Nigeria’s development has been financed in the most part by the oil and gas industry. Since the discovery of oil in 1956, the industry has undergone rapid expansion. It has equally attracted many stakeholders, from government to corporate organisations. With 4 refineries, 21 product depots, and approximately 5001 kilometers of pipeline network, the country experiences a large volume of downstream activity daily. Unfortunately, the economic benefits derived from petroleum have been soured by the negative effects its exploration, storage and distribution has had on the environment, and the peace of host communities.
Corporate Social Responsibility presents an opportunity for industry stakeholders to be the solutions to the problems. Interestingly, many corporate organisations already have a number of CSR initiatives. From the Shell Intensive Training Program (SITP) by Royal Dutch Shell, to Chevron Nigeria’s educational scholarships initiative, and Oando’s “Adopt a School” project. Sadly, these initiatives do not go far enough. Environmental degradation, militant agitations, and acute fuel shortages still stifle the country’s economic growth and social cohesion.
Many CSR initiatives have the objective of mitigating the effects of major oil spills, however, very little attention is paid to how petroleum products are handled at micro levels. Over the years, harmful practices such as the adulteration of petroleum products, the application of engine oil to open wounds by mechanics, and the use of waste oil in road construction have been evolved. Also, many Nigerians are at risk of carbon monoxide and benzene poisoning because of the improper disposal of engine oil, and the indiscriminate use of generating sets. These practices have evolved because of a lack of awareness, and they have had negative consequences for the environment and general health.
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The problems could be solved if downstream companies develop CSR models aimed at raising awareness on environmentally friendly and safe ways to handle petroleum products. They may also establish waste disposal systems to handle petroleum waste generated by the end consumer. This should be complemented by a free nationwide health scheme for persons having health complications from exposure to petroleum toxins. This would serve to raise awareness on the proper use and disposal of petroleum products. It would provide needed assistance to Nigerians having health issues from carbon poisoning. More importantly, the environment would be better protected from micro level pollution.
Furthermore, oil and gas companies can be the solution to Nigeria’s energy problems. According to Babatunde Fashola, the Minister for Power, Works and Housing, Nigeria needs more than ten times its current electricity output to guarantee supply for its 198 million people. This deficit is covered by millions of carbon emitting generators operated throughout the country. There is a desperate shift to alternative clean energy sources through the government’s National Renewable Energy and Energy Proficiency Policy. Unfortunately, lack of expertise, funds, and research have stymied progress in this regard.
To resolve this problem, corporate organisations can offer research grants to institutions and researchers involved in renewable energy research. They may also undertake clean energy programs of their own to support government efforts. Downstream companies can go a step further by evolving environmentally friendly operational processes, and deploying energy efficient trucks in the distribution of their products. These solutions would help cure the country’s electricity deficit, and reduce nationwide fossil fuel emissions.
Also, many problems associated with the refining, supply and distribution of petroleum in Nigeria would be solved if stakeholders in the downstream sector invest in modular refineries. Modular refineries are small scale crude processing plants, with structures capable of refining crude in smaller quantities than the average refinery. They are small in size, and can be easily fabricated and assembled.
They are a low cost, environmentally friendly alternative to the hundreds of illegal refineries in the Niger Delta region. Illegal refining of crude oil has led to pipeline vandalism, pollution of water sources, environmental degradation, and loss of revenue to the government. Also, the poorly refined products from these refineries cause dangerous kerosene explosions, and engine break down.
Illegal refineries were set up by Niger Delta agitators who feel marginalized by the activities of multinational companies. Small scale modular refineries presents an opportunity for oil corporations to include indigenes in the refining and distribution processes. Modular refineries would also help increase refining capacity, and reduce the importation of petroleum products into the country. Consequently, there would be relative peace, and downstream operators would enjoy increased revenue.
Oil and gas companies must play a role in curbing corruption within the industry. According to the BBC, hundreds of thousands of barrels of oil are stolen every day at each stage of the supply chain. Even more brazen are the notorious fuel subsidy scams. In 2011, 21 companies were indicted for defrauding the country off N382 billion in subsidy payments without supplying a drop of petrol. The Department of Petroleum Resources (DPR) also reports that many filling stations illegally hoard petroleum products, and take undue advantage of fuel shortages to sell above the approved pump price.
Downstream companies can complement government’s anti-corruption efforts by developing measures to fight internal corruption. They may set up information sharing systems with anti-corruption agencies to aid the investigation and prosecution of offenders. Nigerians would appreciate retailers who can be trusted to sell fuel at the official pump price even when there is a shortage. Also oil firms should be transparent about the identity of their true owners, instead of shrouding them in secrecy. These solutions would provide for greater transparency, and cure the industry of corruption and sharp practices.
Finally, the problems plaguing the country could be avoided if companies are socially responsible. While profit making is important, it should not be the sole objective. Sustainability of operations can only be guaranteed if companies pay better attention to their social and political environment. Social responsibility boosts positive public perception and ultimately, profitability.
