Crude Oil Theft, Threat to Nigeria’s Economy-Report

SEATTLE (Oil Monster): A fresh report commissioned by the Nigeria Natural Resource Charter (NNRC), a non-governmental organisation showed that the estimated value of crude oil stolen from the Niger Delta was higher than the current combined allocations for health and education captured in the 2018 budget.

Details of the report presented to the media in Abuja, yesterday revealed that the combined allocations for health and education which amount to N189.4 billion translates to a mere 8.4 per cent of the estimated value of losses from oil theft two years ago.

Consequently, the NNRC has urged the federal government to address the issue of oil theft with the urgent attention it deserved and intervene with more effective action.

The report focused on the consequences of weak governance structures on the Nigerian economy and the Nigerian people. It also provides credible information on revenue losses from oil theft and its impact on the economy and the average Nigerian.

It identified poverty, unemployment, poor governance and pervasive corruption and the neglect of the Niger Delta region with disproportionate brunt of the negative impact of oil exploration as major reasons for the emergence and sustenance of oil theft over time. 

The report recalled that in 2016, reports by both government and oil companies indicated that up to ₦3.8 trillion were recorded as losses from crude oil theft, sabotage and pipeline vandalism, principally as a result of the force majeure declared at the Forcados terminal combined with wider pipeline infractions and theft. The government’s share of this loss was approximately 42 per cent or about N1.6 trillion.

The report observed, “The Nigerian government passed a record budget of ₦9.12 trillion for 2018 with a revenue target of N7.2 trillion, most of which it aims to achieve from the petroleum sector. At a time when the country has just exited a recession and the economy remains fragile, with national debt on the rise, reducing oil theft should clearly be an urgent national priority.”

The report noted that though oil theft was as old as the Nigerian oil industry, the level of pilfering remained insignificant till the 1970s. However, “as the stakes got higher over time and with global oil prices rising above $100 a barrel in the early 2000s, oil theft evolved into a cottage industry creating consequential socio-economic problems.”

It added that “over the last decade, oil theft has risen to unprecedented levels, peaking between 2011 and 2014. The inability of the government and oil companies to curb this epidemic has made Nigeria the country most plagued by oil theft in the world.”

Courtesy: https://leadership.ng