UNETHICAL MARKETING PRACTICES BY MARKETERS IN THE PETROLEUM DOWNSTREAM SECTOR OF NIGERIA

UNETHICAL MARKETING PRACTICES BY MARKETERS IN THE PETROLEUM DOWNSTREAM SECTOR OF NIGERIA

ABSTRACT

This study looked at unethical marketing techniques by Nigerian petroleum marketers in the downstream sector of Nigeria’s petroleum industry. The study’s objectives were to identify marketers’ main causes of under-dispensing or adulteration of petroleum products. To determine if marketers are trying to deceive their customers and if marketers have adulterated petroleum products to cause high-rate car/vehicle engine damages in Nigeria. Both desk research and survey were combined, so primary and secondary data were used for analysis. The desk research area was determined by the six geopolitical structures of the country, from which some states were chosen. The primary data was collected from the Lagos commercial areas. A sample of 350 motorists who regularly frequent 20 filling stations in Lagos’ commercial areas was obtained from a population of 3.500 people; This resulted in a 5 percent margin for error and 95% confidence; To test these hypotheses, the Chi-square goodness-of-fit test was used. The study’s findings revealed that greed is the major reason for marketers’ under-dispensing and adulterating petroleum products. Conclusively, it is evident from the study that: under-dispensing of petroleum products is a deliberate attempt by marketers to dupe their customers. Marketers are responsible for high rates of engine damage in Nigerian cars/vehicles due to petroleum products adulteration. It is recommended that the relevant law enforcement agencies improve their monitoring and enforcement efforts to curb the unethical marketing of petroleum product marketers in Nigeria.

 

 

CHAPTER ONE UNETHICAL MARKETING PRACTICES BY MARKETERS IN THE PETROLEUM DOWNSTREAM SECTOR OF NIGERIA

1.1 BACKGROUND INFORMATION 

Energy is at the core of human existence. It is also the pillar of wealth creation. Modern society cannot seriously address development issues if such consideration is not based on the foundation of effective energy planning and management that enhances optimal utilization, regular supply, and availability of energy resources. (Barnes et al., 2006).

Empirical reports from Nigeria’s petroleum regulatory agencies and other sources point to a high level of unethical practices by marketers in the downstream petroleum sector in the country. According to the DPR, the department has been inundated with complaints from the public about the sharp practices ragging as manipulation of dispensing pumps (under dispensing) by marketers and perennial incidences of fuel pollution in the country over the years, causing deaths, deformities, and irreparable damages to consumers of the petroleum products in the country.

Over the years, Nigeria’s downstream petroleum sector has increasingly become unstable (Onyishi et al., 2012). For example, Ameh M. O. (2012) pointed out that even with the existence of regulatory agencies, Nigeria’s downstream petroleum sector has experienced several problems, including scarcity, adulteration, bunkering of products, and corruption.

Oseni M. (2013) further stated that the sector’s controlling agencies have several weaknesses. Sanusi S. L. (2012) argued that the system consists of incompetent operational management throughout the supply chain, ranging from poor product handling to distribution to final consumers.

Ehinomen & Adeleke (2012) noted that the inefficiencies in handling activities in the jetties and storage depots result in inconsiderable leakages in the supply chain.

Sharp practices in the downstream sector of the Nigerian petroleum industry have continued to have a heavy toll on end-users as many fillings stations selling Premium Motor Spirit, also known as petrol in the country, have resorted to under-dispensing of the product. ( Kalejaye, 2013).

In 2017, the department of petroleum resources (DPR) in Kogi state sealed the NNPC filling station and 12 other filling stations along with phase 1 and Ganja junction, duping customers almost 2 for every 10 liters. ( Itodo,2017).

DPR State Controller, Engr. Amos Jokodola, who led the surveillance team on routine surveillance, uncovered shady dealings by most of the petroleum marketers whose filling stations were visited in the state capital Lokoja as their meters were found to have been adjusted, thereby ripping off customers. (Akubo, 2017).

The Department of Petroleum Resources (DPR) has shut over 200 filling stations over sharp practices ranging from overpricing, manipulating meters, and adulterating petrol nationwide. The spokesperson of the DPR, Mrs. Dorothy Bassey, said the affected stations were penalized for violating the laws and regulations of the downstream sector. (National Mirror reports, 2015).

According to a DPR (2013) report, the nation’s petroleum products market is flooded with adulterated products, the Department of Petroleum Resources (DPR) admitted on Thursday, July 25, 2013. Products like Premium Motor Spirit (PMS), also known as petrol, and Automobile Gas Oil (AGO), or diesel, are commonly used for domestic and automobile. Their adulteration usually causes explosions that result in social and economic catastrophe, said the report. Again, the Director-General, Standards Organisation of Nigeria (SON), Dr. Joseph Odumodu, said a nationwide sampling conducted by SON on Petroleum products showed a high level of adulteration at different distribution levels. (Opara, 2012).

In 2010, a family of six members in Kano State was hospitalized following an explosion from adulterated kerosene (Adunola, 2010). Then, in 2011 kerosene explosions occurred almost at the same time in Rivers and Edo states of the south-south zone of Nigeria. The explosions permanently killed many and incapacitated or disfigured others (NAN, 2011).

These unethical marketing practices have gone unabated by petroleum marketers. One thing is certain; their actions are not in the spirit of marketing which revolves around the satisfaction of consumers’ wants and needs to maximize profit while advocating society’s long-term best interest ( Damilola & Austin, 2011).

1.2 STATEMENT OF PROBLEM

The interests of the society have not been upheld, and neither has the Nigerian populace derived optimum satisfaction from the activities of the petroleum marketers. The study’s pervasive nature makes it imperative for the researcher to examine the unethical marketing practices by petroleum marketers in the downstream petroleum sector, emphasizing under-dispensing. Pollution of petroleum products, establishing whether or not petroleum marketers are involved in this illicit activity, and the consequent effect of fuel adulteration on cars/vehicles’ engines damages Nigeria.

1.3 RESEARCH QUESTIONS 

1. What is/are the cause(s) of under-dispensing and adulteration of petroleum products?
2. Is under-dispensing of petroleum products a deliberate attempt by marketers to dupe their customers?
3. Do marketers truly engage in these illicit acts of under-dispensing and adulterating petroleum products?
4. Can it be said that petroleum product adulteration is responsible for car/vehicles engines damages in the country?

1.4 OBJECTIVES OF THE STUDY 

1. To determine the major cause of under-dispensing and adulteration of petroleum products by marketers.
2. To determine objectively whether or not under-dispensing of petroleum products is a deliberate attempt by marketers to dupe their customers.
3. To determine if marketers truly engage in these illicit acts of under-dispensing and adulterating petroleum products.
4. To determine whether or not petroleum products adulteration by marketers is responsible for the country’s high rate of car/vehicle engine damages.

 

1.5 THE SCOPE AND LIMITATION OF THE STUDY

Taking cognizance of the time factor, availability of funds, the precision required, and other limitations involved, the scope of this research study was narrowed to the assessment of unethical marketing practices.

 (under-dispensing and pollution of product) by petroleum marketers in Lagos state and the consequent effect of fuel adulteration on cars/vehicles’ engines damages.

1.6 RESEARCH HYPOTHESES 

The following research hypotheses were formulated for testing in this study:

Ho1: Under-dispensing petroleum products is not a deliberate attempt by marketers to dupe their customers.

Ho2: Petroleum product adulteration by marketers is responsible for the high rate of car/vehicle engine damages in the country.

1.7 SIGNIFICANCE OF THE STUDY 

Studies on unethical marketing practices of marketers in the downstream petroleum sector in Nigeria revealed that price hikes, under-dispensing, and adulteration of petroleum, amongst others, have been the order of the day in Nigeria today (Udeagbara, Ojeh & Anusiobi, 2014). According to them, petroleum products such as kerosene, diesel, and gasoline were tested. It was discovered that the properties vary. This variation in the properties has been causing more harm than good in Nigeria. The knocking in automobile engines and the fire outbreak in different petroleum product sales outlets and homes result from adulteration. For every ten liters sold to a motorist, it is not unlikely that he drives away with less than seven liters due to the tampered meters by the filling stations. The innuendo is that the petroleum marketer gains additional three liters. Several other studies have proven that the primary factors stimulating these practices are differential pricing mechanisms of petroleum products and the easy availability of adulterants in the market.

This research work is of utmost importance as a reference for other researchers, an information guide for the general public, and an action plan guide to the various regulatory agencies and policymakers in the downstream petroleum sector in Nigeria.