The recent report by the Nigeria Extractive Industries Transparency Initiative (NEITI) that the nation loses about $4.1 or N123billion annually due to poor crude oil production metering is perturbing. In the report, which has been submitted to the government, the oil and gas industry watchdog says that unless government takes appropriate measures, limitations in the metering of crude oil production will continue to pose serious threat to the nation’s revenue target. The fact that government could realise only 58 per cent of its projected revenues from January to June, 2019, is a confirmation of how inadequate oil production can cause huge losses in revenue.      

According to NEITI, Nigeria is the only oil-producing country without adequate metering to ascertain the accurate quantity of crude oil produced at any given time. In view of this lapse, the installation of the facility in the various oil fields in the country has become imperative, particularly at this time of imminent financial crisis. The installation of the technology will reduce the rising cases of oil theft. In its audit reports from 2012-2015, Nigeria lost over  $9.89billion worth of crude oil due to poor metering infrastructure. Within this period, over 107 million barrels of oil were not properly accounted for. The latest figures show that Nigeria loses over 250,000 barrels of crude oil per day to oil thieves. This translates to over $25 million daily in revenue. Oil theft is one of the booming illicit businesses in the oil-rich Niger Delta region.

Therefore, the Federal Government should see the NEITI’s damning report as a wake-up call to quickly install the oil-tracking device and save the country the huge losses in oil revenue arising from poor oil production metering. It is unfortunate that many decades after crude oil was discovered in large quantities in Oloibiri, Bayelsa State, Nigeria has reportedly not been able to independently verify its oil production levels. Instead, it relies entirely on International Oil Companies (IOC) to do so.

This is worrisome and unacceptable. There is need for a change in the narrative. At a recent strategic session in Lagos, some members of the NEITI study team decried the development. We align with them that without adequate oil production metering, it will be difficult to determine the volume of crude oil or product stolen or lost in the country. The situation is further worsened by deteriorating conditions of some of the pipelines conveying oil to its final destination.

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Considering the huge revenue losses and the current volatility in the price of crude oil in the international market, government should not hesitate to put the metering infrastructure in place. Last year, the Federal Government gave approval for an automated fuel system management and censor network aimed at tracking petroleum products movement across the country. Although this measure was to eliminate fuel subsidy scam, government should install metering facilities at all oil fields. Any plan to sanitize the oil and gas sector should begin with tracking every barrel of crude produced and exported out of the country and their destinations.

We recall that early this year, the immediate past Minister of Petroleum Resources, Dr. Ibe Kachikwu, disclosed that the Department of Petroleum Resources (DPR), and the Economic and Financial Crimes Commission (EFCC), were gathering data to track specific vessels lifting crude oil from Nigeria. We believe that that intervention is still on course. However, lack of metering facility has resulted in discrepancies in remittances to the Federation Account, as well as subsidy payment claims by independent oil marketers. Often, the Nigerian National Petroleum Corporation (NNPC) gives daily petrol consumption figures different from those supplied by private oil marketers. This anomaly would have been avoided if there was a metering system that could reveal exactly the quantity of crude produced and sold at the international market.

Nigeria should borrow a leaf from other oil-producing countries such as Saudi Arabia, Kuwait, United Arab Emirate (UAE), Russia, USA, Brazil, Iran, Iraq and others that have effectively managed their oil productions. Adequate management of the oil sector will boost economic growth and development of the country.

It is sad that the oil sector is opaque and riddled with corruption due largely to ineffective supervision and lack of accountability in its operations. We urge the government to plug the inherent leakages in the sector. Without further delay, metering facilities should be installed in oil facilities in the country. We believe that this will go a long way to ensure transparency in the sector.