The worsening oil theft

RECENTLY, the Nigerian National Petroleum Company Limited (NNPCL) gave scary statistics on oil theft in the country, saying that it was losing $700 million every month to oil theft and vandalism at terminals.  Speaking during a tour of NNPCL facilities, Bala Wunti, the group general manager, National Petroleum Investment Management Services (NAPIMS),  a corporate services unit in the upstream directorate of the NNPCL, said that the security challenges experienced in the oil sector were hindering oil production in some of the country’s terminals. According to him, oil thieves and pipeline vandals had crippled the pipelines, particularly those around the Bonny oil export terminal. He said: “If you’re producing 30,000 barrels a day, you get 1,940 barrels every month. What it means is that you can take it to 270 every four days and calculate it for a month; you will have seven million barrels. When you multiply seven million barrels by $100, that is $700 million lost per month.”

However, last month, the Chief of Naval Staff, Vice Admiral Awwal Gambo, described the estimated amount of stolen crude oil in the country as unrealistic and impossible. His point was that that oil losses also occurred as a result of metering errors on the operating platforms, while the volume of crude oil shot-ins from non-production was often added to figures for oil theft instead of declaring them as oil losses. He said: “We need to understand the difference between oil theft and oil loss. While oil theft is siphoning crude oil from vandalised pipes into barges, oil losses occur when there is known production, especially during shut-ins and force majeures, not allowing the Federal Government to earn the desired revenue it should.” But the country must address losses frontally, whether due to systemic errors or outright theft.

Although there are discrepancies in the oil theft figures— the NNPCL Chief Executive Officer, Mele Kyari, says that the country loses 700,000 barrels of crude oil daily to oil theft while the the Minister of State for Petroleum Resources, Dr. Timipre Sylva, bandies a 400,000-barrel figure— the fact is incontestable that the losses to oil theft have deleterious effects on the Nigerian economy, especially with the country failing to meet the Organisation of Petroleum Exporting Countries’ (OPEC) daily quota. The Nigerian economy is currently confronted with a widening budget deficit which stands at N7 trillion for the 2022 fiscal year. As shown by the figures released by the Central Bank of Nigeria (CBN), the sustained sabotage to the country’s oil production capacity caused a 29 per cent shortfall in oil revenue in the first quarter of 2022: earnings from crude oil fell to N790 billion from N1.1 trillion in the previous quarter which ran from October to December 2021.

It is significant that as the daily plunder of Nigeria’s oil assets worsen the Nigerian military, a major protector of oil assets, has had to fend off allegations of complicity with the outlaws behind the haemorrhage. Speaking during the bi-weekly news conference on the operations of the military recently, the Director Defence Information, Major General Jimmy Akpor, dismissed allegations that some military personnel and security agencies were involved in oil theft and illegal bunkering in the Niger Delta region. The blame game has widened, as the NNPC GMD has also claimed that stolen crude is stored in mosques and churches. The culprits are apparently yet to be apprehended, and Nigerians are left to grapple with endless reports of oil theft, including the one indicating that between January and July this year alone, Nigeria lost an average of 437,000 barrels of oil a day to criminal entities and individuals who illicitly tapped pipelines onshore and offshore in the Nigeria Delta region.

In our view, if massive oil theft continues to take place in the country even as the government continually goes a-borrowing, that is because the government wants it that way. It has the repressive state apparatuses at its disposal and if it cannot deploy them in containing the threat to the country’s oil revenue, that is not the fault of the public. The government has the Nigeria Security and Civil Defence Corps (NSCDC), police pipeline protection squad, the Nigeria Navy and outfits such as the Joint Task Force mandated to patrol the waterways and keep oil thieves at bay. It is disturbing that, according to the NNPCL GMD, Nigeria has lost as much as $1.5bn to pipeline vandalism this year alone, yet the government which has continued to bemoan the country’s dwindling revenue has not devised a formula to reverse the trend. The message is clear: it all boils down to corruption. Besides, the fact that the government has had to award a contract for the security and protection of the pipelines to Government Ekpemupolo (Tompolo), one of the ex-Niger Delta militants, is an acknowledgment of its inability to curb the ongoing oil theft.

The point has to be made that the current situation speaks to the collapse of governance. If the government, in spite of its avalanche of security agencies and apparatuses, is not able to secure its own oil pipelines and has to depend on private effort and contract for the protection of the pipelines, that is simply a testament to its powerlessness, incapacity and ineffectiveness in governing the country, and it is highly unfortunate. When a government accepts its own incapacity and ineffectiveness, it leaves the citizenry in a quandary. There is a need for urgent apprehension of the danger of governmental ineffectiveness and what has to be done to turn things around. Nigeria cannot continue to exist in the current state if it is to be taken seriously. Governmental ineffectiveness is not the sign of a healthy and functioning society; it is a signal of inevitable and imminent total collapse.

 

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