The Nigerian Extractive Industries Transparency Initiative (NEITI) has revealed that Nigeria lost 619.7 million barrels of crude oil valued at N16.25 trillion ($46.16 billion) to crude oil theft between 2009 and 2020.
Orji Ogbonnaya, the executive secretary of NEITI, said this during a policy dialogue on the utilisation of beneficial ownership data in the fight against corruption in Nigeria’s crude swap deals, held in Abuja.
He said the volume of crude oil stolen represented a loss of over 140 thousand barrels per day, adding that between 2009 and 2018, the country lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.
The data which was culled from the agency’s latest policy brief titled “The cost of fuel subsidy: A case for policy review”, also stated that the country spent over N13 trillion ($74 billion) on fuel subsidies between 2005 and 2021.
“The figure in relative terms is equivalent to Nigeria’s entire budget for health, education, agriculture, and defence in the last five years, and almost the capital expenditure for 10 years between 2011 2020,” he said. Highlighting other impacts of fuel subsidy costs, he said it disincentivised private sector investment in the downstream and midstream petroleum sector, worsened the country’s debt profile, and caused inefficient supply arrangements-scarcity.
Ogbonnaya said although these findings have been submitted to the president through the Presidential Committee on Crude Oil Theft, he urged civil society organisations to urgently target issues in the oil and gas sector and set an agenda for the incoming administration.
Speaking on oil swap, he said it started when the Nigeria National Petroleum Company (NNPC) Limited used to receive a daily crude allocation of 445,000 bpd from the government to refine for domestic consumption.
However, the NNPC exported most of the crude and then depended on the Pipeline Products Marketing Company Limited (PPMC) or private oil marketers to import refined products which led the country into debts and did not guarantee sustained imports of refined products to meet domestic demand.
As the debts increased, Ogbonnaya said the government had to find innovative and less expensive ways of making refined petroleum products available for the citizens and in 2010, the NNPC introduced oil-for-product swaps as a solution to this problem.
“Oil-for-product swaps are complex barter transactions in which NNPC and private traders swap crude oil for refined petroleum products, rather than for money,” he said.
He, however, noted that these swap deals were not sustained as there were major operational changes within the NNPC on the management of domestic crude allocation in 2016. He hoped that the crude oil swap will become history upon the full deregulation of the petroleum sector.