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CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND TO THE STUDY

Capital budgeting decision in the most government parastatals is statutory instrument used to take decision in most organization like  NPC i.e. Nigerian National Petroleum Industry. This government parastatals helps in exploration of crude oil and natural gas and refining or processing of crude oil and natural gas to produce petroleum and produces and others denatures both for domestic consumption and for export.  The expect of the corporations activities include transportation and distribution petroleum products throughout Nigeria and production of petrol-chemical to provide the needed raw material for rapid agricultural and industrial development of the country.  They are also responsible for the supervision of the country activities of oil companies.

Since the year 1996, most of the oil companies has grown considerably.  This is evident in its size and area of operation, which spanned through one length and breath of the country. The other subsidiaries of government department engaged in activities of capital budgeting are; (1) Engineering Company of Nigeria (ENCON). This is a joint venture enterprise between NNPC and Bethel, An American based multi national engineering and consulting company.

B. Nigerian Petroleum Development Company (NPDC):  This is petroleum producing company of a group.  It is wholly owned by Ngos.  It is involved in exploration and production of crude oil and gas.

The mission of NNPC is to profitable operate and optimum size petroleum exploration and production. Nigeria has development company limited NGDC it is also under the NNPC, its mission is to efficiently gather treat, transmit and market Nigeria Natural Gas and its bye-products to major industries and utility gas distribution companies in Nigeria.  The other includes Integrated Data  Service Company Limited (IDSC).

1.2   STATEMENT OF THE STUDY

This study which is an appraisal of capital budgeting in government parastatals, is to find out how the various appraistatals appraise as capital budgeting decisions.  For every organization, the usefulness of financial statement enhance decision making. Information provided should be current and meaningful. The continuing inflation of recent year has led to an increasing awareness of some of the disadvantage of historical cost accounting. The following problems associated against the capital budgeting decision in government parastatals.

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