President Bola Tinubu appears to have woken up to the reality that his economic reforms will not work if the massive fiscal haemorrhaging associated with crude oil theft and pipeline vandalism persists. Ending oil theft is the first step in Nigeria’s road to economic recovery.
On Monday, the Chief of Defence Staff, Christopher Musa, pledged to end oil theft within three months. The latest directive to end oil theft mandates a collaborative effort involving the Armed Forces, the Nigeria Police Force, the Nigerian National Petroleum Company Limited, and other security agencies.
This is a decisive stance against the illicit activities that have robbed Nigeria of valuable resources for decades based on directives from the President.
Former President Muhammadu Buhari gave a similar directive in January 2023 in a last-ditch attempt to leave a tangible legacy to no avail. Tinubu is taking up the challenge, albeit belatedly. His National Security Adviser, Nuhu Ribadu, said Nigeria was losing over 400,000 barrels per day to theft, equivalent to $12.26 billion a year since August 2023. It is confounding that it has taken Tinubu almost a year to declare an outright war against oil theft.
The Nigeria Extractive Industries Transparency Initiative said on Monday that audit figures covering 2009 to 2020 put Nigeria’s losses to oil theft over 12 years at 619.7 million barrels valued at $46.16 billion or N16.25 trillion. Between 2009 and 2018, Nigeria lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.
Apart from monetary losses, the environmental degradation resulting from pipeline vandalism and oil spills has resulted in deaths, illness, and destruction of farmland and fishing grounds, tourism facilities, and cultural areas.
Nigeria can easily produce over 2mbpd if oil theft is eliminated. The Group Managing Director of the NNPC, Mele Kyari, recently pointed out that oil production rose to 2.2mpbd in April 2020 during the COVID-19 pandemic when the oil thieves went into hiding.
The NNPC reported that 5,800 illegal pipeline connections had been removed and over 600 illegal refineries destroyed in recent months, which contributed to oil production of 1.7mbd recorded in May.
Oil theft and pipeline vandalism have driven international oil companies from the Niger Delta. TotalEnergies just sold its onshore Nigeria assets to a local firm for $860 million after diverting a $6 billion investment to Angola.
This order will test the sincerity of these entities, including the government itself. Multiple accounts have attributed oil theft to collusion between the oil-producing companies, the NNPC and other government officials, military and security agents, and other actors operating illegal refineries. The Minister of the Federal Capital Territory, Nyesom Wike, in 2021 during his tenure as Rivers’ governor, accused a General Officer Commanding an Army division of running an oil theft syndicate.
It is a shame that Nigeria cannot properly account for the crude oil produced. Flow stations have no meters. It was only last week that the Federal Executive Council awarded a $21 million contract to install meters at the 187 flow stations within six months. Another contract was awarded to install tracking facilities for all crude cargoes leaving Nigeria to the point of discharge. These are significant corrective measures, but the human element remains suspect.
Saudi Arabia has advanced systems with sensors and monitors that can track every single barrel of oil produced from the wells through pipelines to export terminals in real time.
If Tinubu is indeed committed to ending oil theft in Nigeria, accountability by those in charge must be paramount. There must be consequences if there are no marked improvements within specific timelines. There must be a monthly or quarterly re view of measures being implemented to adjust as required. The NNPC should be privatised as soon as possible for improved efficiency.
