THE PETROLEUM INDUSTRY AND ECONOMIC DEVELOPMENT IN NIGERIA A CASE STUDY OF SOUTHERN IJAW L.G.A OF BAYELSA STATE
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THE PETROLEUM
INDUSTRY AND ECONOMIC DEVELOPMENT IN NIGERIA
A CASE STUDY
OF SOUTHERN IJAW L.G.A OF BAYELSA STATE
ABSTRACT
The study of
the petroleum industry and economic development in southern Ijaw local
government area in Bayelsa state seeks to understand the contributions of the
petroleum industry towards the economic development of the Niger Delta Area in
Nigeria. The study was based on the data collected from the indigene of the
area under study, through the use of questionnaires. The researcher employed
the chi-square test as his statistical tool for testing the hypothesis. The
first hypothesis sought to know if there are no incessant conflicts between the
oil firms and their host communities, the second hypothesis was to find out
whether there are no problems faced by the oil firms from their host
communities while the third hypothesis sought to find out if there are no
government policies and programmes directing the petroleum industry towards
economic development Of the Niger Delta Area. The result of the analysis
indicated that not enough has been done for the development of the Niger Delta
Area which is the cause of the social unrest of the area. Consequent upon the
findings, some recommendations were made in order to enhance the development
process of the oil producing areas. The recommendations are as stated in
chapter four.
TABLE
OF CONTENTS
Title Page i
Certification ii
Declaration iii
Dedication iv
Acknowledgments v
Table of Contents vi
List of Tables vii
CHAPTER
ONE
1.1 General
introduction 1
1.2 The
birth of NDDC 5
1.3 Statement
of problem 6
1.4 Objective
of the study 8
1.5 Research
question 9
1.6 Statement
of hypothesis 9
1.7 Method
of study 10
1.8 Scope
of study 11
1.9 Significance
of study 11
1.10 Definition
of key concepts 12
CHAPTER
TWO: LITERATURE REVIEW
2.1 Introduction 14
2.2 The
modern approach 16
2.3 Poverty 17
2.4 Unemployment
as development indicator 23
2.5 Inequality
as development indicator 29
2.6 The
petroleum industry 35
2.7 The
Nigerian case 37
2.8 Southern
Ijaw local government area 37
2.9 The oil industry and economic development in
southern ijaw local government area 42
CHAPTER
THREE
3.0 Data
presentation and analysis 44
3.1 Presentation
of data 44
3.2 Hypothesis
testing 47
3.3 Hypothesis
one 48
3.4 Hypothesis
two 52
3.5 Hypothesis
three 54
CHAPTER FOUR: SUMMARY, CONCLUSION AND
RECOMMENDATION
4.1 Summary 57
4.2 Conclusion 59
4.3 Recommendation 60
4.4 Suggestion
for further research 61
Bibliography 62
Questionnaires 64
References 69
CHAPTER ONE
1.1 GENERAL INTRODUCTION
The
economy of Nigeria was based mainly on the agricultural sub-sector before and
the early periods after her independence. The agricultural sector provided the
Nigerian economy with benefit like the fetching of foreign exchange for the
economy through the export of its products, the provision of food for the
masses, creation of employment opportunities for the citizens, provision of raw
materials for our local industries and mainly contributed over 69 percent of the
country’s GDP in 1958 and 1959 (Moro, 1995).
As
a result of the significant role the agricultural sector claim to have played
in the development process of the economy, the three regions which were the
North, West and the East in Nigeria went into which were the North, West and
produce and export products like groundnut, cocoa and palm products
respectively on a lucrative basis. The regions were able to utilize the revenue
they generated from the export of the agricultural products to build roads, schools
etc. the federal government was only playing a complementary role through the provision of soft loans, subsides
and the collection of taxes from such activities.
While
the above mentioned activities were going on in the agricultural sub sector,
other sectors like the petroleum sector was trying to lay a solid foundation on
the Nigeria economy from 1980s, by a German company and Nigerian Bitumen corporation
in the present Ondo State, but their efforts were distorted by the advent of
the first world war in 1914 (MNNPC) diary, (1994). These activities resumed
again in 1937 by shell D. Arch, it was the only oil prospecting company that
was given the right to prospect for oil in Nigeria. This was as well disturbed
by the second world war.
In
1956, shell petroleum development company of Nigeria limited (SPDC), for the
first time in the history of Nigeria discovered the first oil well in oloibiri,
in the present Bayelsa State. The shipment and export of crude oil started on
the 17th of February 1958, from the same Oloibiri oil field (Moro,
1995).
By
1961, other companies like Mobil, Agip, Elf, and Texaco and so on were also
given the right to prosper for oil. This was in line with the federal
government desire to increase exploration in the same Niger Delta Region. The
led to the discovery of other oil fields (Moro, 1995). Production and export of
petroleum products in the 1950s was 5,100 barrels per day. It latter increased
to 2.0 million barrels per day in 1979 (shell yearly report, 19996:7)
The
interest and role of government gradually progressed from a regulatory one to
direct involvement in oil exploration and exploitation. This increase in
interest and role of the government did not affect the host communities who
have no stake in the sharing of the revenue accruing from the sale of the
petroleum products. While the oil companies on their pat claimed to have done
enough for the host communities with regard to the provision of potable water,
electricity and so on.
The
above claims made by the both parties of not being treated fairly and having
done enough for the communities respectively have put everyone in doubts as to
which party to believe. This usually brings about serous misunderstandings and
psychological war between the both parties in southern Ijaw local government
area (SILGA), in Bayelsa State.
As
a result of the growing restiveness in the area, the Babangida’s administration
set up the Belgore commission to among other things, identify the root causes
of the incessant communal clashes and disaffection in the oil producing areas
and to suggest the best way forward. The commission recommended the
establishment of a development agency for the region to ameliorate the problems
that arise from oil production. This led to the establishment of the Oil mineral
producing area development commission (OMPADEC) in 1993.
More
than its predecessors, OMPADEC appeared better established to make some
positive impact on the development of the region. But, it suffered from a
number of factors: namely; lack of a master plan that would define its
developmental objectives and strategies, inadequate funding, official
profligacy, unfaourable political climate, etc. though its projects spread
throughout the region, it suffered an untimely demise, with a lot of unfinished
projects in its wake.
The
failure of all these development intervention agencies worsened the economic
woes of the people, as well as the environmental and ecological degradation of
the area. This was mainly because of the intensified activities of oil
prospecting companies which adversely affected farming and fishing, the
predominant occupation of the people of the area or region incessant oil
spillage and years of gas flaring impacted negatively on the environment,
thereby making the inhabitants to demand for remediation and prevention
strategies to resuscitate the rich ecosystems of the Niger Delta.
1.2 THE BIRTH OF NDDC
The
long years of neglect and deprivation, coupled with insensitivity of some
pervious government and oil companies, as well as the failures of previous
development intervention agencies, had created, by the 1990s, a volatile
atmosphere characterized by protest, agitation and communal conflicts. By 1998,
the Niger Delta region had become a lawless zone, where youths disrupted oil
production activities at will and communities frequently engaged, with little
provocation, in destructive inter, and intra community strife.
This
was the scenario when President Olusegun Obasanjo made his first campaign visit
to the region. He then made a promise that when he became President he would
establish an agency or setup a programme that would deal urgently and
fundamentally with the development needs of the Niger Delta Region and bring
sustainable prosperity and peace to the area.
Following
his election and inauguration as president on May 29, 1999, President Obasanjo
made good his promise. Within two weeks of his inauguration, the president sent
to the national assembly, a bill to establish the Niger Delta development
commission as the agency to implement a programme for the sustainable
development of the Niger Delta region, which 13 percent from the revenue of oil
sales.
1.3 STATEMENT OF PROBLEM
The
Niger Delta region in Nigeria is made up of about 75,000 square kilometers and
is comprised of over 10 major ethnic
groups with over 900 communities.
The
various communities that are playing host to the oil firms claimed of not being
treated fairly, despite the recommendations made by commission set up to find
out the problems of the area, the policies that have been put in place by the
federal government to solve such problems (OMPADEC, etc) that suffered a
premature death which could not solve the problems of the area as a result of
underfunding and the terrain of the area, and the huge amount of returns from
the petroleum activities to the federal government and the oil firms for the
number of years this has been existing since the mid-1950s.
This
situation has prompted some communities and individuals who could not bear the
psychological pains to be restive. This is to the detriment the oil companies
who are their next door neighoburs for the provision of the basic necessities
of life for the host communities. While the oil firms on their part, claiming
to have done enough for their hosts, this, for instance is the publication in
“The TIDE” newspaper by shell to have trained 4,141 Niger Delta youths in 2004.
These
claims by both parties have put everyone in doubt and yet there is no concrete
fact(s) on ground to support any side over the argument. Such facts can only be
produced by a specific and carefully conducted study. This is the desire of the
researcher to contribute towards the provision of such concrete facts that have
prompted this study on the impact made by the oil industry an the developmental
process of the communities in southern Ijaw local government area in Baylesa
State.
1.4 OBJECTIVE OF THE STUDY
Due
to the negative impacts inherent in the exploration and production of crude oil
in the underdevelopment rural communities, and the development policies that
have failed to address the problems they were intended for by the federal
government, the researcher is proposing to carry out this project to;
a. to
find out the cause(s) of incessant conflicts between oil firms and their host
communities.
b. to
identify the problems faced by the oil firms from the host communities.
c. to
critically examine some of the government policies/programmes directing the
petroleum industry to economic development.
1.5 RESEARCH QUESTION
To
evaluate the objectives of the study, it is necessary to pose some questions.
It is expected that at the end of this study, answers to the fallowing
questions shall be found;
a. What
are the cause(s) of incessant conflicts between oil firms and their host
communities?
b. what
are the problems faced by the oil firms from their communities of operations?
c. what
are the policies (if any) and programmes directing the petroleum industry to
economic development in the Niger Delta region?
1.6 STATEMENT OF HYPOTHESIS
In
course of this study that is being carried out, we will state the following
hypothesis is be tested for verification;
H01:
There are no incessant conflicts between oil firms and their host communities.
H02:
There are no problems faced by the oil firms in their communities of operation;
H03:
There are no government policies/programmes directing the oil industry towards
economic development in the Niger Delta region;
1.7 METHOD OF STUDY
In
pursuit of the objectives stated in this study, we will state the kind of data,
source of data and method of analysis to be employed here.
The
researcher would make use of primary data. The use of primary data would
provide the opportunity for the researcher to base hi findings on data that is
prepared for the research work at hand.
Sources
of data would be from resource persons who will give useful information on the
questions that would be based on the problems under review, and questionnaire
would be used as the tool for data collection.
The
research would use chi-square as the method of analysis. This is because it
involves no assumption about the form of the original distribution from which
the observation come (Cookey, 1998).
1.8 SCOPE OF STUDY
The
study is limited to shell petroleum development company of Nigeria (SPDC) in
Sothern Ijaw local government area (SILGA), this is due to the numerous oil
companies in the Niger Delta area, the number of local government areas, a
limited time on the study, and lack of funds to enable the research reach all
oil firms in the Niger Delta region.
Notwithstanding,
the researcher strongly believed in the reliability of the study, though for
the reason that we could not reach all the oil firms in the region. It is open
to any researcher to start from where we stopped.
1.9 SIGNIFICANCE OF STUDY
Basically,
agriculture was the main stay of our economy, but it suffered a serious setback
in recent time. This is as a result of the advent of the petroleum industry.
Therefore, this study would find out the cause(s) of the setbacks, in the
agriculture sub sector in the economy and would as well proffer suggestions for
the government of Nigeria to adopt the formulation and implementation of
policies and programmes in respect of the agricultural sub sector and the
economy as a whole.
1.10 DEFINITION OF KEY CONCEPTS
Host communities
These are communities on whose land, the free
gift of nature crude oil is found.
Oil Firms
These
are the companies that are involved in the exploration, exploitation,
production, transportation and marketing of petroleum products.
Environment
This
is the environment on which the oil firms carry out their operational
activities.
Degradation
This
is the situation whereby the land on which the oil companies operate is
rendered unfit for other economic activities like farming etc.
Development
This
is the process of “improvement” in the various aspects of the lives of the
people.
Exploration
This
is the process of discovering and drilling of the oil wells.
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