A recent report by the Nigeria Natural Resource Charter (NNRC) on crude oil theft in the country has revealed a loss of N2.6 trillion between 2016 and 2017. NNRC is a United Kingdom-based Non-Governmental Organisation (NGO) which provides policy options to guide governments and societies manage their natural resources for development.
According to the report entitled: ‘Oil theft in Nigeria,’ oil theft has assumed a spiraling and disturbing dimension, costing the economy huge losses, bigger than federal allocations for education and health sectors combined. For the two years (2016-2017) covered by the report, the combined allocations for health and education in the 2018 budget amount to 8.4 per cent or N189 billion of the estimated value of losses from crude oil theft.
The NNRC report identified poverty, unemployment, poor governance, pervasive corruption, sabotage, pipeline vandalism and the neglect of the Niger Delta region as major causes for the emergence and sustenance of crude oil theft. The report also said it found a connection between politics and crude oil theft and noted that local politicians engage in oil theft to get money to fund elections.
More disturbing in the report is the allegation that oil thieves bribe security officials deployed to curb oil theft in the Niger Delta region. Currently, Nigeria is the country most plagued by oil theft in the world. It is followed by Mexico, Russia and Iran. The amount lost to crude oil theft in 2016 was reported to be more than the revenue target attained by the Federal Inland Revenue Service (FIRS) in 2017.
Also, the Chatham House, a policy Think Tank group based in the UK, said massive oil theft by pirates costs Nigeria $1.5 billion every month. The figure which was confirmed by the Vice President, Yemi Osinbajo, is equal to the total daily export capacity of the Forcados terminal.
At a time government is in dire need of revenue to fund the N9.12 trillion 2018 budget and the N242 billion for the 2019 general election, the economic outlook is still fragile with fluctuations in global oil prices and rising national debt, checking the menace of oil theft should, therefore, be a national priority. Although oil theft has remained a recurring problem over the years, reports that the incident has continued in spite of security deployment to curb it, means the economy is at risk, and therefore new strategies are required to contain it.
Also, a report by the Shell Petroleum Development Company (SPDC) showed that crude oil theft rose to 50 per cent in 2017. The NNPC monthly financial operational report for November 2016 disclosed that out of its total earnings from domestic crude oil and gas sales, N11.78 billion was spent on pipeline repairs and management compared to N12.34 billion in October 2017. The corporation said it lost N127 billion to crude oil theft and infractions in 2016.
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In the face of increasing revenue losses due to oil theft in the Niger Delta, we call for a proactive approach that will involve relevant stakeholders, including security agents and Regional Development Committees (RDCs). We support the Community Pipeline and Facilities Surveillance Programme (CPFSP) with strong governance currently being used by some oil companies to combat oil theft and vandalism. This device has become a model for enhancing the fight against oil theft and illegal refining. However, oil companies should improve on their relations with their host communities.
Government and oil companies should build modern refineries and filling stations in the riverine areas of oil bearing communities to give them a sense of belonging. It has also become imperative to enact a law that will prescribe stiff jail terms for oil thieves and pipeline vandals.
There is urgent need to pass the Petroleum Industry Bill (PIB) into law. Measures should be put in place to make oil theft and pipeline vandalism a risky venture.