Document Type

Occasional Paper

Publication Title

Promoting the Flow of Investment Resources into Nigeria's Petroleum Industry


The objective of the paper is to review the investment climate and policy incentives designed for the Nigerian oil industry with a view to evaluating how supportive they have been in terms of attracting investment funds into the sector. The industry has grown over the years to become the backbone of the economy. Given its strategic role, recent revelations of possible distress in the sector attributable to fast declining investment expenditure, deserves analysis and remedial actions. The investment needs of the industry are massive. A survey of the. sector shows that there is a large resource gap between its needs and utilized funds. This has been traced to some inhibiting _ factors such as depressed profit margins, Government’s inability to discharge the cash call obligations, inadequate participation of Nigerians enterprises in the industry, community disturbances and poor enabling environment. As remedies to these problems, the paper recommends measures to shore up profitability, prompt discharge of cash call obligations and reduction of Government involvement in financing oil operations; strict enforcement of regulations on pollution and provision of basic infrastructure to the oil communities as safeguards against community disturbances; and creating an enabling investment environment through the restoration of law and order.

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