Nigeria lost N1.29trn annual revenue to oil theft

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The Speaker of the House of Representatives, Hon. Tajudeen Abbas, expressed serious concern on Wednesday over the report indicating a yearly revenue loss of N1.29 trillion due to large-scale oil theft in Nigeria.

Hon. Abbas who expressed the concern during the inauguration of the Special Committee on Oil Theft chaired by Hon. Alhassan Ado-Doguwa, who tasked the Special Committee to unravel the “criminal elements sabotaging our nation.”

While expressing displeasure over the import of the criminal activities on the nation’s economy, Hon. Abbas reiteres the 10th House resolve towards tackling “one of the largest threats to Nigeria’s economy.

“It is estimated that Nigeria loses over 300,000 barrels of crude oil per day due to theft, vandalism, and other criminal activities. Some of the severe consequences of this include revenue loss, environmental disaster, threats to regional peace and security, proliferation of arms, and a poor investment climate.

“The nation is reported to incur losses of oil revenues estimated at N1.29 trillion annually due to industrial-scale theft. Therefore, this committee’s primary objective is to determine the proximate and remote causes of oil theft and recommend remedial measures to the House.

“Nigeria is facing significant financial challenges due to a combination of rising expenditures and falling revenues. You may recall that the proposed revenue and expenditure for 2023 stand at N9.73 trillion and N20.51 trillion, respectively. This means a fiscal deficit of N10.78 trillion, which is about 4.78% of the GDP. This deficit is the largest in Nigeria’s history, and with a budget more than double the proposed revenue, we are faced with the challenge of borrowing to cover the gap.

“It is for this reason that the House will significantly raise the targets for all government revenue-generating agencies. I am convinced these agencies can generate much more than they currently do.

‘In our recent engagement with MDAs on the 2024-2026 MTEF, we have made it clear that a lot more will be required of our key revenue-generating agencies in 2024. We expect them to double their total annual revenue profile. However, to achieve this, these agencies must reduce wastage and improve efficiency, especially in collection.

“In addition to this, revenue-generating agencies must ensure transparency in the management of generated revenues. Let me state clearly that the House will not tolerate low performance by agencies or failure to show evidence of required remittances to the Federation Account. We shall also closely monitor and undertake strict oversight of the activities of all revenue-generating agencies to ensure compliance.

“Dear Colleagues, we set up this Special Committee to underscore our unwavering commitment to protect the nation’s resources for the good of all our citizens and to punish the perpetrators of these dreadful crimes. I charge you, therefore, to investigate all dimensions of oil theft, focusing on the actions of all actors, including criminal gangs, militia groups, the local populace, company employees and security agencies.

“I urge the members of this committee to approach your mandate with diligence, objectivity, a sense of urgency and patriotism. The findings and recommendations from your work will serve as a foundation for sustainable solutions rather than ad-hoc measures. I also expect your efforts to contribute significantly to enhancing the integrity of our oil sector and promoting sustainable development.

“I call upon all stakeholders, including government agencies, industry players, security agencies, civil society organizations, and the general public, to extend their full cooperation to this Special Committee for it to deliver on its mandate. By effectively addressing this challenge, we can enhance revenue, investment and overall socio-economic progress for Nigeria.”

In his remarks, Chairman of the Special Committee on Crude Oil theft, Hon. Alhassan Ado-Doguwa observed that issue of crude oil theft is of significance national importance and the House of Representatives have taken an important and bold step to check and tame the tide of this unfortunate development.

While noting that the challenges may appear enormous, he expressed optimism that with the political will of the House leadership and Members, the Committee can surmount the myriad of challenges and rewrite these tales of woes to that of blossoming prosperity.

“Available record from National Extractive Industries Transparency Initiative (NEITI) report 2021 indicates that the Oil and Gas sector accounted for 72.26% of Nigeria’s total export and Government foreign exchange, 40.55% of government revenue and provided 19,171 jobs.

“Despite the seemingly robust contribution of the oil and gas sector to our national economy, the country is yet to derive maximum benefits from its abundant hydrocarbon resources due to oil theft and losses through pipeline vandalization, pipeline integrity issues, compromises, measurement inaccuracies, outright sabotage and general insecurity in the oil producing communities.

“The issues of oil theft and pipeline vandalisation are not new to us, nor are they exclusive to Nigeria. However they remain persistent threats to our economy, environment and national security. The urgency of addressing these challenges and bolstering our regulations, technology and security measures cannot be overstated.

“Oil theft is large scale illegal business estimated to be worth $133 billion per year globally. This makes it the world’s biggest theft of a natural resource and is also considered to be the number one most smuggled natural resource globally. From the 2021 NEITI, it is estimated that between 2019 – 2021 Nigeria lost 643 million barrels of crude amounting to $48 billion as a result of theft.

“A recent report by a presidential investigative panel affirms the apparent micro-economic impact of crude oil theft. The report states that with oil theft and illegal bunkering taking as much as 200,000 to 400,000 barrels per day of the country’s oil production at the onset of these illegalities to now more than 800,000 barrels per day, the country’s fiscal stability is therefore threatened. The report further painted a frightening scenario where losses to oil thieves and official leakages could overtake official receipts of all oil revenues into the Nigerian treasury.”

He observed that: “Such policies and initiatives have given rise to the 13% revenue for oil producing communities from the consolidated revenue of the federation, the Niger Delta Development Commission (NDDC), the Presidential Amnesty Programme, the Nigeria Content Development and Monitoring Board, the Host Community Development Trust etc.

“It is therefore important to evaluate the efficacy of these government policies and programmes and strengthen them where need be in order to address some of the identified causes of oil theft. It is also alleged that most of the recommendations arising from past efforts are stacked in shelves and left unattended to.

“I am optimistic that with the inauguration of this committee and with the support of the House leadership we will dust off all those recommendations, reevaluate them in line with current realities and ensure and monitor the implementations of relevant ones in collaboration with relevant Ministries, Departments and Agencies of Government.”

Hon. Ado-Doguwa assured Nigerians that the Committee will engage stakeholders in the entire hydrocarbon value chain so that together we will begin to rollback the evil effects of the criminal enterprise of oil theft and pipeline vandalism. Together we will overcome and such reports of inability to put the nation’s oil pipelines to effective use, breaches at the flow stations, compromises at the loading/export terminals, dangers of non- decommissioned and abandoned oil wells will begin to recede.”

To this end, he solicited for the cooperation and support of every stakeholder in the oil and gas sector, the security sector and indeed every Nigerian and other nationals residing and doing business in Nigeria in the bid to ensure that the Committee delivers on the mandate.

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