CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Oil is unarguably the lifeblood of modern economy and it has now become the most essential commodity in the world. Hence, no nation today can survive without oil that is why Smil (2008) describes it as the “lifeblood of modern world”, adding that, “without oil, there would be no globalization, no plastic, little transport, and a worldwide landscape that few would recognize”. Yergin (2008) also calls it “the world’s most important resource”. In recognition of the significance of oil, Feyide (1986) aptly stated that: “Oil is a raw material as well as a convenient and effective source of energy. In the form of energy it increases man’s capacity to get work done. As a raw material it provides the feedback for the fasts expanding industry in the world-the petrochemical industry. All over the world lives of people are affected and the destinies of nations are probably determined by the results of oil industry operations. Oil keeps the factories of the industrialized countries working and provides the revenues which enable oil exporters to execute ambitious national and economic development plans. Those developing countries that have no oil are faced with a grim struggle for survival: if they lose they are relegated to the “fourth world” the march of progress would be retarded and life itself would become unbearable if the world was deprived of oil. That is why oil has become the concern of governments, a vital ingredient of their policy and a crucial factor in their political and diplomatic strategies”. Nigeria, being a mono-economy nation largely depends on the oil sector for its economic survival. The Nigerian economy is dependent on the exploitation of crude oil and the nation’s future is very much tied to the commodity (Okere, 2013). Indeed, oil and gas resources from Niger Delta region accounts for over 90% of Nigerian export and foreign exchange earnings, and over 70% of total Nigerian revenue (Ekuerhare, 2002). This informs Wilson (2012) to state that the increase or otherwise in crude oil production affects directly the revenue base and development programs of Nigerian state. Oil is now the mainstay of Nigeria’s economy. It is the country’s major export, fetching millions of petrodollars to the country each day. Sadly, that same resource is being savagely stolen in copious quantities on daily basis (Adeboboye, 2013). The upsurge of oil theft in the Niger Delta region of Nigeria in recent times is alarming. Presently, Nigeria is losing over 300,000 barrels of crude oil per day to oil theft, pipeline vandalism and related criminal vices in the country’s oil sector (Akpan 2013; Olusola, 2013; Odemwingie and Nda-Isaiah, 2013; Okere, 2013). Despite the efforts of the Federal government to curtail the illegal diversion of oil in the Niger Delta by increasing its security spending in recent years and devoting millions of naira annually to hire private security firms as well as equipping men and officers of the Nigeria Security and Civil Defence Corps (NSCDC), incessant destruction of pipelines and other oil facilities across the country as well as trade in stolen oil by criminal cartels with international connections have continued unabated (Ugwuanyi, 2013; Mernyi, 2014) . This shows that, the huge investments of public funds on the safety of oil facilities have not yielded the required results.

It is no longer news that corruption has been existing in Nigeria since the country got her political independence in 1960, and is still existing in all spheres of the nation’s socio-political economy and if not challenged and eradicated, Nigerians may continue to experience its ugly consequences in all sectors of the nation. Corruption means the nepotism, favoritism, bribery, graft, and other unfair means adopted by government employees and the public alike to extract some socially and legally prohibited favours (Dwivedi, 2007).

According to Nye (2000), corruption is a behavior which deviates from the formal duties of public role because of private, pecuniary or status gains; or violates rules against the exercise of certain types of private gains. Otite (2004) defined corruption as the pervasion of integrity or state of affairs through bribery, favor or moral depravity. It involves the injection of additional but improper transactions aimed at changing the moral course of events and altering judgments and position of trust.

1.2     STATEMENT OF THE PROBLEM

Nigerian crude oil is being stolen on an industrial scale. Some of this stolen oil is exported but it is not entirely clear how much is exported. Proceeds are then laundered through world financial centers and used to buy assets in Nigeria and abroad. In Nigeria, politicians, government security forces, militants, oil industry personnel, oil traders and community members benefit to varying degrees, along with organized criminal networks. The trade in stolen oil also supports the spread of other transnational organized crimes (TOC) in the Gulf of Guinea (Adegoke, 2004).

This research work wills explores how corruption intertwine with crude oil theft and the international dimensions of Nigerian crude oil theft. It will also tackle the challenges and prospects of oil theft and bunkering in Nigeria.Nigeria offers a strong enabling environment for the large-scale theft of crude oil. Corruption and fraud are rampant in the country’s oil sector. A dynamic, overcrowded political economy drives competition for looted resources. Poor governance has encouraged violent opportunism around oil and opened doors for organized crime (Badejo et al, 2004).

The basic story of how Nigeria’s crude goes missing has been told for years. To steal oil, thieves tap into pipelines and other infrastructure in the Niger Delta. They then pump the oil onto waiting barges and boats. Some of it is refined locally while larger vessels carry the rest abroad. There are also allegations that oil vanishes from at least some of the country’s roughly two dozen export terminals.

Lines between legal and illegal supplies of Nigerian oil can be blurry. The government’s system for selling its own oil attracts many shadowy middlemen, creating a confusing, high-risk marketplace. Nigeria’s oil industry is also one of the world’s least transparent in terms of hydrocarbon flows, sales and associated revenues. Industry watchers and policy-makers often think they know more about oil theft than they actually do. (Fearnley Consultant, 2003).

The specifics of who steals oil are elusive, even in Nigeria. A typical large-scale theft network has facilitators, operations and security people, local and foreign transport, buyers and sellers, and a range of opportunists. Top Nigerian officials cut their teeth in the oil theft business during military rule. Over time, evidence surfaced that corrupt members of the security forces were actively involved. The country’s return to democracy in 1999 then gave some civilian officials and political ‘godfathers’ more access to stolen oil (Maduegbunam, 2008).

This study, thus, seeks to look into ways the problems of corruption, oil theft and bunkering has affected the growth and development of this nation and proffering solution to this challenges.

1.3     OBJECTIVES OF THE STUDY

The overall aim of this study is to determine the effect of corruption, oil theft and bunkering on national development.  Specific objectives include the following:

1. To find out the effect of corruption on national development
2. To investigate the consequences of oil theft and bunkering on economic and national development
3. To proffer solution to the problems of corruption, oil theft and bunkering in Nigeria.

1.4     RESEARCH QUESTIONS

1. What are the effects of corruption on national development?
2. What are the consequences of oil theft and bunkering on national development?
3. What are the solutions to the problems of corruption, oil theft and bunkering?

1.5     RESEARCH HYPOTHESIS

Ho: there is no significant effect of oil theft and bunkering on national development

Hi: there is significant effect of oil theft and bunkering on national development

1.6     SIGNIFICANT OF THE STUDY

This study will expose the general public to the effect of oil bunkering in Nigeria, the effect it has on national development and growth. The study will also expose the acts of the few privileged ones who find themselves in high positions of authority and the ways at which they divert the profits gotten from these natural resources for personal uses instead of using them for public purposes and how this has hampered efforts made on development. Also to expose the effects of corruption on the growth and development of Nigeria.

This study will proffer some real life solution to the problem of crimes and corruption, and lastly this study will serve as a reference to others research work

1.7     SCOPE OF THE STUDY

The scope of this study encompasses all the stakeholders in oil and gas and maritime industry including the government in Nigeria.  But for the purpose of this study, it will be limited to the companies involved with refining and distribution of crude and refined oil in Nigeria. The institutional framework saddled with maritime security responsibility will also be involved. This is informed by the frequency of the operations and activities of oil thieves in Nigeria.

1.8     LIMITATION OF THE STUDY

The issue of finance for the general research work will be a challenge during the course of study. Correspondents also might not be able to complete or willing to submit the questionnaires given to them.

However, it is believed that these constraints will be worked on by making the best use of the available materials and spending more than the necessary time in the research work. Therefore, it is strongly hoped that despite these constraint, its effect on this research report will be minimal, thus, making the objective and significance of the study achievable.