Corruption is a broad term which has been
defined in various ways by different people but despite the difference in words
used in defining corruption, it is seen as any conduct, action, or behaviour
that is abnormal, not just or an act that deviates from the laid down or
established laws or rules, procedures and practices. Corruption poses to be the biggest threat to
any nation because it impedes on the nations socio-political development and it
also affects the operation of the various organs of government. Corruption has
been identified as a major obstacle militating 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 is and will
always be a major problem to any nation because one way or the other it affects
humans and it will continue to affects generations to come.
Ribadu (2006) as cited
in Ajao, Dada and olaye (2013) say that the histry f corruption is strongly
rooted in over twenty nine years of military rule, after forty six years of her
statehood since 1960. According to Ribadu, successive military regime subdued
the rule of law, facilitated the wanton, looting of public treasury,
decapitated public institutions and free speech and instituted a secret and
Opaque culture in the running of government business. The resul was total
insecurity, por economic management, abuse of human rights , ethnic conflicts
nad capital flight Nigeria.
The oil and gas sector is one of the
biggest sector in the world and it is the most important and valuable sector to
Nigeria especially its economy and political destiny because it is where most
of our revenues are generated. Oil was discovered in Nigeria on 15 January,
1956 at Oloibiri (Bayelsa state) in the Niger Delta after half a century of
exploitation by Shell-BP, oil has remained a major source of energy and income
in Nigeria. In Nigeria after the civil war which took place in 1967-1970, oil
became a prominent source of revenue to its economy. Note; Oil was founded at
the beginning of the century.
According to Nigeria
Extractive Industries Transparency Initiative (NEITI), Nigeria is one of the
largest oil and gas producers in Africa and among the top ten globally. In
2017, according to Nigerian National Petroleum Corporation (NNPC), Nigeria
ranks has Africa’s largest producer of oil and the sixth largest oil and
producing country in the world. According to Organisation of Petroleum
Exporting Countries (OPEC), Nigeria is the second biggest oil and gas exporter.
Nigeria ranks the ninth position in gas production in the world (OPEC).
Corruption in the oil
and gas sector as a hindrance to revenue generation in Nigeria simply means the
fraudulent or dishonest conduct by entrusted officials or public powers in the
oil and gas sector which in turn affects the revenue generation in Nigeria. The
revenue generated from oil and gas sector in Nigeria is supposed to be used for
the economic growth and development of the countryDue to the discovery of oil
and gas in Nigeria, corruption became the order of the day. Nigeria depends
highly on this sector, any corrupt practice carried out from this sector
automatically affects all other sector of the economy. Although corruption is
found in every phase and sector of the Nigerian socio-political economy but it
is more pronounced in the oil and gas sector in the country.
The oil and gas sector is a very strategic
sector to Nigeria’s economy because this is where much of its revenues are
generated. The country’s major balance of payment, 35 per cent of gross
domestic product, petroleum exports revenue and exchange rate policy, monetary
and fiscal policies are dependent on revenue from oil and gas. Revenue from oil
and gas has played a vital role in the execution of various national
development plans and still does so.
It has been made
obvious that eighty percent of the corruption in Nigeria is either happening in
or out of the proceeds of the oil or gas sector due to the fact that a lot of
money 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 huge
capital expenditure, high technological expertise and the ability to manage investment
risks. Due to this, the foreign oil companies with sufficient capital,
expertise, technology and investment risks capabilities are granted license 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 inflow
from Foreign Direct Investment (FDI). The foreign direct investment has little
effect 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 money
is acquired, the dollar (naira) volume in the industry is a lot but the very
small fractions of transaction values in the sector can equate to very large
sums of money, which will definitely lead to temptation to corruption. Although
the fractions are small but they are a lot of money and they are difficult to
detect if they go missing and so this encourages corrupt practices.
Despite the efforts of anti-corruption
agencies in Nigeria (EFCC, ICPC, CCB, CCT, ACEP, EOCO, etc.), the level of
corruption still prevailing in Nigeria is still high. According to Adomako
(2008), there is an historical symbiotic relationship that exists oil and gas
and corruption in Nigeria. The income made from oil and gas ends up in the
pockets of the leaders and this directly affects revenue generation that is
supposed to be used for the growth of the country.
However the focus of
this project is on corruption in the oil and gas sectors in Nigeria and its
effects on the revenue generation in the country which in turn affects the
growth of the country and also to proffer solution to the problem of corruption
in the sector.
Statement of the problem
Despite the increase in
the effort of anti-corruption agencies in Nigeria especially in the oil and gas
sector, it is obvious that corruption is still at an increase pace in Nigeria
especially in the oil and gas sector. The revenue from oil and gas has been
largely mismanaged by successive governments as the level of economic and
social infrastructural development/ facilities on ground (e.g. health,
education services) does not reflect the revenue derived from the petroleum
Nigeria depends a lot on
the revenue generated from the oil and gas sector and the revenue derived from
this sector, due to the fact that it is a lot, it is shared amongst states for
the economic and socio-political development/growth of the country. It is noted
that the large proceeds obtained from the oil and gas sector acts as
multipliers to other sector of the economy through government expenditure.
Corruption is highly endemic in the oil and gas sector and it has been wiping
away all the generated money and this leaves the country with little money
which affects the development of the country.
However this study will investigate the level
of corruption in the oil and gas sector and its effects on Nigeria.
Objective of the Study
The main objective of
the study is to examine the rate of corruption in the oil and gas sector in
Nigeria and how it has reduced/affected the revenue which purpose is for the
growth/development of the country. Hence the following are the sub-objectives:
The operations of the oil and gas sector
in Nigeria , giving a detailed explanation on how the revenue is generated and
Significance of the oil and gas sector
and how it affects the socio-political economy of Nigeria
To proffer/suggest solution to
corruption in the oil and gas sector in Nigeria.
In light of the above, the following
form the research questions which will be answered in the study.
are the operations of the oil and gas sector in Nigeria and how are the revenue
generated and shared?
are the significance of the oil and gas sector and how does it affect the
socio-political economy of Nigeria?
are the solutions to corruption in the oil and gas sector in Nigeria?
Scope of the study
study examines corruption in the oil and gas sector and how it affects the
revenue generated which is supposed to be used for the growth/development of
Nigeria. The scope of the study will not limited to the Nigerian society alone
but when necessary it will include other countries involved in oil and gas. The research will be periodize to
begin from 1999, a year which is significant in Nigerian history as it ushered
in the Fourth Republic under the democratically elected government of President
Olusegun Obasanjo till date.
This study will
comprise of five chapters, chapter one is basically for the introduction of the
study, chapter two reviews various related literature, chapter three discusses
the methodology, chapter four presents the data analysis and interpretation of
findings and chapter five provides conclusion and recommendation.
Limitation of the study
The limitation is that
although it is widely known that corruption is endemic in the oil and gas
sector, the extent of the corruption, and the quantum of money involved is
difficult to ascertain. This is because very few people in the sector have been
put on trial for corruption and hardly has anybody been convicted and sentenced
accordingly. Rather, there is a lot of denials and rationalisation of the money
stolen. For instance, the former minister of petroleum, Mrs Diezani Allison
Madueke who has been accused of embezzling billions of naira and dollars from
the oil and gas sector, is still in the United Kingdom, and has not been
prosecuted. All these make it difficult to know the exact amount lost to corruption
from the oil and gas sector.
Another limitation is that most of the
operations of the oil and gas sector are done through joint ventures between
Nigeria and multinational oil companies such as Shell, Chevron, Total etc. the
corruption deals are done in secrecy among the top officials of the partners. A
lot of the corrupt deals therefore are shielded from public glare and may never
be revealed in the open. However, the problem that might confront the researcher is not the
scarcity of materials but its availability and also time might serve as
limitation to this research. Nevertheless, these limitation factors will
greatly be managed to make the research work more objective in its
Significance of the
The main focus of this study is to examine corruption in the
oil and gas sector and also to suggest ways in which corruption can be
minimized in the sector. This research will help the country understand what
corruption means, those who are involved in corruption in this sector, its
effects on the social political economy of the country and also to bring to
awareness the responsibilities of anti-corruption bodies in Nigeria.
Corruption is a global problem and it has been existing for
a very long time. Corruption has had terrible effects on the world, for
instance, it leads to poverty in so many countries e.g. Nigeria. Corruption has
been and is still a major problem in Nigeria. It’s obvious that Nigeria depends
majorly on the revenue generated from the oil and gas sector for all forms of
development in the country and it’s also obvious that corruption is high in
this sector. However. The Nigerian government and anti-corruption agencies
needs to work together in order to block the loopholes of corruption in this
sector for the sake of progressive development. The continual existence of
corruption will definitely cause unprogressiveess or under development in
Nigeria. Nigeria definitely earn/generate a lot from the oil and gas sector but
the current state of the country shows that revenue generated from the sector
is not used for the development of the country.
the outcome of the study will enrich/enlighten youths about the operations in
the oil and gas sector in Nigeria. This study might be of importance to
political scientists, economists, engineering students and international
relations experts, the study will be of significance to the decision maker and
the citizens in Nigeria society etc. who are conducting research in related
fields, the political class will learn, through this study.