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 is abnormal, not just or an act that deviates from the laid down orestablished laws or rules, procedures and practices.
Corruption poses to be the biggest threat toany nation because it impedes on the nations socio-political development and italso affects the operation of the various organs of government. Corruption hasbeen identified as a major obstacle militating against rapid growth anddevelopment of the Nigerian economy (Nagari, Umar & Abdul 2013). Corruptionundermines good government, fundamentally distorts public policy, leads tomisappropriation of resources, harms private and public sectors development andit affects the poor ( Ajao, Dada & olaoye, 2013). Corruption is and willalways be a major problem to any nation because one way or the other it affectshumans and it will continue to affects generations to come.
Ribadu (2006) as citedin Ajao, Dada and olaye (2013) say that the histry f corruption is stronglyrooted in over twenty nine years of military rule, after forty six years of herstatehood since 1960. According to Ribadu, successive military regime subduedthe rule of law, facilitated the wanton, looting of public treasury,decapitated public institutions and free speech and instituted a secret andOpaque culture in the running of government business. The resul was totalinsecurity, por economic management, abuse of human rights , ethnic conflictsnad capital flight Nigeria. The oil and gas sector is one of thebiggest sector in the world and it is the most important and valuable sector toNigeria especially its economy and political destiny because it is where mostof 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 ofexploitation by Shell-BP, oil has remained a major source of energy and incomein Nigeria. In Nigeria after the civil war which took place in 1967-1970, oilbecame a prominent source of revenue to its economy.
Note; Oil was founded atthe beginning of the century. According to NigeriaExtractive Industries Transparency Initiative (NEITI), Nigeria is one of thelargest oil and gas producers in Africa and among the top ten globally. In2017, according to Nigerian National Petroleum Corporation (NNPC), Nigeriaranks has Africa’s largest producer of oil and the sixth largest oil andproducing country in the world. According to Organisation of PetroleumExporting 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 oiland gas sector as a hindrance to revenue generation in Nigeria simply means thefraudulent or dishonest conduct by entrusted officials or public powers in theoil and gas sector which in turn affects the revenue generation in Nigeria. Therevenue generated from oil and gas sector in Nigeria is supposed to be used forthe economic growth and development of the countryDue to the discovery of oiland 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 manage investmentrisks. Due to this, the foreign oil companies with sufficient capital,expertise, technology and investment risks capabilities are granted license toexplore 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 largesums of money, which will definitely lead to temptation to corruption. Althoughthe fractions 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 to corruptionfrom 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 aslimitation to this research. Nevertheless, these limitation factors willgreatly be managed to make the research work more objective in itspresentation. 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 ofcorruption will definitely cause unprogressiveess or under development inNigeria. Nigeria definitely earn/generate a lot from the oil and gas sector butthe current state of the country shows that revenue generated from the sectoris not used for 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.