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Pipeline Vandalization in Africa

Abstract

The recent pipeline vandalism by the Niger Delta Avengers and other militants groups have attracted both national and international condemnations due to its implication on not only business activities in Africa but the Nigerian economy as a whole. The consequences of their actions had affected most businesses which paralyzed business activities as a result of power failure and rising cost of production through the provision of alternative power source which have significant impact on both the organizations and the country’s economy in general. It is for this reason that the study was conducted with the main objective of investigating pipeline vandalism and its implications on business activities in Nigeria. The study employs the use of both primary and secondary sources of data from managers and customers of business organizations in the Nigeria’s power sector. A Simple Linear Regression was used to analyze the data obtained from the formulated hypotheses. Findings based on the analysis reveals that, pipeline vandalism in Africa significantly affects business activities in Nigeria as it’s resulted to destruction of critical pipeline installations and constant power failure which affects the smooth operations of business organizations and subsequently, retard economic development. The study recommended that Federal Government of Nigeria should through the NNPC collaborate with the nation’s military and other security agencies to ensure adequate policing and protection of critical pipeline infrastructure throughout the country so as to checkmate the activities of pipeline vandals which is having a devastating effects on the economy. The study concludes that the actions of the militant groups is a serious economic sabotage which if allowed to go unchecked will continue to be having a devastating effect on the country’s economy.

 

CHAPTER ONE

 

INTRODUCTION

1.1  Background to the Study

The Nigeria’s pipeline infrastructure has been subjected to incessant attacks by militants and pipeline vandals across the country. The frequency of such attacks has been very alarming which is affecting all fabrics of life and the country’s economy as a whole. This is making investors (domestically & internationally) to be losing interest in the country’s Oil sector due to the security implication and effects on power generation as well as decline in profit and general socio-economic development of the nation which is making it difficult for business organizations to achieve their goals of been in business.

 

The incidence of pipeline vandalism by Niger Delta Avengers and other militant groups has been on the rise in Nigeria which is affecting Oil production thereby making the country’s output projection of 2.2million bpd to now drop to less than 1.1million bpd (CBN, 2016). This has affected Gas supply for electricity generation and distribution in the country thereby crippling business activities and economic growth which calls for immediate action that will put a stop to the ugly situation so as to restore confidence into the power and energy sector which will pave way for business activities to thrive and subsequently, economic growth and development.

 

It is in view of this that this study on investigating pipeline vandalism and its implications on business activities in Nigeria was conducted to examine the extent of the implications on business activities in Nigeria. The findings of this study will be of great benefits to business organizations, government, students and researchers, as well as stakeholders in the Oil and Gas industry. The study focused on South-South and South-Western regions of Nigeria where major cases of pipelines vandalism were recorded. The study covered the period 2015 to the first quarter of 2017; the period which witnessed heavy attacks on pipeline infrastructure in the regions. The study focused on those business activities with the most significant impact on the energy/power sector of the economy (i.e. Crude Oil revenue, availability of Petroleum Motor Spirit [PMS] & Electricity Generation). Managers and other categories of employees of stakeholder organizations including their customers were part of the study focus.

1.2  Statement of the Problem

The major challenges of pipeline vandalism are poor policing and protection of pipeline infrastructure, political/militant agitation and endemic corruption. However, the fundamental issues are the attendant consequences of pipeline vandalism such as decline in Crude Oil revenue, scarcity of PMS and decline in electricity generation which all affects business activities in Nigeria. The study will investigate these problems and come up with some policy recommendations. Even though, there have been several studies (such as those of Vidal, 2011, Ogbeni, 2012 & Ugwuanyi, 2013) conducted at different times on the impact of pipeline vandalism on the growth of Nigeria’s economy, there studies focuses mainly on its impact on Nigerian economy without specifically studying the implications on business activities in Nigeria which this study is designed to accomplish.

 

1.3 Research Questions

The study will provide answers to the following research questions:

  1. The extent of pipeline vandalism in Africa?
  2. To what extent pipeline vandalism result to decline in crude Oil revenue accruing to the federation account?
  3. How the scarcity of PMS arising from pipeline vandalism affects business activities in Nigeria?
  4. How the decline in electricity generation arising from pipeline vandalism affects business activities in Nigeria?

 

1.4 Objectives of the Study

The main objective of the study is to investigate the extent of pipeline vandalism in Africa. The specific objectives are:

  1. To assess how pipeline vandalism result to decline in crude Oil revenue
  2. To investigate how scarcity of PMS arising from pipeline vandalism impact on business activities in
  3. To determine how decline in electricity generation arising from pipeline vandalism affects business activities in

 

1.5 Research Hypotheses

In the course of this study, the following hypotheses were formulated:

Ho1: Pipeline vandalism does not result to decline in crude oil revenue accruing to the federation account.

Ho2: Scarcity of PMS arising from pipeline vandalism does not have significant on impact business activities in Nigeria.

Ho3: Decline in electricity generation arising from pipeline vandalism do not have significant effects on business activities in Nigeria.

 

1.6 Significance of study

Theoretically, this study will contribute to the scholarly debate on pipeline vandalism in parts of Africa and it’s implication on oil revenue and the environment.

Practically, the outcome of this study will be instrumental to socio-economic and

political development of policies, to reposition, complement or change the strategies and methods of intervention in the Niger Delta so as to achieve maximum results. Finally, if the study succeeds in clarifying issues and facilitating understanding, it will enrich the pool of literature on pipeline vandalism to the benefit of researchers and students.

1.7 Scope of study

This research assesses pipeline vandalism in Africa, with particular reference to Nigeria, for the sake of clarity and focus.

The business environment of Nigeria, oil price and electricity supply formed the scope.

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