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Title: The corporatisation of the Nigerian National Petroleum Corporation (the NNPC) : can lessons be learned from the Norwegian approach?
Author: Chioma, Emem Eze
ISNI:       0000 0004 9353 6735
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2017
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This thesis proposes a compatible petroleum governance paradigm that might be an efficient evolutionary step in promoting the commercial viability of the Nigerian National Petroleum Corporation (NNPC), and in the ultimate, provide socio-economic benefits to the Nigerian State. The thesis examines the current institutional structure governing the activities in the Nigerian oil and gas sector, and the extent to which the institutions may need to be adapted to changing framework conditions. A leading issue with which the governance of the Nigerian petroleum sector is concerned is as to how the principal roles in the petroleum sector should be organised. Around the world, in places where a national oil company (NOC) is created, policymaking, regulation and commercial operation are the principal functions in the hydrocarbon sector. These roles can be organised in a variety of ways in an attempt to achieve a number of different objectives. There is the NOC-dominated approach, in which the NOC plays a dominant de facto or de jure role. There is also the Ministry-dominated system. Here, the policymaking and regulatory functions are housed in the relevant Ministry. Thirdly is the much-admired separation-of-functions approach (otherwise known as the 'Norwegian approach') where roles are formally demarcated across distinct and independent agencies. Rather than the optimal demarcation of roles and responsibilities, the present structure of the institutions governing the Nigerian oil sector is such that shows no clear and separate roles for the industry. The Nigerian oil sector has been subjected to a high degree of central control under the NNPC. The NNPC has been the institutional embodiment of the Nigerian oil sector. The corporation doubles its commercial roles with regulatory functions-a situation that has led to a degree of criticism. It has been criticised as contributing to the high inefficiency of the Nigerian oil industry. It is believed to have adversely affected not only the commercial efficiency of the NNPC but also issues such as transparency, enforcement and best-practice standards within the Nigerian oil industry. For this reason, it is current Nigerian oil policy to adopt the Norwegian approach. It has been prescribed that the governance of the Nigerian petroleum sector shall be consistent with the separation-of-functions approach. It has been proposed that this is enough to ensure efficiency in the system. Because of the success of separation-of-functions approach in Norway, it is presumed the most efficacious approach for its far-reaching potential benefits. Typical is its checkmating nature. While demarcating roles and responsibilities in Norway's petroleum sector, the Norwegian approach, in other words, conveys the idea of checks and balances. The most significant potential benefit is the claim that it allows Norway's NOC (Statoil) to concentrate on doing what it knows best, namely the government's business interests of profit-maximisation. As such, the thesis is examining whether the separation-of-functions approach can be relied upon to resolve the governance-related challenges of the Nigerian hydrocarbon sector. It argues that the purpose served by Norway's organisational variety in Norway does not seem to arise within the Nigerian oil context-indeed is perhaps effectively beyond the reach of the Nigerian oil sector. Organisational variety can be explained by the fact that nations differ in their institutional attributes, on account of which their governance needs vary. A basic condition for an effective implementation of the Norwegian approach would be to have state institutions, and laws that are modern and of good quality, and courts and bureaucrats that are provided with adequate facilities, as well as trained and properly compensated staff. These are conditions that do not yet exist in Nigeria. Although it is conceivable that these conditions can be developed someday, there is a concern that they would not be developed overnight. The challenges raised by present contextual peculiarities of Nigeria cannot, therefore, be ignored simply because the Norwegian approach offers potential advantages. There is thus the question of the success or survivability of the Norwegian approach under the present Nigerian conditions and context. Moreover, there is no trend converging towards a generally accepted structure all countries could live with in the governance of their petroleum sectors. Effective oil sector governance could also be realised by assigning functions to governance structures in a discriminating way if necessary. Consequently, the thesis approaches this concern differently. It is argued here that, rather than a wholesale transplant, a preferably alternative way would be to identity a specific feature of the Norwegian approach which could be transferred to Nigeria since the Norwegian approach is rich enough to enable any oil-producing State to find its own solution. The thesis thus points to a distinctive feature of the Norwegian approach, which in large part, is very relevant not just to the success of Statoil as a national oil company but also for the success of the tripartite governance arrangement in the Norwegian oil and gas sector. It is argued that the value of the Norwegian approach lies more on the specific nature of Statoil-especially its corporate governance independence, a feature the thesis believes is also capable of allowing the NNPC realise its full potentials as a national oil company. The Norwegian approach arguably underlies the importance of what could be said to be lacking in the corporate governance structure of the NNPC-lack of corporate autonomy. Therefore, whereas a case could be made for the separation-of-functions approach, the thesis submits that dealing with the NNPC's lack of corporate independence would appear a more veritable strategy for addressing the transient and ineffective governance of the Nigerian oil and gas sector.
Supervisor: Not available Sponsor: University of Aberdeen
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Corporate governance ; Petroleum law and legislation ; Nigerian National Petroleum Corporation