THE MANAGEMENT OF THE NIGERIA NATIONAL PETROLEUM CORPORATION PROBLEMS AND PROSPECTS

ABSTRACT

Nigerian  national  petroluem  corporation(NNPC)  is  the  bedrock  of nigerian economy which definitely means it accounts for more than 70% of nigerians growth domestic product(GDP) and as a matter of fact has to be managed and its’ affaires directed towards achieving the utmost prospects.  With  the  unavoidable  problems  NNPC  are  going  through which has been hindering the production of petroluem products, resulting to poor growth of Nigerian economy. When an organisation is doing perfectely well or poorly, all eyes normally goes to the management team, either for positive reasons or negative reasons. To utilise this medium in determining how the management of NNPC has been cooping in a global economic downfall; that is probably determining the problems facing them and possible prospects achieved so far.   This research paper is concerned with the management of the Nigerian National Petroluem Corporation which has resulted in persistent  fuel scarcity and shortage of petroleum products for the past years though, there has been an improvement lately. It examines the management objectives behind the setting up of the NNPC in order to see how successful the corporation has been in fulfilling them. It is argued that inspite of the problem and constraints of NNPC, there are still very bright prospects for it’s proper management and development. This will go a long way in promoting the Nigerian economy.The study examines some options to ensure efficient management of the corporation. To solve these identified problems, local sourcing of raw materials, employment of trained personnel and skilled manpower, as well as full utilization of government assistance aimed at improving the management of the NNPC were recommended

CHAPTER ONE INTRODUCTION

1.1  BACKGROUND OF THE STUDY

The Nigerian economy before the advent of oil was sustained largely by agriculture. Infact agriculture accounted for the lion’s share of the Gross Domestic Product (GDP) and provided one time employment for the bulk of  the  work  force.  Peasant  farming  was  the  main  occupation  of  the people. It was carried out mostly on co-operative basis. According to Wogu Abanaba (1969:1), on a given day people went out and worked for members in  rotation.  Throughout  such  days the man  who  was being served was responsible for feeding the work group, on another day the man returned the service, and so it went until everybody in the group was served.

Events however began to take a different position with the discovery of oil. In the words of Christopher Tugendhat and Adrian Hamilton (1996:20).

In the middle ages, men searched for the elixir of life so that they might have the gift of everlasting youth, and for the philosopher’s stone, which would turn base metals into gold. Not even modern medical science can

offer 1nmortalitv but in oil mankind has found a substance that is even more valuable and versatile than the philosopher’s stone. The importance of  oil  to  the  economy  and  economic  development  as  well  as  world politics cannot be over emphasized. Oil is of great importance that it has led nations to war. It has also brought major nations of the world into greater rivalry for its control and exploitation.

In  Nigeria,  indications  of  potential  resources  were  first  noticed  in seepages at Araromi, some 200 kilometres east Lagos. This evidence led a German firm, the Nigerian Bitumen Corporation to take a licensed to exploit the deposit in 1908.

This company folded its operation at the outbreak of the First World War. However. The first major advance occurred when a consortium of the Royal  Dutch/Shell  group  and  British  petroleum  made  the  first  oil discovery at Oloibiri in 1956 (Koch 1991:1). Ever since, the oil sector has steadily dominated Nigeria and currently accounts for well over 90% of revenue to the federation account. Whatever happens to oil receipts is transmitted   immediately   to   the   fiscal   operations   of   the   federal government as well as states and local government (T. O. Okurounmu,

1993:344).

Because of its lucrative nature, the oil industry has attracted a wide spectrum  of  both  foreign  and  local  investors.  The  foreign  investors include, shell, chevron. Agip, Mobil, Elf, Texaco to name a few, while the principal local investor is the Nigeria National Petroleum Corporation (NNPC).

Governments interest in the oil industry was handled by a number of government departments including the Hydrocarbon section of the mines Division in 1963 The interest was also handled by the department of petroleum  in  the  ministry  of  mine  and power  in  1970,  By  1975  the Department  of  petroleum  resources  was  uplifted  to  a  full  fledged ministry.  This  was  the  ministry  of  petroleum  Resources  and  Energy which was finally called ministry of Petroleum Resource in 1976. Before this time the Nigerian National Oil Corporation (NNOC) was established by a decree in 1971 as an Integrated Oil Company This company was tasked  to  explore,  produce,  transport,  process,  refine,  distribute  and market crude petroleum and its refined products. It was established to enhance government’s effective participation in the oil industry. The chequered history of NNOC ended with the eventual merger with the Ministry of Petroleum Resources to form the NNPC by Decree 33 of P April 1977. The legal instrument establishing the corporation gave it a

unique feature. This was the creation of an operational commercial arm and regulatory arm vested in the petroleum inspectorate.

1.2     STATEMENT OF THE PROBLEM

The main problem of this research study is to determine whether and how the management of Nigerian National Petroluem Corporation (NNPC) has been fairing in the past years compared to what is obtainable in other advanced countries of the world. There has been shortage of petroluem products  in  the  past  years;  it  definitely  affected  the  growth  of  our economy.

Nigeria being the sixth highest oil producer in the world is not suppose to lack petroluem products rather should be a sole supplier of the product to other countries and still have more than enough after the supply for her citizens. The problem has been acclaimed to be from the management.

1.3     OBJECTIVE OF THE STUDY

In order to address the above mentioned problems, the objective of this study is designed to profer solutions and recomendations to such cases as:

   Improvement of the management of NNPC

      Encourage  the    diversification  of  Nigerian  economy  from  oil dependence

      Understudy the attitude of employees specification with the view of finding out workers reactions to the prevailing conditions in their work environment as this will affect output.

1.4     RESEARCH QUESTION

To solve the research problems, the investigator has asked the following research questions.

1.     What are the  problems affecting management of NNPC?

2.      How is the problems affecting petroluem production?

3.     How  is  over  reliance  on  petroluem  products  affecting  nigerian economy?

4.     How has NNPC management elicit the gap between employer and employee relationship?

1.5     HYPOTHESIS

The study was based under the following hypothetical assumptions:

1)       Lack of petroluem products in the past years was because of poor management.

2)       Employment of  unqualified personnels contributed to shortage of petroluem products.

3)       There is mismanagement of finances in NNPC.

4)       There is inadequate maintenance of NNPC facilities.

5)       There is always sabotage of NNPC products.

6)       Extensive dependence on foreign technology and expertise.

7)       Inability to strike a balance between the employer and employee.

1.6     SIGNIFICANCE OF THE STUDY

The significance of the study can be summarized thus:

i.      To establish the operational inadequacies of the NNPC with a view to proffering solutions.

ii.      Other  establishments/researchers  could  also   benefit  from   the findings and recommendations of the study

iii.      The results and implementation of the study can act as a very good motivational factor for the workers,  management and economic advancement of the country.

1.7    SCOPE OF THE STUDY

This study concentrates on the options for managing the NNPC. It covers the  following  areas  such  as  the  historical  background,  impact  of petroleum products in the Nigerian economy, constraints of NNPC, prospects  and  analysis  of  policy  options,  conclusion  and recommendations. The fact however that the scope of the study will be limited to the NNPC does not in any way suggest that its findings and recommendations would not be applicable to other establishments of the same setting, bearing the same culture and management setup.

1.8     LIMITATIONS OF THE STUDY

This research work was subjected to a lot of constraints. These range from the nature of respondents in answering questions to non-compliance. In  Nigeria  non-existence of  true  democracy  has  made  it  difficult  for people in lucrative public employment areas such as the NNPC to freely and honestly discuss the problems and issues relating to the management of public corporations for fear of recrimination. Information from the staff therefore was like squeezing water out of stone. Finance was one other serious constraint to this research. So much money was needed for transportation to various places and locations for information hunt also typing, duplicating and binding of this work required a large chunk if not all allowance. Despite these, the research went a great deal to resolve some of these constraints taking into cognizance the significance of the study.

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