The oil business is the foundation of the Nigerian economy. Nigeria is one of the world’s largest petroleum producers, it ranks 6th in the world, for the production of crude oil. The oil industry in Nigeria creates more than 95% of its foreign income and around 80% of state revenue. In Nigeria, the oil business alone has created employment for its citizens. Over 65,000 and 250,000 positions opportunities have been created directly and indirectly respectively. The region where most of the exploration is done is located in the country’s Niger Delta region.
Nigeria has many oil and gas reserves which have greatly improved the economy considerably, yet with many environmental hazards. Serious environmental problems have been reported in the Niger Delta zone where the majority of the oil businesses are based. Legal guidelines for environmental security, which are relevant to the oil business in Nigeria seem to be commonly deficient and ineffective. Up until this point, air contamination has not been appropriately addressed.
Social partners in oil and gas companies share the duty of guaranteeing great industrial connection, solidarity, and efficiency in the oil division, in order to advance social dialogue in the field. Worker’s organizations are urged to keep on making a move to unionize laborers, including agreements to advance capacity building programs, and expatriate workers so as to cultivate social democracy and a good work environment.
The perspective of the Nigerian oil industry
The present status of the oil industry in Nigeria depicts a hopeful standpoint. The assessed natural gas and crude oil deposits are 36.2 billion barrels. To grow Nigeria’s demonstrated oil deposits to 40.0 billion barrels and increment its creation ability to 4 million barrels in 2010, the government invested about $9 to 10 billion yearly for five years. And almost 200% of demonstrated oil deposits created in Nigeria from 1970-2005 have been replaced by new reserves, showing that the oil business condition in Nigeria compares to the global framework. Mr. Abdul-Rasheed Oshoma Momoh who is the head of capital trade in Nigeria and an owner of stakes in several oil companies says that forex trading is one of the most rewarding asset classes. And that although the business has a reputation of high risk and huge fluctuations, the best Forex traders in Nigeria still make tons of profits in the field, leading to a surge in trading activities in the country, that led to Nigeria being ranked as one of the top African countries in the forex business.
Challenges Facing the Petroleum Industry in Nigeria
The petroleum industry in Nigeria just like any other industry in the country faces its own challenges. The 1999 Constitution of Nigeria makes it difficult to address the issues facing the industry, or even to resolve them. The main components of these difficulties include asset ownership and the selective privileges of the government to give companies or individuals the go-ahead to explore and develop assets in Nigeria.
Effective and Stable Fiscal System
Generally, the Nigerian constitution is the main steering wheel behind oil asset development and the distribution of income from all mineral extraction. Besides the constitutional base, the financial terms guiding some operational and income creation parts of the oil frameworks in Nigeria are generally determined before time through public enactment. Also, the non-monetary instruments depend on dialogue, and some of the political dangers and vulnerabilities are found here. There is no doubt PFA in Nigeria is very effective in moving the country’s economy to its maximum capacity.
Authentic Indigenous Participation Issue
Many policies have been put in place since the launch of the industry to achieve local interest in the oil business. A number of individuals have been approved for the oil block, yet it is difficult to ascertain the authenticity of these individual companies. The state is trying to encourage local development in this field as well, this content development policies have been made available. However, because of a lack of financial intermediation, these policies continue to fail.
Resource Ownership and Control
The sole proprietorship of petroleum assets by the Nigerian government causes unjustifiable damage to the economy. This also encourages a high level of inefficiency, no transparency and corruption. Further, it has made each procedure to indigenize the domestic oil industry inadequate and essentially restrained the improvement of the economy in every one of the petroleum networks.
The tax policies of energy-related and oil industries in Nigeria are highly centralized, which is totally in contrast to that of the US and other capitalist nations. There is no significant effect of oil-tax strategies that can be felt in the oil production networks, regardless of the income allocations made to the oil field by the local governments and states. As such, the issue of asset ownership is no doubt the basic factor causing the conflict of interests among partners in the Niger Delta, which has brought a lot of damage to Nigeria’s economy.
Tactical and Strategic Actions for Sustainable Growth
There is no need for Nigeria to keep damaging its economy on the grounds that it is endowed with natural resources, or that it has petroleum. Nigeria has too many billionaires in the oil sector, with too much political power, yet they do nothing to improve the deploring conditions of the oil sector. Two main strategies for sustainable financial growth are as follows;
Domestication of the oil and gas industry in Nigeria
The promotion of local companies by the government. This will encourage local companies in the oil business to be more active, not just regarding HR, but with regards to material assets. Statistics show that the extent of upstream consumption spent locally builds the commitment of the upstream division and increases the total national output. It might be convenient to use a part of the excess income from rising oil costs to give credit to authentic domestic businesses to reduce the barriers of new investors who try to join the business or current local oil manufacturers who face a lot of difficulties from the government’s control.
Effective Management of Petroleum Wealth
A nation that needs its people in the future to profit from its natural resources like oil, they must change the natural resource to a sustainable one by putting resources into beneficial capital. For example, power and transportation frameworks and water resources, and much more. A change of the constitution to permit oil-producing states to collect taxes. Each state will set up an income designation board of trustees with authoritative power to guarantee that fair appropriation of such assets is achieved, which encourages satisfaction and promotes stability.