Environmental Cost Management and Profitability of Oil Sector in Nigeria (2004-2013)

Abstract

The problem of land degradation failures globally had tended to exacerbate the problem of environmental cost on the productivity of the Nigerian oil sector. Therefore, this study is aimed at ascertaining the effects of environmental cost management on the profitability of oil sector in Nigeria from 2004 to 2013.Data used
were obtained from the Central Bank of Nigeria (CBN). Multiple Regression Analytical Technique (MRAT) was employed. Result revealed that there exist a significant relationship between influence of environmental cost management and the profitability of oil sector in Nigeria. Also, it was discovered that there are established standards in Nigeria guiding environmental cost management in the oil and gas industries in Nigeria. Again there is a lacuna in external reporting of environmental cost data in Nigeria. It was concluded that the extent of environmental cost management in the oil sector is at its rudimentary stage. It was however recommended inter alia that; there should be Policy consistency on the Improvement of external reporting in environmental cost data. The adoption of the United Nations Environmental Cost Management Accounting (ECMA) guideline which will enhance the effectiveness of the already adopted Internationally Financial Accounting Standards (IFRS) in Nigeria, and which evolves environmental cost management accounting practice, should be encouraged. This will facilitate the global campaign for environmentally enhanced society. The financial Reporting Counsel of Nigeria (FRCN) and the professional bodies (ANAN&ICAN) should accommodate the growing awareness in environmental cost management and formulated disclosure requirements. The extent of environmental cost management as emphasized in this study should be considered.