PERFORMANCE EVALUATION OF NNPC (1999-2015) USING REGRESSION ANALYSIS TECHNIQUES
ABSTRACT
The oil industry, as the leading sector of the economy, should have some spillover effects on the other sectors.
Over the last few decades, the Nigerian economy has become increasingly reliant on oil revenues. During the 1986-92 period, oil export revenues increased by an average of 13% per year, while GDP in current US dollars decreased by an average of 2%, implying a greater reliance on oil export revenues.
The oil industry has made significant contributions to the growth of the Nigerian economy over the years. The researchers want to evaluate the NNPC’s performance on Nigeria’s economic development based on this promise.
The purpose of this research is to assess NNPC’s contribution.
in Nigerian economic development, to determine whether there is a link between NNPC performance and Nigerian economic development, and to highlight the negative roles of NNPC and the oil industry. This research would be useful to policymakers, researchers, and the Nigerian government in improving the country’s economy.
The data used in this study’s methodology is secondary data from the Central Bank of Nigeria’s 2015 statistical bulletin. Regression was used to analyze the data.
The survey’s findings revealed that:
-NNPC makes significant contributions to Nigeria’s economic development.
-There is a significant relationship between NNPC performance and Nigeria’s economic development.
CHAPTER ONE
INTRODUCTION
- Background of the study
On April 1, 1977, the Nigerian National Petroleum Corporation (NNPC) was formed by the merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. By law, the Nigerian National Petroleum Corporation (NNPC) manages the joint venture between the Nigerian federal government and a number of foreign multinational corporations, including Royal Dutch Shell, Agip, ExxonMobil, Chevron, and Texaco (now merged with Chevron). The Nigerian government conducts petroleum exploration and production in collaboration with these companies. The NNPC Towers in Abuja are the company’s headquarters, consisting of four identical towers. In addition, the NNPC has zonal offices in Lagos, Kaduna, Port Harcourt, and Warri. It maintains an international office in London, United Kingdom.
The Corporation was given powers and operational capabilities in addition to its exploration activities.
Interests include refining, petrochemicals, product transportation, and marketing. Between 1978 and 1989, NNPC built refineries in Warri, Kaduna, and Port Harcourt, and took over the 35,000-barrel Shell Refinery, which was established in 1965.
The NNPC was commercialized in 1988 into 12 strategic business units that cover the entire spectrum of oil industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments. Currently, the subsidiary companies are as follows:
Services for National Petroleum Investment Management (NAPIMS)
Nigerian Petroleum Development Company is a Nigerian petroleum development company (NPDC)
Nigerian Gas Corporation (NGC)
Integrated Data Services Limited, Products and Pipelines Marketing Company (PPMC) (IDSL)
Nigerian LNG is in short supply (NLNG)
Limited National Engineering and Technical Company (NETCO)
Nigeria Hydrocarbon Services Limited (HYSON)
Warri Refinery and Petrochemical Co. Limited (WRPC)
Kaduna Refinery
Port Harcourt Refining Co. Limited (KRPC) and Petrochemical Co. Limited (KRPC) (PHRC)
Aside from these subsidiaries, the industry is governed by the Department of Petroleum Resources (DPR), a branch of the Ministry of Petroleum Resources. The DPR ensures compliance with industry regulations, processes license, lease, and permit applications, and establishes and enforces environmental regulations. The DPR and NAPIMS are extremely important in the day-to-day operations of the industry.
According to Onoh J.K (1995), when Nigeria gained independence in 1960, oil production was established and the country was exporting more than 170,000 barrels per day. In 1964, the Gluf oil company discovered offshore oil on the Okan structure of the then Bendel state (now Edo state). The
These companies were granted both offshore and onshore licenses. With these commercial discoveries in petroleum products, Nigeria’s socioeconomic and political development, as well as its internal ethnic dynamics, began to crystallize.
Because of the lack of local refineries prior to the mid-1960s, all crude oil produced was exported, while domestic demand for petroleum products was met by imports. However, the need to conserve foreign exchange creates some job opportunities, and other benefits derived from establishing refineries locally prompted the Nigerian government to establish and commission a refinery in Port-Harcourt in 1965. To meet rising domestic demand, the refinery has a processing capacity of 35,000 barrels per day, with excess fuel oil exported.
According to Michael Tanzer (1980), the demand for petroleum products Supply continued to exceed demand, prompting the government to officially open the Warri refinery in 1978 with a total capacity of 100,000 barrels per day, giving the country its current potential capacity of 260,000 barrels per day. These were intended to refine 50% Nigerian light crude and 50% Nigerian medium crude. Both the Kaduna and Warri refineries are currently expanding, and a fourth refinery near Port Harcourt is being built for 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, making our offshore processing arrangement, in which Nigerian crude is taken abroad for refining and the products exported, obsolete.
are imported to make up for the shortfall in domestic demand. Because the output from all refineries will then exceed demand, a surplus will be available for export.
Since the Nigerian government’s overdependence on oil, evaluating the performance of the Nigerian national petroleum corporation (NNPC) has become necessary. To avoid economic failure or recession, the oil sector, which is the most important sector of the Nigerian economy, must be properly managed.
- Statement of the general problem
The oil industry, as the leading sector of the economy, should have some spillover into the other sectors of the economy.
Over the last few decades, the Nigerian economy has become increasingly reliant on oil revenues. During the 1986-92 period, oil export revenues increased by an average of 13% per year, while GDP in current US dollars decreased by an average of 2%, implying a greater reliance on oil export revenues.
The oil industry has made significant contributions to the growth of the Nigerian economy over the years. The researchers want to evaluate the NNPC’s performance on Nigeria’s economic development based on this promise.
- Objectives of the study
The study’s goals and objectives are as follows:
To assess the NNPC’s contribution to Nigeria’s economic development.
To determine whether there is a link between NNPC performance and Nigeria’s economic development.
To highlight NNPC’s and the oil industry’s negative roles
- Significance of the study
This research would be useful to policymakers, researchers, and the Nigerian government in improving the country’s economy. The survey results will assist the government in monitoring the NNPC’s performance and, if necessary, overhauling the organization.
- Research Questions
How has the NNPC performed over the last decade?
Has NNPC’s performance had a significant impact on economic development?
Is there a link between the performance of NNPC and economic development?
- Research Hypothesis
H0: There is no significant relationship between NNPC performance and Nigeria’s economic development.
H1: There is a significant relationship between NNPC performance and Nigeria’s economic development.
- Limitations of the study
Financial constraint- A lack of funds tends to impede the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection process.
Time constraint- The researcher will conduct this study alongside other academic work. As a result, the amount of time spent on research will be reduced.
- Definition of terms
Crude oil, also known as petroleum, is a liquid found on Earth that is made up of hydrocarbons, organic compounds, and trace amounts of metal. While hydrocarbons are typically the most abundant component of crude oil, their composition can range from 50% to 97% depending on the type of crude oil and the method of extraction.
Development: The gradual growth of something to make it more advanced, stronger, and so on.
A refinery is a factory that refines a substance such as oil.
Nigerian National Petroleum Corporation (NNPC).
GDP stands for Gross Domestic Product.
REVENUE: the total income that accrues to a country’s government from various sources, i.e. the money received by the government from taxes paid by oil companies, organizations, or firms.
REFERENCE
“The Role of Oil in the Nigerian Economy,” Acha J. http://EzineArticles. Com/?Expert=AchaJoy.
“The Impact of Oil on Nigeria’s Economic Policy Formulation,” Adedipe.B. (2004).
“Oil Wealth and Economic Growth in Oil-Exporting African Countries,” O.P Akanni (2004). Paper 170 of the AERC.
Provide an answer.
“Exports and Economic Growth,” S.M. and R.K. Sampath (1997), Western Agricultural Economics Association Annual Meeting.
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CBN Bullion publication, vol.32, No.2, April-June 2008.
Statistical Bulletin of the Central Bank of Nigeria, Vol. 18, December 2007.
“Oil Price Distortions and their Short and Long-Run Impacts on the Nigerian Economy,” Chukwu and colleagues (2010). August, MPRA paper No. 24434.
“Exports and Economic Growth in Ethiopia,” Debel.G., 2002. An Experimental Study.
Ehanmo.J.N. (2002), “Is Sustainable Development Compatible with Economic Growth in an Oil-Dependent Economy?” Dominant in the developing economy?” Nigeria is the case study.
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