CHAPTER
ONE
INTRODUCTION
1.1 Background to the study
The oil and gas industry
in Nigeria is the largest industry and main generator of GNP in the West African
nation which is also the continent most populous. Since the British discovered
oil in the Niger Delta in the late 1950s, the oil and gas industry has been
marred by political and economic strife largely due to a long instinct of
corrupt military regimes and complicity of multinational corporations notably
Royal Dutch Shell. Despite this, it has not until the early 1990s that the
situation was given international attention, particularly following the murder
of playwright and activist Ken Saro-Wiwa by the Nigerian provoking the
immediate suspension of Nigeria from the Common Wealth of nations. Nigeria is
identified by the international community and the firms in operation there as a
major concern with regards to human rights and environmental degradation (Aina,
1991).
Oil and gas production in Nigeria has been
mixed by bag of fortune and misfortune of blessings and curses, depending on
who is feeling that effect. For the country, it has been a large fortune. It is
the source of her wealth, accounting for about 90% of her foreign exchange earnings;
it is the source from which governments at the federal, state and local levels
substantially fund their developmental programmes, a source of employment. Most
desired transfer of technology was to extent been achieved especially in the
areas of exploration and production, provision of internal energy requirement,
increased income per capital (Ekpo, 2004). Nigeria’s membership of such
important bodies as the World Petroleum Congress (WPC), Organisation of
Petroleum Exporting Countries (OPEC) and African Petroleum Producers
Association (APPA) has raised the country’s profile internationally.
In other words, that Nigeria is a force to
reckon with in the country of nations is arguably attributable to her being an
oil producing country (Adams, 1999). For the oil bearing communities in the
Niger Delta, however, oil has been more of a curse than a blessing.
In communities where oil exploration and
production are carried out on shore, deforestation, erosion and destroyed farm
lands are the main signposts for this gift of nature. The Nigerian Content
Policy initiated by the Obasanjo’s administration to help develop local capacity
building in the Nigeria oil and gas sector with a view to ensuring that Nigeria
participate actively in the operations in the sector.
In the early 1990s where democratic government
initiated a series of a market oriented policy reforms to integrate the economy
towards globalization and economic growth. A remarkable progress in terms of
growth, investment and employment has been achieved. It is in view of this that
the researcher is writing on the “implication of oil and gas accounting on the
economy development of Nigeria in Niger Delta”.
1.2 Statement of the problem
Since the introduction of oil and gas
exploration in Nigeria in the place of agricultural sector, the problem
surrounding this sector has been on how the account of this sector could be
good to the nation and careless about the location (Niger Delta) where this oil
and gas is found. Provision has not been made to cushion the effects of
provision of infrastructural amenities, especially in the Niger Delta region of
the country. This has resulted in a long period of political unrest and
instability in economic growth in Nigeria. The existence of oil in the Niger
Delta is absolutely not a blessing because attempts by oil producing companies to
provide palliatives for the harmful effects of their activities have not solved
fundamental problems of the people. This explains the restiveness of the people
of the area, i.e. unwilling to be controlled, with manifestation in form of
vandalization, disruption of the operation of oil companies, kidnapping and
hostage taking and the seeming endless demands for monetary compensation. The
problem defined here is on how oil and gas sector could provide employment
opportunities to the people making good infrastructural amenities to the areas
affected, easy and direct investment in replacement of their farmlands,
increasing government revenue, etc.
World Bank has noted that most of
Nigeria’s wealth get siphoned off by 1% of the population, corruption in
government is very rampant, making it very difficult to account for oil and gas
sectors contribution to the people and the nation. It is also estimated that
demand for petroleum product in Nigeria grows at a rate of 12.8% annually.
However, petroleum products are invaluable to most Nigeria and are quite
expensive, because almost all the oil extracted by multinational companies is
refined overseas, while a limited quantity is supplied to Nigerians as a result
of very few refineries and insignificant production capacity.
1.3 Objectives of the study
The objectives of this study are to
examine the following;
(i)
The contribution of oil and gas accounting
on employment generation.
(ii)
The contribution of oil and gas for the
development of infrastructure to the area.
(iii)
Highlights on the oil and gas accounting on
transfer of technology.
(iv)
Impact of oil and gas on foreign exchange.
(v)
Impact or contribution of oil and gas on
government revenue/increase of income.
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