REGULATORY ENVIRONMENT AND THE SURVIVAL OF THE NIGERIA OIL SUBSECTOR: A STUDY OF WARRI REFINERY AND PETROCHEMICAL COMPANY (WRPC)

Author: Egorerua Moses
Department: Business Administration
Affiliation: Nnamdi Azikiwe University Awka

This study examined the regulatory environment and the survival of Nigeria oil subsector (1990-2013). The study identified non uniform tax regime, application of obsolete technology and continuous flaring of gas as some of the challenges that besiege the Nigeria oil subsector; in view of these challenges, the objectives of the study are: To determine the implications of gas flaring on oil communities of Delta State by WRPC; to ascertain the effect of technology on the growth of Nigeria oil subsector and to determine the impact of Government fiscal policy on the survival of Nigeria oil subsector with particular reference to Petroleum Profit Tax (PPT). The study is anchored on the strategic management theory. Primary and Secondary data were sourced for this study, Chi-square and Ordinary Least Squared (OLS) regression method were employed to analyze the data. The result revealed thus: Gas flaring have a negative effect on oil communities of Delta State; 1per cent increase in Petroleum Profit Tax reduces Profit after tax of oil firms by 0.19 per cent. The study concludes that the fiscal policy is deliberately designed to provide maximum revenue to the Government to the detriment of the oil communities. The paper recommends total stoppage of gas flaring, adoption of Greenfield and modular refineries as well as designing flexible and competitive tax regime in the oil sector as a panacea to strategically reposition Nigeria oil subsector.

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