AN INSTITUTE OF THE IMPACT OF MULTI –NATIONAL OIL COMPANY IN THE NIGERIA PUBLIC REVENUE (A CASE STUDY OF ELF NIG UNITED)
ABSTRACT
Many Nigerians are in almost confusion on the activities and the contributes to the public revenue of the multi –national Oil companies in Nigeria. For the singular reason, in order to educate he populace on the activities and contributions of these multi –national Oil companies, the research embarked on an investigation into the impact of multi –national oil companies to the Nigerian public revenue.
For a proper education and information the researcher work by introducing the multi –national Oil companies with particular reference to ELF Nigeria United. Disclosing the aim of the study, background of study, statement of problem and the limitations of the study and testing of hypothesis.
Chapter two of the project work revenue all other research writings and publications already made on the research topic including information gotten from oral interviews and questionnaires distributed. The research design and methodology sued in the course of the research work was briefly highlights in chapter three giving a clear description of sources of data areas of study and sample used and the determination of sample size.
Chapter four of the project work dealt with the presentation and analysis of data collected in the course o the research work.
The research work ended with the summary of the findings, conclusion and recommendations by the research.
CHAPTER ONE
1.0 Introduction 1
- Background and need of the study 1
- Statement of the problem 5
- Scope of the study 10
- Aim of study 15
- Limitations of the study 15
- Objective of the study 16
- Formulation of hypotheses 17
References 18
CHAPTER TWO
2.0 Literature Review 20
- Multinationals in Nigeria Oil Industry (The Issues of Nationalism) 28
- Participants 32
- Economic Policies and its circumvention 34
- Visible contributions of Multinational Oil Companies to the Economy of Nigeria 38
- Invisible Contributions of Multinational Oil Companies. 41
- Elf Donation of the flood victims 46
- The role of Multinational Oil companies in developing Countries 47
- The role Capital In Developing Theory 50
- Welfare are Effects f Development Concepts 52
- The Role of Technology 53
- Issues and challenges of Nigeria Petroleum Industry 56
CHAPTER THREE
3.0 Research design and methodology 63
- Sources of Data 63
- Interview Questions 64
- Area of study 65
- Sample used and Determination of Sample Size 66
- Method of Investigation 67
- Validation of Research 68
- Method of Data Analysis 68
CHAPTER FOUR
1.0 Data Presentation and Analysis 71
CHAPTER FIVE
FINDING, CONCLUSION AND RECOMMENDATION
- Discussions of findings 85
- Conclusion 87
- Recommendation 88
Bibliography
Appendix
CHAPTER ONE
1.1 BACGROUND AND NEED OF THE STDUY
1.11 AN INSIGHT INTO OIL INDUSTRY OR PRODUCITON IN NIGERIA
As a matter of fact, the research for petroleum in the country started as early as 1908 when German company, the Nigeria between cop[oration (Imitated) exploration in the Araromi was interrupted by the outbreak of the first world war in 1914.
However, in 1937, Oil prospecting resumed in the country with shell D’ Arcy (the former of present day shell petroleum Development company of Nigeria) awarded the sole concession Nigeria. Their activities were again affected by the second world wari but resumed in 1947.
Meanwhile, it as in 1956 that Oil was discovered in commercial quantities of Olobiri in the Nigeria Delta after suceral years of oil prospecting and an investing of over N30 billion with this development, shell started Oil production and exportation from its Olobiri filed in 1958’s.
Following the discovery of oil in the country, other companies such as Mobil, Agu, sc frop (Now E/F) Tennoco, and Amasses (Which we know today as Texaco / Chevron), by 1961 began exploration activities for Oil the Onshore and offshore areas of Nigeria. The exploration right, which has been formally granted , to shell alone was extended to the new coners in line with the government policy of increasing the pace of Oil exploration in the country.
So, Oil production and export from Olobiri filed was first started in 1958 by shell at a production rate of 5,000 barrels of crude Oil pen day. The quantity doubled the country rose to 2.0 million barrels per day in 1979. Infact in 1972 631,000,000 barrels were exported yielding more than N600 million in tax and royalties. As production continued, Nigeria attended the status of a major oil production being presently ranked the 6th Oil producer in the world and second African after Lydia.
Furthermore, Initially government interest was only united to collected of royalties and other due (taxes) offered it from the oil companies and rudimental laws to regulate the activities of the oil industry.
This was due to the fact that oil revenue was very insignificant in this economy before the late ninety sixties a also relative lack of trained personnel and expertise.
However, immediately after the Nigeria and war, oil had become very important to our economy. So to strengthen and establish government control in industry. The Nigeria Oil corporation (INNOC) was established by decree in may, 1971 as an integrated oil company designated with the powers to engage in all phases of oil production from exploration to marketing later in 1997, the corporation was amalgamated with the ministry of petroleum to form the Nigeria National petroleum company (NNPC).
Besides before October 1965, the country’s crude Oilk was refined overseas and all its processed oil needs were thus imported. Consequently, to reduce the money spent in such venture, the country built its first retinue by October 1965 at Eleme, port Harcourt an as demand for more petroleum products increased, more refineries were built at warri and Kaduna, including other petro – chemical complex as well as the Bonny liquefied National lead project.
As a result of these developments, government decided on intensive participation in the oil industries activities. It is believed that if government had more say or involvement in the day to day activities of these companies, it could achieve its goal of rapid industrial and commercial development of the country as well as better public revenue background.
Today the government has increased its participate interest in the oil producing companies to stand at 60% in shell, mobil, ElF, Agip, Texaco and Panacea. Therefore, having the right to about 70% of the total oil produced in the country.
In other words, the joint venture activities between government owned Nigeria national petroleum, company and the oil companies have now shifted from mere monitoring of operations as practiced in the past to a more positive involvement in the day – to – day activities of these multi –national oil companies.
- AN OVERVIEW OF MULTI –NATIONAL OIL COMPANIES
By multinational companies we simply refer to certain specific business outfits which have their parent headquarters located in the developed countries and then their subsidiaries operating in a number of other counties. They can equally be termed transitional corporations, depending on the contextual frame work.
As a matter of fact , he parent country assumes greater control of the subsidiary, not withstanding some certain influences by the home government where the subsidiaries are located.
Infact, the multinational oil companies control most of the meaningful economic activities in the developing countries., This control gives them very wide jurisdiction in the manipulation of the economic policies and circumstances o their country.
Meanwhile, our emphasis in this case is much on he multinational that participates in Nigeria oil industry. Henony these companies are:
Elf Petroleum
Mobil Petroleum ‘
Chevron Petroleum ‘
Schelumberger
Texaco Oil etc.
Initially when companies started their operations have in the country, they were granted income tax relief (Industrial Development Ordinance 1950). There were equally several amendments an laws which where, put in place to encourage these companies towards a favourable operation and investment in Nigeria. With these opportunities, which were not, obtainable in their home countries so many multinational companies found Nigeria with her teeming population and abundant natural resources, a very fertile ground] for operations.
Hence the scramble for Oil prospecting,. Which followed the discovery of oil granted to these companies, was magnifying their profits. Assuming the reserve is the case, their tax would have been directed a such expanding the economy and at the same time accusing much pubic revenue.
- PUBLIC REVNUE
When new are talking about public revenue we are just returning or emphasizing on government revenue, that is , involves of the government. In other words, w are looking at returns or yields from any kind of property which is directed to government or public coffers. Such revenue are mainly for the provision of social amenities and infrastructure as well as for socio –economic development.
We should equally note that public or government revenue is quite different from national income, which is the value of all the economic activities of the country within a specific period. Conversely, the government revenue itself contributes to the national income.
- SOURCES OF GOVERNMNET REVNUE
There are various ways through which public revenue is accrued, amongst these includes :-
TAXATION : This is a system through which compulsory levies are made or paid by a person, or company towards generating revenue for government, together with promoting economic and social policies.
These includes :-
Income Tax
Property Tax
Export and Import Duties
Excise Duties etc.
BORROWING: This might be either internally or externally.
FEES AND NSPECIAL CHANGES : Here we have fees and change paid for certificate of occupancy (C.O), passports, Incenses, (that is legal permits to do some certain things either produce, sell or distribute).
ROYALTIES AND RENTS : By this we refer to rents, stipulated amounts paid for his use of public land and royalties from companies that granted mineral rights.
GRANTS: Special offers or favours to the government.
REFURUS FROM FIRECT INVESYTMENTS :- For instance, the share governments in various companies.
All these are numerous ways through which government generates their incomes and therefore money associated with them are termed government or public revenue.
1.2 STATEMENT OF PROBLEM
It is may believe that there are not much study performing to the role of the multinational oil company, to ascertain the extent to which they have contributed to the public revenue of their host country. These multinational oil companies are major partners in our oil industry as such they are very important in the economic life of our country.
Most importantly, we believe that they contribute immensely in the area of foreign exchange earning and other revenue generating aspect of the public revenue.
Meanwhile, though the actions of the multinational companies are fully supported by their home government who give form guarantee for their investments in sources countries , as well as always stress economic developments theories that preach the inadvisability of the multinational oil corporations in the development process and revenue generation of the developing country. That does not means the host countries cannot be well considered and properly centered for.
Since the greater percentage of our revenue is through the oil industry ,therefore the country is very much interested in what happens within the operations of these multinational oil companies of these multinational oil companies of these multinational oil companies. So proper analysis of their operation is needed with much emphasis on how much money they generate. Infact the gap we intend to close or bride this study is to really ascertain the extent of financial growth of the company and see if it is commensurate with what they give the nation as taxes, rents and royalties etc.
In other worlds, we want to verify if really the activities of the multinational oil companies (with ELF in Focs) are inimical or on the other hand favourable to the country revenue drive, going by the huge profit they make over oil production in Nigeria.
1.3 SCOPE OF STUDY
An investigation into the impact of multinational oil companies towards the Nigeria public revenue (the case study of ELF) is a study, which FOCUSS on the activities or operations of the ELF oil companies, Nigeria and how favoarable or inimical their activities or operations of the Elf oil company , Nigeria and how favourable or inimical their activities effect the public revenue of our country.
As we have already stated, ELF petroleum Nigeria is one of the outstanding oil producing and marketing corporations with its headquarters in France.
Meanwhile, though there and various areas the company can contribute towards the growth of our country’s economy, which includes the infrasructual development aspects government revenue aspect, the employment aspect and manpower development aspect etc.
However; study scope this case is united to strictly the contribution of m8ultinational oil country (ELF) towards public revenue of Nigeria. As well it is important to note that we are not referring to the national income, that is the total value of all the economic activities of the country within a given period. In this case we are emphasizing on he following levies such as:
TAXES : That comprise income tax , property, taxes, excise duties etc.
FEES AND SPECIAL CHANGES: Certificate of occupancy changes and incomes of occupancy changes and incenses of operation fees .
Returns from direct investment of the federal governments.
Rents and royalties : Which are paid by the multinational oil companies of our interest to the public or government coffer or account how they are paid and fi they are properly paid.
- AIM OF STDUY
The aim of this work is to ascertain the role or influence of multinational oil companies (ELF) on the economic life of our country. Hence the revenue accruing through their activities and to offer potent suggestion concerning this, if needed.
- LIMITATION OF THE STUDY
The huge financial objective involved in the conduct of this study, to same extent affects the scope of the researcher for instance, this imposed under restriction on the same size.
The time frame allowed for the conduct this study also has some measure of impact on the scope of this proper. This is informed by fact that the time period involved is in our view , not adequate for the purpose.
The data that were collected were analyzed manually instead of computer analysis and other modern equipment because the researcher could by hands on these equipment.
For extensive work to be carried out finance is very important. Sequel to this the researcher confined himself within the armbits of his lean finances (poor student)
1.6 OBJECTIVE OF THE STUDY
The objectives of this study are:
To check, or rather analyse the profit of the company as if affected their income tax, company tax.
To check if there in inimical financial practice by the named company, which in one way or the other affects our revenue drive
To assess their level of staffing and how they pay their tax as well as well other royalties that the company is expected to pay into the counties coffer.
- FORMULATION OF HYPOTHESIS
The researcher wishes to established the authenticity or otherwise of the following hypothetical statements.
H0 : There is significant impact or influence by the mu8ltinational oil companies on the country’s public revenue
There is no significant impact or influence by the multinational oil companies on the public revenue.
REFERENCES
Anthur A.. Nwankwo: (1980) Can Nigeria Survive ?
Schwarzenberger ; (1957) International law,
Vol 1, Page 184
Okigbo, (1993) Proceeding of NNCWEC Conference
On Energy Pricing and Notational
Development Bullon vol / 2 , page 32
David West Tom; (1985) Prospective industry Nigerian
National Petroleum Corporation Gold Medal Publishers. Page 166
Kayode Sote; (1996) World oil and Gas Sources Book, CBN Economic and financial revenue, vol 34, N0 4 and B0 3
Odoh N.N (1998) Public finances
Odoh N.N (1991) Analysis of revenue allocation in Nigeria (1947 –1991) The Poly banker Vol. 1 page 44 .
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