Economics JAMB

The deregulation of the petroleum sector in Nigeria will bring about?

A. efficiency in pricing and distribution of the products
B. an end to the importation of fuel
C. an end to foreign firms’ dominance
D. fixing appropriate production quotas

Correct Answer:

Option A – efficiency in pricing and distribution of the products

Explanation

To understand this, we first have to understand what deregulation means. Deregulation is the removal of regulations or restrictions, especially in a particular industry. In this context it is the removal of regulations and restrictions such as subsidy paid by the Nigerian government on petroleum products.

One of the main reasons for deregulating the petroleum sector is to make the sector competitive, efficient and with lower product prices. The government has been paying for subsidy and this has led to stealing and corruption in that sector as well as high cost of refined products. If the sector is deregulated, petroleum products would be refined and sold in Nigeria eliminating the extra cost of paying for subsidy by re-importing the refined products.

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