By Prof Mike Ozekhome SAN
INTRODUCTION
The 2nd part of this treatise continues where last week’s feature stopped, namely ‘military and other security forces’, followed by ‘resident oil companies’ and ‘the local populace’. I then wonder aloud: ‘why are they stealing Nigeria blind?’. This is followed by another poser: ‘how is oil theft carried out?’, to which I proffer the following answers: (through so-called) ‘hot-tapping’, ‘cold-tapping’, terminal and vehicular transportation’, etc, concluding with what I see as the cost of the phenomenon. In this week’s feature, we shall examine the negative impact of oil theft on our economy and conclude with some recommendations for mitigating oil theft. Please read on.
THE NEGATIVE IMPACT OF OIL THEFT ON NIGERIA’S ECONOMY
The impacts of oil theft in Nigeria cannot be over emphasized. It has led to unstable economy, mass poverty, corruption, security challenges amongst others. It has left Nigeria behind in the race of the third world country. This is not healthy for a developing Nation that is beclouded with so many political and social variables.
1. LOSS OF REVENUE: The Nigerian government has lost substantial revenue, courtesy of oil theft. The stolen oil is sold on the black market, bypassing legal channels and depriving the state of crucial income that could be used for public infrastructure, social programs, and economic development. According to estimates by the Nigerian National Petroleum Corporation (NNPC), the country lost around $41.9 billion to oil theft between 2009 and 2018. The situation is even worse in the successive years as seen above.
2. CONSTRAINTS IN BUDGET: Oil theft has dealt a negative blow in other sectors. It creates budgetary constraints, leading to government reducing expenditure in other vital sectors germane to livelihood such as the health, education and infrastructural development sectors.
This leads to a lack of investment in these areas, hindering human capital development and overall economic growth. The instability caused by inconsistent revenue inflows also undermines investor confidence and discourages foreign direct investment.
3. ENVIRONMENTAL DISASTERS: Oil spillage is always a likely attendant consequence of production. This has led to pollution in many states of the Niger Delta region. Oil smugglers employ crude and unsafe methods to extract oil, damaging pipelines and infrastructure in the process. These incidents result in widespread contamination of farmlands, water sources, and ecosystems, posing serious health risks to local communities and affecting agricultural productivity. The environmental consequences of oil theft exacerbate the economic challenges faced by Nigeria.
4. SOCIETAL EFFECTS: Oil theft effects the society in various ways. Since it is a lucrative endeavor, the proceeds from oil theft are often used to fund criminal activities, including insurgency, terrorism, and other forms of organized crimes. This creates security challenges, particularly in the Niger Delta region, where most oil theft incidents occur. The presence of criminal networks also fuels corruption and exacerbates social inequality, further hampering economic progress and development.
MY RECOMMENDATIONS
Combating oil theft requires a community effort and approach by the law enforcement agencies, technological advancements, proactive government policies and even the cooperation of local communities.
TECHNOLOGY
Happily, the NNPC launched an App (applications platform) to monitor crude oil theft in the country. The company launched the app in Abuja at the signing of renewed Production Sharing Contracts (PSCs) agreements between NNPC and its partners in oil mining leases.
The platform ‘Crude Theft Monitoring Applications’ was created for members of host communities and other Nigerians to report incidents of oil theft and get rewarded. The Group Chief Executive Officer of the NNPC Limited, Mele Kyari, had in April disclosed that Nigeria lost $4 billion to oil theft at the rate of 200,000 barrels per day in 2022. This is not withstanding the fact that the country already lost $1.5 billion so far in 2022 because pipeline vandalism has escalated. The country was losing 95 per cent of oil production to oil thieves at Bonny Terminal, Rivers State. This is alarming. What is left for the country?
Therefore, there should be a round table conference by relevant stakeholders whose sense of patriotism, integrity and national loyalty are unwavering in this journey of ours – Nation building.
1. SECURITY ENHANCEMENT: security is a key factor in combating oil theft. Enhancing security measures around oil installations, pipelines, and waterways is essential to deter oil theft. The strategies may involve increasing surveillance, deploying advanced monitoring systems, and improving coordination among security agencies.
2. COLLABORATION WITH INTERNATIONAL PARTNERS: Oil theft is a big business, it is more regional and international. Nigeria should collaborate with international partners to combat oil theft. Information sharing, capacity building and joint operations can help disrupt transnational criminal networks involved in oil theft.
3. COMMUNITY ENGAGEMENT: This is one of the most important factors as it permeates the grassroots. Engaging local communities and providing alternative livelihood options can help reduce their reliance on oil theft for income generation. This includes promoting entrepreneurship, vocational training, youth employment, skills acquisition, and sustainable development initiatives.
4. LEGAL REFORMS: Nigeria operates the Rule of Law, and by virtue of this, all actions must be carried out according. Strengthening existing laws and imposing stricter penalties for oil theft offences can act as deterrence. This should be accompanied by an efficient judicial system that ensures speedy trial, prosecution and punishment of offenders. The Judiciary must rise like Daniel, to salvage the situation by dispensing justice without fear or favour, malice or ill-will.
5. NEED TO LEGALISE SMALL SCALE REFINERIES: There is the urgent need to legalise refinery by small scale back water factories, subject to standards and bench mark being given and monitored. This will stop their bad products finding their way into the market (as they do anyway), know innocent consumer’s motor engines. Afterall, Biafra was already refining oil as far back as 1967 (56 years ago) during the three year bloody Nigerian- Biafran Civil War.
CONCLUSION
Oil theft is an enigma to the Nigerian economy and security, the need to prevent same, cannot be overemphasized. The Nigerian government in collaboration in the oil, security, and economic sector must form a synergy to eradicate this cankerworm eating up the flesh of the wellbeing of the Nigerian- state, which is supposed to be an Eldorado.
(The end)
THOUGHT FOR THE WEEK
“A century ago, petroleum – what we call oil – was just an obscure commodity; today it is almost as vital to human existence as water”. (James Buchan).
