TITLE PAGE
PERFORMANCE
EVALUATION OF NNPC (1999-2013)USING REGRESSION ANALYSIS
TECHNIQUES
CHAPTER ONE
INTRODUCTION
1.1.
Background of the
study
The
Nigerian national petroleum corporation (NNPC) was established on April 1, 1977
as a merger of the Nigerian National Oil Corporation and the Federal Ministry
of Mines and Steel. NNPC by law manages the joint
venture between the Nigerian federal government and a number of
foreign multinational corporations, which include Royal Dutch
Shell, Agip, ExxonMobil, Chevron, and Texaco (now
merged with Chevron). Through collaboration with these companies, the Nigerian
government conducts petroleum exploration and production. The NNPC
Towers in Abuja is the headquarters of NNPC Consisting of four
identical towers. NNPC also has zonal offices
in Lagos, Kaduna, Port Harcourt and Warri. It has an
international office located in London, United Kingdom.
In addition to its
exploration activities, the Corporation was given powers and operational
interests in refining, petrochemicals and products transportation as well as
marketing. Between 1978 and 1989, NNPC constructed refineries in Warri, Kaduna
and Port Harcourt and took over the 35,000-barrel Shell Refinery established in
Port Harcourt in 1965.
In 1988, the NNPC was commercialized into 12
strategic business units, covering the entire spectrum of oil industry
operations: exploration and production, gas development, refining,
distribution, petrochemicals, engineering, and commercial investments.
Currently, the subsidiary companies include:
- National Petroleum Investment
Management Services (NAPIMS) - Nigerian Petroleum Development
Company (NPDC) - The Nigerian Gas Company (NGC)
- The Products and Pipelines
Marketing Company (PPMC) - Integrated Data Services Limited
(IDSL) - Nigerian LNG limited (NLNG)
- National Engineering and Technical
Company Limited (NETCO) - Hydrocarbon Services Nigeria
Limited(HYSON) - Warri Refinery and Petrochemical
Co. Limited (WRPC) - Kaduna Refinery and Petrochemical
Co. Limited(KRPC) - Port Harcourt Refining Co. Limited
(PHRC)
In addition to these
subsidiaries, the industry is also regulated by the Department of Petroleum
Resources (DPR), a department within the Ministry of Petroleum Resources. The
DPR ensures compliance with industry regulations; processes applications for
licenses, leases and permits, establishes and enforces environmental
regulations. The DPR, and NAPIMS, play a very crucial role in the day to day
activities throughout the industry.
According
to Onoh J.K (1995), when Nigeria gained independence in 1960, oil production
had been established in the country and it was exporting over 170,000 barrels
per day. It was Gluf oil company that struck off shore oil on the Okan
structure of the then Bendel state (now, Edo state) in 1964. The licenses that
were granted these companies were both offshore and onshore. With these
commercial discoveries in petroleum products, the socio-economic and political
development of Nigeria began to crystallize as well as its internal dynamics
ethnicity.
All
crude oil produce before the mid-sixties was exported because of
no-availability of local refineries, while domestic demand of petroleum
products was met by imports. However the need to conserve foreign exchange
creates job opportunities to some extent and other benefits derivable from
setting up refineries locally prompted the government of Nigeria to establish
and commission a refinery in Port-Harcourt in 1965. The refinery has processing
capacity 35,000 barrels per day to meet the increasing domestic demand while
excess fuel oil was exported.
Michael
Tanzer (1980) states that the demand for oil products continued to outstrip
supply which made the government to officially open the Warri refinery in 1978 with a total capacity
of 100,000 barrel per day, thereby giving the country its present day potential
capacity of 260,000 barrels per day. These were designed to refine 50 percent
Nigerian light crude and 50 percent medium crude. Expansion work is currently
going on at both the Kaduna and Warri refineries, with a fourth refinery being
constructed near port-Harcourt at a cost of about N750 million. It is hoped
that when the fourth refinery is completed, it will increase domestic refinery
capacity by 150,000 barrels per day, and render unnecessary our offshore
processing arrangement by which Nigerian crude is taken abroad for refining and
the products are imported to meet the short fall in domestic requirements. As
the output from all the refineries will then exceed demand, there will be a
surplus available for export.
The
evaluating the performance of the Nigerian national petroleum corporation(NNPC)
has become necessary since the over dependency of the Nigerian government on
oil. The oil sector being the most important sector of the Nigerian economy has
to be properly managed to avoid economic failure or recession.
1.2.
Statement
of the general problem
Asthe
leading sector of the economy, the oil industry should have some spill over
into the other sectors of the economy.
The
Nigerian economy has become dependent oil revenues over the past decades.
During the 1986-92 periods, oil export revenues increased at an average of 13
percent per annum which GDP measure in current US Dollars, decrease by an
average while oil export revenues alongside the continuing decline of the
non-oil economy implies higher dependency.
Over
the years, the contributions of the oil industry to the growth of Nigeria
economy are great. On this promise, the researchers want to evaluate the
performanceof the NNPC on the Economic development of Nigeria.
1.3.
Objectives
of the study
The following are the aims and
objectives of the study
Ø To
evaluate the contribution of NNPC in Nigeria economic development.
Ø To
know if there is a relationship between NNPC’s performance and the economic
development of Nigeria .
Ø To
point out the negative roles of NNPC and the oil industry.
1.4.
Significance
of the study
This
research work would be of importance to policy makers, researchers and the
Nigerian government in improving the economy of the country. The findings from
the survey would help the government in monitoring the performance of the NNPC
and to overhaul the establishment if need be.
1.5.
Scope
of the study
This
study is restricted to the performance evaluation of the Nigerian national
petroleum corporation (NNPC) in its contribution to the economic development of
Nigeria.
1.6.
Research
Questions
Ø How
is the performance of the NNPC in the last decade?
Ø Has
the performance of NNPC significantly influenced economic development?
Ø Is
there a relationship between NNPC’s performance and economic development?
1.7.
Research
Hypothesis
H0:
there is no significant relationship between the performance of NNPC and
economic development of Nigeria.
H1:
there is a significant relationship between the performance of NNPC and
economic development of Nigeria.
1.8.
Limitations
of the study
Financial
constraint– Insufficient fund tends to impede
the efficiency of the researcher in sourcing for the relevant materials,
literature or information and in the process of data collection.
Time constraint–
The researcher will simultaneously engage in this study with other academic
work. This consequently will cut down on the time devoted for the research
work.
1.9.
Definition
of terms
Ø Crude oil:Crude oil, commonly known as petroleum, is a liquid found
within the Earth comprised of hydrocarbons, organic compounds and small amounts
of metal. While hydrocarbons are usually the primary component of crude oil, their composition can vary
from 50%-97% depending on the type of crude
oil and how it is extracted.
Ø Development:A
gradual growth of something so that it becomes more advanced, stronger, etc.
Ø Refinery:A
factory where a substance such as oil is refined.
Ø NNPC: Nigerian
national petroleum corporation.
Ø GDP: Gross
domestic product.
Ø REVENUE: the
total income that accurse to the government of a country from various sources,
i.e. the money that is received by government from taxes paid by oil companies,
organization or firms.
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