Shell petroleum development of nigeria

Shell crude oil Development of Nigeria

This is a short briefing paper prepared for the senior director of the Shell Petroleum Development Company of Nigeria ( SPDC ) on the statements covering the application of the defiler pays rule to the issue of battling clime alteration. This statement will be directed towards different constituencies, concern, authoritiess, rich states and the hapless states.

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The defiler pays rule is the procedure whereby companies bear the cost of actions as a consequence of their pollution emanation. The rule allows pollution to happen to a certain bound, but it is being taxed ( iru.org, 2010 ) .

This rule is a signifier of commanding pollution emanation, but on the other manus ; if the company ‘s benefits would outweigh the cost, this will give companies the chance for more pollution. This can be seen in the instance of the air power industry where they are being taxed, but alternatively, the industry is turning annually because their benefits outweighs what they are being taxed ( BBC News, 2009 ) .

Sing the economic barriers, the application of defiler wages rule within a short term might take to an increased Numberss of vass doing fiscal losingss. This is to deter companies whose activities causes ‘ environmental pollution to halt or alter their method of concern. Alternatively, the company involved might increase their monetary values in order to equilibrate their cost and their benefits ; this could take to a competition between the regulative organic structure and the pollutants.

An illustration of this is the Shell Company ; they were charged $ 1.8billion as revenue enhancement and royalties in 2003 and they are still in the concern because they have been able to reassign the cost to their client by increasing their monetary value by 30 % ( $ 80.20 per barrel ) . [ Ethicalcorp.com ]

Another issue is how to compare the sum of pollution that the oil spillage has caused with the levy that the company is being charged. This can non be measured, significance, the defiler pays rule is levied by the authorities because they know what the petroleum oil means to the company and that the company ( Shell ) will be ready to pay any possible levy merely to stay in the concern.

There could be room for illegal activities as there are troubles associated with the usage of some economic instruments that could promote bad responses within the regulative organic structure regulating the defiler pays rule. An illustration is, if charges are placed on declared oil spillage on sea, this might give avenues for extra inducements to misreport spillage. The solution for this can be the attempts on how to cut down pollution in the environment as portion of sustainable development ( Financial times, 1999, p.302 ) .

Normally, the revenue enhancements and charges are non meant to function as a protection to domestic merchandises in the sense that, the state might utilize this as a arm to thwart Shell Company and other multi-national companies that are in the state as consequence of globalization in order for their domestic companies to rule the market. This could besides be exceeding if their purpose of the distinction is based on the nonsubjective standards, such as the nature of the natural stuffs or procedures that is used to bore the petroleum oil.

Before the applying of the defiler pays rule, there will be need for the regulative organic structure to look at the major causes of the pollution emanation and how it can be reduced in order to understate the economic cost. A good illustration of this is the transit system in Nigeria. Exploitation of longer paths while going, this should be reduced by making shorter paths ( express ways ) to associate metropoliss and neighboring states in order for pollution emanation to be reduced.

Besides, developing states needs to be given a manus or utilizing a agency to promote them on bettering on their roads as it will take a longer period of clip for oilers to transport fuel from one point to another and might do accident ensuing to spillage and counterbalancing the households of the people involved in the accident which is besides a loss to the company.

What are the confidences that the levy will be used for the intents it will be meant for and non being diverted to work out other jobs like general budgets, and pension financess? Harmonizing to the merely concluded clime alteration conference in Burkina Faso, a determination was made that the defilers should pay for the pollution emanation in Africa and that, the African state demands at least $ 65 billion to cover with the consequence of clime alteration ( COP15, 2009 ) . In order to transport out sustainable development, a suggestion should be made that a per centum of revenue enhancement and charges should be paid to Nigerian authorities and a per centum should be used to cover with the clime alteration instead giving all the money to the policy shapers who might miss-use it for another intent.

The determination made by the United Nation conference in Copenhagen is that the pollutants should pay for the fixs of the clime alteration, this determination is right because Africa is merely responsible for climate alteration with merely 4 % , significance, it is the foreign companies that are responsible ( COP15, 2009 ) .

The policy-makers believe the Polluter Pays Principle ( PPP ) is the lone means to pay for external costs. However, the PPP is merely another revenue enhancement aggregation strategy, which does non cut down external costs in a best manner because it already indicates which party should cover all external costs before it is fixed without carry oning a sound cost-benefit dislocation. In add-on, the charges made will non be used to work out the job as mentioned above.

The defiler pays rule can be an attack to be used to carry the defiler to take the suited form to be used to repair the harm that has been caused in a peculiar environment either by modifying their production procedures, paying the charges or transporting out full/partial waste intervention. These charges are portion of the resources that is used to reconstruct the amendss and pollution control for the future coevals to profit from.

Globalization

Globalization is popularly described as the absence of boundary lines and barriers to merchandise between states for a better economic system ( Ohmae, 1995, p.6 ) . Due to globalisation, Shell which is a multi-national company has been able to travel into concern with Nigeria since 1937. The company operates more than 6,000 kilometers of grapevines and flow lines, 87 flow Stationss, 8 natural gas workss, and more than 1,000 bring forthing Wellss. ( wikipedia.org, 2009 ) Due to the operations of the company ‘s concern, there have been series of oil spillage both on land and sea. The company and other multi-national oil company ‘s manner of extraction of petroleum oil have contributed to climate alterations.

With groundss, we can see that free market economic development has improved the quality of human life, at the same clip, these betterments have had unexpected and unwanted effects on the environment.

In order to show sustainable development by Shell Company, attempts have been decided on how to understate environmental pollution ( improved engineering ) which has given rise to climate alterations. These are labelled as “external effects” ( shell.com, 2009 ) and the costs associated to these are called “external costs” . The following challenge is how to cut down these costs in an optimum manner.

Due to the negative result created by globalisation in disbursal of economic growing, environmental protection institutes should allow tradable emanation license to merely companies with high cost emanation decrease alternatively of giving it to companies with lesser emanation license. This will convey about competition between companies on bettering the engineering and agencies of their operations in an environment.

For concerns across international boundary lines to turn without environmental debasement, the tenseness between economic growing and environmental protection/regeneration has to be resolved. The hapless states should be convinced non to needfully copy the production and ingestion forms of the richer states and the rich state should seek to alter their life style by non merely maximizing their income but to replace it with the enlargement of chances for people.

Conclusively, The Polluter Pays Principle is yet another revenue enhancement and charges collection strategy, which does non cut down the external costs in a most advantageous manner and in order to accomplish a sustainable development and remain competitory, the Cheapest Cost Avoider Principle, which is based on sound cost-benefit analysis, should be applied for all inquiries of external costs of battling clime alterations.

To sum up the whole write-up, I wish to go through this quotation mark across To Whom It May Concern, “leave the universe better than you found it, take no more than you need, seek non to harm life or the environment, and do damagess if you do for a better hereafter for the following generation” .


  1. International Road Transport Union, 2010. Polluter pays principle- A revenue enhancement aggregation strategy. [ Online ] Available at: hypertext transfer protocol: //www.iru.org/index/cms-filesystem-action? file=PPP/en_CCAP_leaflet.pdf [ Accessed 12th January, 2010 ] .
  2. BBC News, 2009. Aviation revenue enhancement switches to planes. [ Online ] Available at: hypertext transfer protocol: //news.bbc.co.uk/1/hi/england/london/7036384.stm [ Accessed 11th January, 2010 ] .
  3. Ethical Corporation, 2009. Shell unit reports $ 1.8bn payments in revenue enhancement and royalties to Nigerian authorities. [ Online ] Available at: hypertext transfer protocol: //www.ethicalcorp.com/content.asp? ContentID=2538 [ Accessed 8th January, 2010 ] .
  4. Financial times, 1999. Global Business: your single-source usher to globalisation. 1st erectile dysfunction. London: Redwood Books
  5. United Nations clime alteration conference, 2009. Africa: Let defilers pay. [ Online ] Available at: hypertext transfer protocol: //en.cop15.dk/news/view+news? newsid=2326 [ Accessed 11th January, 2010 ] .
  6. Parker, B. , 1998. Globalization and Business Practice: Pull offing Across Boundaries. 1st erectile dysfunction. California: Butler and Tanner Limited.
  7. Wikipedia, 2010. Shell Nigeria [ Online ] Available at: hypertext transfer protocol: //en.wikipedia.org/wiki/Shell_Nigeria [ Accessed 11th January, 2010 ] .
  8. Shell Nigeria, 2009. Climate Change and Shell Managing Environmental Impacts. [ Online ] Available at: hypertext transfer protocol: //www.shell.com/home/content/nga/responsible_energy/respecting_the_environment/ [ Accessed 12th January, 2019 ]
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