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Business in Society

Essay by   •  February 3, 2019  •  Essay  •  828 Words (4 Pages)  •  40 Views

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[INTRODUCTION, delete this later]

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        After being deprived of a fair share in terms of unpaid royalities and unpaid funds for environmental degredation, MOSOP wants to be repaid by terms of being a part of the Joint Venture between Shell and NNPC. However, the primary objective behind the inclusion is a constant flow of income in the form of dividends and greater transparency because the cenral governemnt was  not distributing the profits it kept on receiving from NNPC. However, NNPC is hesistant as it would underline their position but at the same time, they recognize that MOSOP plays an integral role for the smooth functioning of the oil plant and hence, they must reach an agreement. As a result, after a dialogue betweeen NNPC and a representative selected by MOSOP people, an agreement is reached wherein MOSOP gets a 5% share of profits but the ownership rights remain with NNPC.  (YASH)

        From PENGASSAN’s perspective, job security and the location of the headquarter as well as servers in Africa are superior over other concerns. Similarly, NNPC is aiming to keep control. In Shell’s globalization strategy, the access to the Nigerian markets and oil fields is more important than the location of the headquarters. Thus, they agree to not relocate the HQ, but request PENGASSAN’s support for their development of Nigerian activities. However, a close cooperation between the Hauge and local headquarters is to established in order to ensure sustainable development of African operations. (TIMOTHY)

MOSOP is one party that is directly affected by the environmental damages estimated at $4bn, which they demand from Shell. Opposing that, Shell states that the attacs causing the oil spillage were out of their control over the JV and NNPC claims that they are not responsible for the operations; hence they both cannot be held accountable for any compensation. Humans Rights Watch strongly supports MOSOP’s aim for an environmental clean-up to prevent any further health issues. Because all stakeholders agree that recovering the impact of the oil spillage is most important, they mutually decide to allocate the necessary funds from the JV revenues as extraordinary expenses that do not affect the profit sharing and tax agreement (FOOTNOTE). (JAVIER)

        The JV Partners have been continuously negotiating the funding of their Nigerian operations; According to the underlying JV agreement, all partners have to allocate capital towards SPDC’s investments. However, NNPC has struggled to adhere to “cash calls” in the past and acknowledge that an underfunding in the JV can influence operations and therefore production output. NNPC is mainly incentivised by maximising output and thereby revenue and is therefore willing to agree an improved funding structure as well as a higher contribution for investments with greater future output effects. (CHRIS)

        While the stakeholders were able to compromise on the previous issues, the following two could not be resolved at this point. First, Shell has not publicly apologised since it does not admit any fault in the oil spoilage, nor does NNPC. At the same time, Shell expresses its strong commitment to the development of the Ogonian society, reinforcing it with continued investments in basic services, community health, and economic empowerment (Source – Exhibit 3 from text E). MOSOP accepts this initiative but they are still awaiting an apology. Second, the presence of armed security forces at some of Shell’s facilities are strongly criticised by Human Rights Watch and PENGASSAN. Both parties oppose any violent actions against civilians, and thus, request the armed forces to be reduced. Even though Shell is not ready to decrease security completely, they agreed to renegotiate in one year. In case of no military actions, nor protests, the armed forces can be gradually declined. (JEKATERINA)

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