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
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
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.
- 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
The following are the aims and objectives of the study
- To evaluate the contribution of NNPC in Nigeria economic development.
- To know if there is a relationship between NNPC’s performance and the economic development of Nigeria .
- To point out the negative roles of NNPC and the oil industry.
- 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.
This study is restricted to the performance evaluation of the
Nigerian national petroleum corporation (NNPC) in its contribution to
the economic development of Nigeria.
- How is the performance of the NNPC in the last decade?
- Has the performance of NNPC significantly influenced economic development?
- Is there a relationship between NNPC’s performance and economic development?
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.
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
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.
- 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.
- Development:A gradual growth of something so that it becomes more advanced, stronger, etc.
- Refinery:A factory where a substance such as oil is refined.
- NNPC: Nigerian national petroleum corporation.
- GDP: Gross domestic product.
- 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
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