a fair representation to the selected firms. The Bowley`s proportional 
allocation formula was used 
The formula is as stated below 
nh = nNh 

       N 

Where: 

nh = Number of units allocated to each firm 

Nh = Number of employees in each firm stratum in the population 

n = Total sample 

N = The total population size under study 

 

Con Oil and Gas 
nh = 362 * 840 

           6800  = 45 
Rain oil 
nh = 362 * 720 

           6800  = 38 
Oando Oil and Gas 
nh = 362 * 1220 

            6800  = 65 
Ascon Oil and Gas 
nh = 362 * 860 

    6800  = 46 
Dizzy Oil 
nh = 362 * 1410 

           6800  = 75 
Geo Oil and Gas 
nh = 362 * 760 

            6800  = 40 
Fort Oil and Gas 
nh = 362 * 990 

    6800  = 53 
 

 

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Table.2 Sample Size Distribution 

S/N Names of Firms Sample Size Per Firm 

1 Con Oil and Gas 45 

2 Rail Oil 38 

3 Oando Oil and Gas 65 

4 Ascon Oil and Gas 46 

5 Dozzy Oil 75 

6 Geo Links Oil and Gas 40 

7 Fort Oil and Gas 53 

 Total 362 

Source: Researcher’s Field Survey (2024) 

The respondents to the research were selected using probability sampling procedures. Specifically, 

stratified sampling was used in the study. A five (5) point Likert scale was used to measure the 

respondents' opinions, as supplied.  

Internal consistency analysis (Cronbach's alpha) and item-to-total correlation were used to determine 

the reliability of the research instrument's constructs. CA offers an estimate of the indicator 

intercorrelations; an appropriate score for CA is 0.7 or greater, whereas less than 0.7 indicates poor 

dependability (Seckaran, 2003). According to the data below, the reliability coefficients are above the 

0.7 threshold. Overall, all items received favourable and dependable assessments. The estimate showed 

adequate internal consistency.  

Table 3 Reliability coefficients of study constructs 

Dimension of study 

constructs 

Number of items Cronbach’s Alpha coefficient 

Legal Framework Process 4 0.751 

Monitoring Process 4 0.811 

Price Fixing 4 0.822 

Firm Performance 4 0.842 

Source: Output of pilot survey data, 2024. 

Descriptive statistics, Pearson correlation, and multiple regression analytical methods were utilized to 

determine the nature of the link between the regulating process and company performance of the 

downstream sector in Nigeria's petroleum industry. Multiple regressions were employed to predict 

outcomes; they not only reveal a positive, negative, or no association, but also the strength of the link 

(Jonson and Kuby, 2007). This statistical method is considered acceptable since it provides a link 

between the independent and dependent variables. The hypotheses provided in this study were 

examined using multiple regression analysis. The statistical analysis was chosen because it helps the 

researcher make sense of the data and reach reliable findings that lead to smart decisions. 

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Model Specification 

The following model specification was developed; 

FPer= F(LFP, MP, PF, EV) 

FPer = α + β1LFP+ β2MP+ β3PF+ β4EV+ε 

Where: 

FPer:  Firm Performance  

LFP Legal Framework Process 

MP Monitoring Process 

PF Price Fixing  

ε:           error term. 

Results and Discussions 

Table 4:  Legal Framework Process and Organisational Performance 

S/N 

 

Statements Scale Mean 

(X) 

Standard 

Deviation 

SA 

5 

A 

4 

U 

3 

D 

2 

SD 

1 

  

1 Government policies do 

not affect performance of 

firms in the petroleum 

downstream sector. 

67 

(23.5) 

69 

(24.2) 

47 

(16.5) 

47 

(16.5) 

55         

(19.3)     

4.415 .6855 

2 Subsidy has no significant 

effect on firm 

performance in the 

Nigeria petroleum 

downstream sector 

117 

(41.1) 

67 

(23.5) 

22 

(7.7) 

42 

(14.7) 

37 

(13)         

4.586 .6531 

3 Product importation by 

NNPC has no impact on 

firm performance. 

82 

(28.8) 

92 

(32.3) 

42 

(14.7) 

37 

(13) 

32 

11.2        

4.540 .5654 

4 Partial deregulation of 

the petroleum 

downstream sector has no 

effect on firm 

performance 

111 

(38) 

101 

(35.4) 

46 

(16.1) 

27 

(9.5) 

- 

                 

4.347 .7705 

Source: Analysis of Field Survey, 2024. 

 

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Table 4,  depicts the extent to which the legal framework process affects corporate performance. 

Statement 1 found that 135 respondents (47.7%) agreed that government policies had little effect on the 

performance of enterprises in the petroleum downstream industry. 47 (16.5%) were indecisive, while 

102 (35.8%) disagreed. In statement 2, 184 (64.6%) of respondents agreed that subsidies had no 

substantial impact on business performance in Nigeria's petroleum downstream industry. 22 (7.7%) 

were unsure, while 79 (27.7%) disagreed. In statement 3, 174 respondents (61.1%) agreed that NNPC's 

product importation had little influence on business performance. 42 (14.7%) were indecisive, while 69 

(24.2%) disagreed. In statement 4, 212 (74.4% of respondents) agreed that partial deregulation of the 

petroleum downstream sector had little impact on organizational effectiveness. 46 (16.1%) remained 

unsure, whereas 27 (9.5%). 

Table 5:  Monitoring Process and Organisational Performance 

S/N 
 

Statements Scale Mean 
(X) 

Standard 
Deviation 

SA 
5 

A 
4 

U 
3 

D 
2 

SD 
1 

5 Monitoring in the 
petroleum downstream 
sector has no impact on 
organization’s 
performance in the 
petroleum downstream 
sector 

107 
(37.5) 

77 
(27) 

42 
(14.7) 

27 
(9.5) 

32 
(11.3) 

4.396 .7272 

6 Price disparity due to lack 
of monitoring does not 
affect the performance of 
organizations in the 
petroleum downstream 
sector 

67 
(23.5) 

101 
(35.4) 

50 
(17.5) 

36 
(12.6) 

31 
(11)             

4.468 .6791 

7 Observation and checking 
do not affect 
organizational 
performance  

112 
(39.3) 

97 
(34) 

22 
(7.7) 

27 
(9.5) 

27 
(9.5)             

4.477 .5538 

8 Control of petroleum 
products does not affect 
the organization's 
performance 

127 
(44.5) 

82 
(28.7) 

28 
(10) 

27 
(9.5) 

21 
(7.3)              

4.235 .7674 

Source: Analysis of Field Survey, 2024. 

Table 5, demonstrates the extent to which the monitoring process influences organizational 

performance. According to statement 5, 184 respondents (64.5%) agreed that monitoring in the 

petroleum downstream industry had little influence on business performance. 42 (14.7%) were 

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indecisive, while 59 (20.8%) disagreed. In statement 6, 168 respondents (58.9%) agreed that price 

disparities caused by a lack of monitoring had little influence on business performance in the petroleum 

downstream industry. 50 (17.5%) were unsure, while 67 (23.67%) disagreed.  

In statement 7, 209 respondents (73.3%) agreed that observation and checking had little effect on 

organizational performance. 22 (7.7%) were unsure, while 54 (19%) disagreed. In statement 8, 209 

respondents (73.3%) agreed that control of petroleum products had little effect on company 

performance. 28 (10%) were unsure, while 48 (16.8%) disagreed. 

T 

Table 6,  Price Fixing and Organisational Performance 

S/N 

 

Statements Scale Mean 

(X) 

Standard 

Deviation 
SA 

5 

A 

4 

U 

3 

D 

2 

SD 

1 

9 PPPRA price ceiling does 

not affect firm 

performance in the 

downstream sector 

69 

(23.5) 

67 

(24.2) 

47 

(16.5) 

47 

(16.5) 

55 

(19.3)             

4.551 .5769 

10 Incessant price hikes of 

petroleum products do 

not affect firm 

performance 

100 

(35.1) 

97 

(34.8) 

43 

(15.1) 

14 

(4.9) 

29 

(10.1)              

4.435 .7828 

11 Lack of uniform prices in 

depots does not affect 

firm performance 

93 

(33) 

73 

(25) 

42 

(15) 

36 

(12.6) 

41 

(14.4)               

4.516 .6586 

12 Price fixing does not have 

any effect on firm 

performance 

88 

(30.9) 

83 

(29.1) 

48 

(17) 

28 

(10) 

38 

(13)                 

4.540 .6561 

Source: Analysis of Field Survey, 2024. 

Table 7,  depicted the extent to which price fixing influences business performance. Statement 9 found 
that 136 respondents (47.7%) agreed that the PPPRA price ceiling did not influence company 
performance in the downstream sector. 47 (16.5%) were indecisive, while 102 (35.8%) disagreed. In 
statement 10, 197 (69.9%) of respondents agreed that constant price increases for petroleum items had 
little influence on company performance. 43(15.1%) were unsure, while 43(15%) disagreed. In 
statement 11, 166 (58%) of respondents agreed that the lack of standardized pricing in storage depots 
has no impact on business performance. 42 (15%) were indecisive, and 77 (27%) disagreed. In statement 
12, 171(60%) of the respondents agreed that Price fixing does not have any effect on firm performance. 
48(17%) were undecided while 66(23%) disagreed. 
 

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Organisational Performance 
S/N 
 

Statements Scale Mean 
(X) 

Standard 
Deviation SA 

5 
A 
4 

U 
3 

D 
2 

SD 
1 

17 My company generates 
adequate returns on its assets 

83 
(29.1) 

88 
(30.9) 

48 
(17) 

28 
(10) 

38 
(13)               

4.477 .5538 

18 My company’s shareholders’ 
value has improved 

98 
(35.1) 

97 
(34.8) 

41 
(14.4) 

22 
(7.7) 

27 
(10.1)            

4.235 .7674 

19 My company delivers on its 
value proposition to 
customers 

69 
(23.5) 

67 
(24.2) 

47 
(16.5) 

47 
(16.5) 

55 
(19.3)            

4.291 .7141 

20 My company’s customer 
retention rate has improved 

73 
(26) 

93 
(33) 

42 
(15) 

36 
(12.6) 

41 
(14.4)           

4.392 .6754 

Source: Analysis of Field Survey, 2024. 
Table 7, . Statement 17 found that 171 respondents (60%) agreed that my organization delivers 
acceptable returns on assets. 48 (17%) were unsure, while 66 (23%) disagreed. In statement 18, 195 
(69.9%) of respondents agreed that my company's shareholder value has increased. 41 (14.4%) were 
unsure, while 49 (17.8%) disagreed. In statement 19, 136 (47.7%) of respondents agreed that my 
organization meets its value offer to customers. 47 (16.7%) were indecisive, while 102 (35.8%) 
disagreed. In statement 20, 166 (59%) of respondents agreed that my company's client retention rate 
had increased. 42 (15%) were indecisive, and 77 (27%) disagreed. 
Table 8,  Correlation matrix studied variables 

  firm 
performance  

legal 
framework 
process 

monitoring 
process 

Price 
fixing 
process 

Evaluation 
Process 

firm 
performance 

Pearson correlation 
Sig.(2-ailed) 
No. 

         1 
 
        
        285 

    

legal 
framework 
process 

Pearson correlation 
Sig.(2-ailed) 
No. 

       .507** 
 
        .000 
        285 

        1 
 
     
     285 

   

monitoring 
process 

Pearson correlation 
Sig.(2-ailed) 
No 

       .222** 
 
       .000 
        285 

    .450** 
 
    .000 
     285 

       1 
 
    
     285 

  

price fixing 
process 

Pearson correlation 
Sig.(2-ailed) 
No 

       .349** 
 
       .000 
        285 

    .218** 
 
    .000 
    285 

    .294** 
 
     .000 
      285 

      1 
 
      
      285 

 

**Correlation is significant at the 0.01 level (2-tailed) 
*Correlation is Significant at the 0.05 level (2-tailed) 
 

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The above table 8,  showed positive correlation coefficients for the metrics of company performance, 

indicating that they are good measurements of the regulatory process. The results showed that the legal 

framework process linked favourably with company success (r=.507**, 0.01).  

The second component, the monitoring process, is linked favourably with business performance 

(r=.222**, 0.01), followed by the legal framework process (r=.450**, 0.01).  

The third variable, the price-fixing process, had a positive correlation with firm performance (r=.349**, 

0.01), the legal framework process (r=.218**, 0.01), and the monitoring process (r=.294**, 0.01).  

The fourth variable; evaluation process correlated positively with firm performance (r= .479**, 0.01), 

with legal framework process (r= .249**, 0.01), with monitoring process (r= .359**, 0.01) and lastly 

with price fixing process (r= .146**, 0.01). 

Multicollinearity Test 

Table 9:  Collinearity statistics of independent variables 

Independent variable Tolerance VIF 

Legal Framework .946 4.057 

Monitoring Process .773 3.294 

Price Fixing .930 2.076 

Mean  3.429 

Source: computed from SPSS analysis of field survey data, 2024 

The result in Table 9:  shows the variance test inflation factor test (VIF); the mean VIF value Reported 

is 3.429 which is less than the benchmark value of 10 points to the absence of multicollinearity.  

Table 10: Multiple Regression Analysis of Coefficients a 

Model  Unstandardized 

Coefficients 

Standardized 

Coefficients 

t Sig 

B  Std. Error Beta  

1 (constant) 

legal framework monitoring 

process  

price fixing process  

6.678 

  .143 

  .266 

  .143 

1.875 

 .066 

.068 

.071 

 

.136 

.259 

.130 

3.562 

2.155 

3.892 

2.016 

.000 

.001 

.000 

.001 

a. Dependent Variable: firm performance 

Table 10: Model Summary 

                             

Model  

R  R  Square Adjusted R 

Square 

Std. Error of the 

Estimate 

1 .978a .956 .914 1.8948 

.a Predictor: (constant) legal framework, monitoring process, price fixing process, evaluation process 

.b Dependent variable: organisational performance 

The multiple regression analysis was adopted to test the relationship of the legal framework, monitoring 

process, price fixing process, evaluation process and firm performance. The results are shown in Table 

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10: From the data shown, the correlation R=.978 means that the four (4) factors have a high 

relationship with firm performance. In this regression, the independent variables at 91.4% (R square= 

0.914), and ANOVA statistics (F=10.702, p<.05) indicated that the overall model is statistically 

significant and has Std. Error of the estimate at ± 1.8948. When considering the regression data of 

independent variables, I found that legal framework (B=.143, SEb1= .066, β= .136, t=2.155, P=.001), 

monitoring process (B=.226, SEb1= .068, β= .259, t=3.892, P=.000), price fixing process (B=.076, 

SEb1=. 065, β= .075, t= 1.159, P=.002) and evaluation process (B=.143, SEb1= .071, β= .130, t=2.016, 

P=.001) predicted firm performance with a statistically significant at 0.05. Therefore, I accept Ho1, Ho2, 

Ho3 and Ho4 which means that the legal framework, monitoring process, price fixing process and 

evaluation process are positively related to firm performance. 

The structural equation model reveals the following regression equations for analyzing the firm 

performance based on four (4) dimension regulation processes. 

Unstandardized Score    Y= -6.678 + .143(LFP) + .266(MP) + .076(PF) + .143(EV) 

Standardized Score        Zr = .136(LFP) + .256(MP) + .075(PF) + .130(EV) 

Table 11:   ANOVA a 

Model  Sum of 
Squares 

Df Mean Square F  Sig. 

   Regression 
l Residual 
   Total 
 

          176.330 
          925.733 
        1102.063 

              4 
          280 
          284 

           38.423 
             3.590 

            10.702              .000 b 

. a. Dependent variable: firm performance 

. b. Predictors (constant), legal framework, monitoring process, price fixing process, evaluation process 

Source: SPSS Version 23, 2024 

The F-ratio in the ANOVA Table tested whether the overall regression model is a good fit for the data. 

The table showed that the independent variables (legal framework, monitoring process, price fixing 

process, evaluation process) significantly predict the dependent variable (firm performance), since F(4, 

280) = 10.702, p<.005, the regression model is good for the data. 

Test of Research Hypotheses  

The multiple regression analysis was adopted as an analytical tool for testing the hypotheses. 

Hypotheses’ testing is really a systematic way for testing claims or ideas about any given parameter in 

a population using data measured in a sample. The p-values reported in the regression coefficient table 

are used for testing the study hypotheses. 

The Decision Rule 

The null hypothesis is the central part of research and is the hypothesis that is usually tested. If the 

probability value calculated is greater than the critical level of significance, then the null hypothesis will 

be accepted while the alternate hypothesis is rejected and vice versa. If the probability value is .000 is 

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smaller than the critical value of 5% (ie .000 < 0.05), we conclude that the given parameter is 

statistically significant. In this situation, it is accepted that there is need to reject the null hypothesis 

and to accept the alternate. 

Gujarati & Porter (2009) observed that when we reject null hypotheses, we say that our findings are 

statistically significant and vice versa. Gujarati & Porter (2009) also posited that it is preferable to leave 

it to the researcher to decide whether to reject the null hypotheses at the given value. Note, the p-value 

is also known as the observed or exact level of significance or the exact probability of committing a type 

1 error. More technically, the p-value is the lowest significance level at which a null hypothesis can be 

rejected (Gujarati & Porter, 2009). Thus, the p-value is at 0.05 (5%). 

Hypothesis one 
HO1:  Legal framework process has no significant effect on the organisational performance of the  
      downstream sector in the Nigerian petroleum industry. 
From the coefficient table 4.8 legal framework process exhibited positive with organisational 
performance given the Beta value (β=136, p<.001). The regression analysis for legal framework process 
and firm performance on the test of hypothesis one, table 4.8 indicated that the exact level of 
significance calculated (.001) is less than the probability of committing a type one error (.05). Giving 
the result, the null hypothesis is rejected to accept the alternate hypothesis thereby implying that there 
is significant positive relationship between legal framework process and firm performance. 
Hypothesis two 
HO2; There is no significant effect of the monitoring process on organizational performance of the  
         downstream sector in the Nigerian petroleum industry. 
The coefficient table 4.8 shows the extent to which the monitoring process positively affects firm 
performance. Given the Beta value (β=259, p<.000), the regression analysis for monitoring process and 
firm performance on the test of hypothesis one, table 4.11 indicated that the exact level of significance 
calculated (.000) is less than the probability of committing a type one error (.05). Giving the result, the 
null hypothesis was rejected to accept the alternate hypothesis thereby implying that there is a 
significant positive relationship between monitoring process and firm performance. 
Hypothesis three 
HO3: Price fixing process has no significant effects on the organisational performance of the 
downstream sector in the Nigerian petroleum industry. 
The coefficient table 4.8 shows the extent to which the price fixing process positively affects firm 
performance. Given the Beta value (β= .075, p<.002), the regression analysis for price fixing process 
and firm performance on the test of hypothesis one, table 4.8 indicated that the exact level of 
significance calculated (.002) is less than the probability of committing a type one error (.05). Giving 
the result, the null hypothesis was rejected to accept the alternate hypothesis thereby implying that 
there is significant positive relationship between price fixing process and firm performance. 
Discussion of Results 
Legal Framework Process and Organisational Performance 
From the results of data analyzed in Table 4.7 it was reported that the overall positive correlation 
coefficient values among variables of the legal framework process are indicative that they are 
appropriate indicators and dimensions of the legal framework process. It showed the extent to which 

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the legal framework process accounted for the change in firm performance (β= .136, P< 0.01). This 
shows that there is a significant positive relationship between the legal framework process and firm 
performance. Table 4.9 shows that the Adjusted R2 reported 545 (54.5%) of the change in firm 
performance is explained by the legal framework process. This result agreed with the finding of the 
Petroleum Products Pricing Regulatory Agency (PPPRA) Act, 2003 which established the Petroleum 
Products Pricing Regulatory Agency to determine the pricing policy of petroleum products and to 
regulate supply and distribution by setting benchmark prices through modulation mechanisms to 
promote stability in the oil sector. The inefficiency in the product transportation system has impeded 
the efficiency of the agency through ageing petroleum pipelines, pipeline vandalization activities, poor 
road networks and poor remuneration of most petroleum truck drivers which have occasioned sharp 
practices, inefficiency and corruption in the sector.  
Monitoring Process and Organizational Performance 

The result obtained from table 4.7 portrayed overall positive correlation coefficient values among 

variables that measure the monitoring process, and this points out the fact that they were all 

appropriate measures of the monitoring process. It showed that the (β= .259, P< 0.00) indicates that 

the monitoring process has a significant positive relationship and accounted for variance in firm 

performance. Also, table 4.9 showed that the Adjusted R2 reported 545 (54.5%) of the change in firm 

performance is explained by the monitoring process. This supports the findings of Odigure, 

Abdulkareem and Adeniyi (2020) as their study finds that the slow development witnessed in the 

petroleum downstream sector was due to government regulation which does not give room for the 

forces of demand and supply to determine the prices of petroleum product. They also argue that the 

lack of proper monitoring has caused a lot of price differences in some parts of the country. 

Price fixing process and organizational performance 

The result from the regression on Table 4.8 revealed that the price fixing process has a significant 

positive effect on firm performance. The (β= .075, P< 0.02) shows the extent to which price fixing 

process accounted for the change in firm performance. In table 4.9, it showed that the Adjusted R2 

reported 545 (54.5%) of the change in firm performance is explained by price fixing process. More so, 

the result of the hypothesis tested showed that there is significant positive relationship between price 

fixing process and firm performance. The study is in support of Oyefusi (2002) who also asserts that 

price controls do impose cost on both agents and create inefficiencies of preventing market prices from 

rising to competitive equilibrium; quantity demanded exceeding quantity supplied by marring price 

from upward adjustment as well as market forces struggle expressed in other ways. 

Summary  

The main objective of the study was to assess the effects of the regulatory management process on 

organizational performance of the oil and gas sector in Nigeria. A cross-sectional research design was 

adopted and Krejcie and Morgan table was used to determine a sample size of 362 employees. 

Cronbach’s alpha (α) coefficient was used for testing the reliability of the research instrument 

(questionnaire) and the findings from this test revealed that the items were reliable and valid at an 

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overall Cronbach’s alpha value of 0.80. The values were above 0.70 exceeding the threshold of 

Cronbach’s alpha value recommended by (Sekeran, 2003).   

The analyses of the background profile of the respondents showed that 59.3% of the respondents were 

male and 40.7 were female. Regarding the age bracket, the age distribution of respondents which was 

spread across various age brackets shows that the highest concentration of respondents fell within the 

age bracket of Below 30 years with 111 (39.0%) of respondents. The categories of respondents between 

31–40 years account for 87 (30.5%). 87 (30.5%) of the respondents fell under 40 years and above. 

Under educational qualification, OND/NCE holders account for 97(34%), of those respondents that 

possess HND/B.Sc were 113 (40%). 59(21%) of the respondents indicated that they were Masters 

Holders and those other educations accounted for 16(5%) of the respondents. It indicates the marital 

status of the respondents; it was observed that 182 (63.9%) of the respondents were married while 103 

(36.1%) were single. The result revealed that legal framework, monitoring process and price fixing 

process has a significant positive effect on organisational performance in the oil and gas sector. 

The results of the regression analyses of the variables revealed that regulation process dimensions have 

positive effects on organisational performance and the strength of the positive effect is as follows, from 

the highest; monitoring process (β = .259, P < 0.00), legal framework process (β = .136, P < 0.01), and 

lastly price fixing process (β = .075, P < 0.02). The result of the hypotheses testing revealed that indeed, 

a general view of the regulation process accounted for organisational performance. Therefore, the 

Adjusted R2 reported 545 (54.5%) of the change in firm performance is explained by the regulation 

process. 

Conclusion 

The legal framework process and its reform will turn NNPC into a fully commercial, viable legal entity 

that is profit-driven with opportunities to raise cash from the capital markets through the provision of 

the Petroleum Industry Governance Act. The monitoring process through the lack of working refineries 

and heavy pressure on infrastructure from resultant importation has been a key cause of supply 

shortages. When the Price fixing process if the sector is fully deregulated, it will enable market forces 

to determine petroleum products prices, rather than the Federal Government fixing them. 

Recommendations 

1. The deregulation policy of the federal government is not associated with challenges, rather it is 

a policy option available for improved performance meant to remove the bottlenecks that have 

characterised the sub-sector, such as the sorry state of the four refineries, inefficiencies in distribution 

and pricing of petroleum products and the negative effects of monopolistic structure of the downstream 

sub-sector. 

2. The government should also increase the quantity of crude for domestic refining to target some 

refineries as exporting refineries. This way, the country could meet the refined products needs of 

neighbouring Economic Community of West Africa States officially, this is important, given the need to 

mitigate the smuggling of petroleum products across the nation’s borders 

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3. That government should in effect provide broad guidelines for the operation of refineries and 

allow private initiative in their running with good tax reliefs. 

Author Information 

Kingsley Akeni is a researcher specializing in industrial management and regulatory frameworks in the 

oil and gas sector. His work focuses on the intersection of regulation and employee performance, aiming 

to provide insights that can help improve operational efficiency and workforce productivity in heavily 

regulated industries. 

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