INTRODUCTIONBackground of theStudy The oil and gas sector is one of the biggestsector in the world and it is the most important and valuable sector to Nigeriaespecially its economy and political destiny because it is where most of ourrevenues are generated. Oil was discovered in Nigeria on 15 January, 1956 atOloibiri (Bayelsa state) in the Niger Delta after half a century ofexploitation by Shell-BP, oil has remained a major source of energy and incomein Nigeria. Oil was founded at the beginning of the century but after the civilwar (1967-1970) oil became prominent to the economy of Nigeria. According to Nigeria Extractive IndustriesTransparency Initiative (NEITI), Nigeria is one of the largest oil and gasproducers in Africa and among the top ten globally. In 2017, according to NigerianNational Petroleum Corporation (NNPC), Nigeria ranks has Africa’s largestproducer of oil and the sixth largest oil and producing country in the world.
According to Organisation of Petroleum Exporting Countries (OPEC), Nigeria isthe second biggest oil and gas exporter. Nigeria ranks the ninth position ingas production in the world (OPEC). Corruption is a broad term which has beendefined in various ways by different people but despite the difference in wordsused in defining corruption, it is seen as any conduct, action, or behaviourthat departs from legitimately established laws, procedures and practice.Corruption in the oil and gas sector as a hindrance to revenue generation inNigeria simply means the fraudulent or dishonest conduct by entrusted officialsor public powers in the oil and gas sector which in turn affects the revenuegeneration in Nigeria.
Corruption to every nation is one of the biggest threatsto economic and political development. The revenue generated from oil and gassector in Nigeria is supposed to be used for the economic growth anddevelopment of the country. Corruption has been identified as a major obstaclemilitating against rapid growth and development of the Nigerian economy(Nagari, Umar & Abdul 2013). Corruption undermines good government,fundamentally distorts public policy, leads to misappropriation of resources,harms private and public sectors development and it affects the poor ( Ajao,Dada & olaoye, 2013). Corruption affects the political, cultural and economicgrowth of any country and destroys the functioning of various organs ofgovernment. Corruption is a great danger to the security of any nation.Due to the discovery ofoil and gas in Nigeria, corruption became the order of the day.
Nigeria dependshighly on this sector, any corrupt practice carried out from this sectorautomatically affects all other sector of the economy. Although corruption isfound in every phase and sector of the Nigerian socio-political economy but itis more pronounced in the oil and gas sector in the country. The oil and gas sector is a very strategicsector to Nigeria’s economy because this is where much of its revenues aregenerated. The country’s major balance of payment, 35 per cent of grossdomestic product, petroleum exports revenue and exchange rate policy, monetaryand fiscal policies are dependent on revenue from oil and gas. Revenue from oiland gas has played a vital role in the execution of various nationaldevelopment plans and still does so. It has been madeobvious that eighty percent of the corruption in Nigeria is either happening inor out of the proceeds of the oil or gas sector due to the fact that a lot ofmoney is generated from this sector.
Revenue from oil and gas amount to 70%-90% of the total foreign earning from export activities annually (NNPC 2016).Nigeria cannot manage the activities in the oil and gas sector (acquisition,exploration, production and development) on its own because of the lack of hugecapital expenditure, high technological expertise and the ability to manageinvestment risks. Due to this, the foreign oil companies with sufficientcapital, expertise, technology and investment risks capabilities are grantedlicense to explore and develop oil in the oil-rich developing countries (e.
g. Nigeria).Nigeria oil and gas industry have experienced high amount of capital inflowfrom Foreign Direct Investment (FDI). The foreign direct investment has littleeffect on the economic growth of Nigeria because of the lack of accountability,transparency and high spread of corruption in the Nigeria economy. In the oil and gas sector, a huge sum of moneyis acquired, the dollar (naira) volume in the industry is a lot but the verysmall fractions of transaction values in the sector can equate to very large sumsof money, which will definitely lead to temptation to corruption. Although thefractions are small but they are a lot of money and they are difficult todetect if they go missing and so this encourages corrupt practices. Despite the efforts of anti-corruptionagencies in Nigeria (EFCC, ICPC, CCB, CCT, ACEP, EOCO, etc.), the level ofcorruption still prevailing in Nigeria is still high.
According to Adomako(2008), there is an historical symbiotic relationship that exists oil and gasand corruption in Nigeria. The income made from oil and gas ends up in thepockets of the leaders and this directly affects revenue generation that issupposed to be used for the growth of the country.However the focus ofthis project is on corruption in the oil and gas sectors in Nigeria and itseffects on the revenue generation in the country which in turn affects thegrowth of the country and also to proffer solution to the problem of corruptionin the sector. Statement of the problemDespite the increase inthe effort of anti-corruption agencies in Nigeria especially in the oil and gassector, it is obvious that corruption is still at an increase pace in Nigeriaespecially in the oil and gas sector. The revenue from oil and gas has beenlargely mismanaged by successive governments as the level of economic andsocial infrastructural development/ facilities on ground (e.
g. health,education services) does not reflect the revenue derived from the petroleumindustry.Nigeria depends a lot onthe revenue generated from the oil and gas sector and the revenue derived fromthis sector, due to the fact that it is a lot, it is shared amongst states forthe economic and socio-political development/growth of the country.
It is notedthat the large proceeds obtained from the oil and gas sector acts asmultipliers to other sector of the economy through government expenditure.Corruption is highly endemic in the oil and gas sector and it has been wipingaway all the generated money and this leaves the country with little moneywhich affects the development of the country. However this study will investigate the levelof corruption in the oil and gas sector and its effects on Nigeria. Objective of the StudyThe main objective ofthe study is to examine the rate of corruption in the oil and gas sector inNigeria and how it has reduced/affected the revenue which purpose is for thegrowth/development of the country. Hence the following are the sub-objectives:1. The operations of the oil and gas sectorin Nigeria , giving a detailed explanation on how the revenue is generated andshared2.
Significance of the oil and gas sectorand how it affects the socio-political economy of Nigeria3. To proffer/suggest solution tocorruption in the oil and gas sector in Nigeria. Research QuestionsIn light of the above, the followingform the research questions which will be answered in the study.1. Whatare the operations of the oil and gas sector in Nigeria and how are the revenuegenerated and shared?2. Whatare the significance of the oil and gas sector and how does it affect thesocio-political economy of Nigeria?3.
Whatare the solutions to corruption in the oil and gas sector in Nigeria? Scope of the study Thestudy examines corruption in the oil and gas sector and how it affects therevenue generated which is supposed to be used for the growth/development ofNigeria. The scope of the study will not limited to the Nigerian society alonebut when necessary it will include other countries involved in oil and gas. The research will be periodize tobegin from 1999, a year which is significant in Nigerian history as it usheredin the Fourth Republic under the democratically elected government of PresidentOlusegun Obasanjo till date.
This study willcomprise of five chapters, chapter one is basically for the introduction of thestudy, chapter two reviews various related literature, chapter three discussesthe methodology, chapter four presents the data analysis and interpretation offindings and chapter five provides conclusion and recommendation.Limitation of the studyThe limitation is thatalthough it is widely known that corruption is endemic in the oil and gassector, the extent of the corruption, and the quantum of money involved isdifficult to ascertain. This is because very few people in the sector have beenput on trial for corruption and hardly has anybody been convicted and sentencedaccordingly. Rather, there is a lot of denials and rationalisation of the moneystolen. For instance, the former minister of petroleum, Mrs Diezani AllisonMadueke who has been accused of embezzling billions of naira and dollars fromthe oil and gas sector, is still in the United Kingdom, and has not beenprosecuted. All these make it difficult to know the exact amount lost tocorruption from the oil and gas sector. Another limitation is that most of theoperations of the oil and gas sector are done through joint ventures betweenNigeria and multinational oil companies such as Shell, Chevron, Total etc. thecorruption deals are done in secrecy among the top officials of the partners.
Alot of the corrupt deals therefore are shielded from public glare and may neverbe revealed in the open. However, the problem that might confront the researcher is not thescarcity of materials but its availability and also time might serve as limitationto this research. Nevertheless, these limitation factors will greatly bemanaged to make the research work more objective in its presentation. Significance of thestudy.The main focus of this study is to examine corruption in theoil and gas sector and also to suggest ways in which corruption can beminimized in the sector. This research will help the country understand whatcorruption means, those who are involved in corruption in this sector, itseffects on the social political economy of the country and also to bring toawareness the responsibilities of anti-corruption bodies in Nigeria.
Corruption is a global problem and it has been existing fora very long time. Corruption has had terrible effects on the world, forinstance, it leads to poverty in so many countries e.g. Nigeria. Corruption hasbeen and is still a major problem in Nigeria. It’s obvious that Nigeria dependsmajorly on the revenue generated from the oil and gas sector for all forms ofdevelopment in the country and it’s also obvious that corruption is high inthis sector. However. The Nigerian government and anti-corruption agenciesneeds to work together in order to block the loopholes of corruption in thissector for the sake of progressive development.
The continual existence of corruptionwill definitely cause unprogressiveess or under development in Nigeria. Nigeriadefinitely earn/generate a lot from the oil and gas sector but the currentstate of the country shows that revenue generated from the sector is not usedfor the development of the country. Finally,the outcome of the study will enrich/enlighten youths about the operations inthe oil and gas sector in Nigeria. This study might be of importance topolitical scientists, economists, engineering students and internationalrelations experts, the study will be of significance to the decision maker andthe citizens in Nigeria society etc. who are conducting research in relatedfields, the political class will learn, through this study. Research MethodologyResearchdesign/methodology aims at arriving at the main result of the researchobjectives in as few steps as possible.
Historical research method will beused in carrying out this study; sources from both primary and secondary. Theprimary sources include written documents such as government publications,correspondence, documentaries and newspapers. Moreover, this study will alsodepend on secondary sources such as books, journals, conference proceedings andinternet sources. Operational TermsCorruption; Corruption isany conduct, action, or behavior that departs from legitimately establishedlaws, procedures and practice.Revenue generation; revenuegeneration is a complete amount of money generated during a specific period oftimeNNPC; Nigerian National PetroleumCorporationOPEC; Organization of PetroleumExporting Countries.EFCC; Economic and Financial CrimesCommission NEITI; Nigeria Extractive IndustriesTransparency Initiative