Revisiting NNPC’s admission of $1.9bn crude oil theft monthly

The group chief executive officer, NNPC Limited, Melee Kyari, admitted recently that Nigeria, Africa’s biggest economy, loses $1.9 billion monthly to crude oil theft.

Using the official exchange rate at the Investors and Exporters Window (I&E Window), which was N428.75 as of August 9, 2022, it means Nigeria, that is so much in dire straits financially and improvising to reduce its fiscal deficit, loses N814.63 billion monthly. In a fiscal year, that would amount to N9.775 trillion. It is humongous.

On his part, the minister of state for petroleum resources, Timipre Sylva, said Nigeria loses 400,000 barrels of crude daily to thieves. This disclosure means that at an average price of $100 per barrel for its Bonny Light, Nigeria loses $40 million daily and $1.2 billion monthly.

It is time for Nigeria to take the bull by the horn. This kind of situation persists because of the little private sector engagement in the sector

These two accounts, which came from the inner circle of Nigeria’s crude oil production and management, validate what many stakeholders have said repeatedly that non-state actors are carving out spaces of influence for themselves within the Nigerian territory. Otherwise, there is no way how a huge amount of crude oil to the tune of 400,000 barrels could have been illegally tapped and transported undetected. We are talking about the transport of 63.6 million litres of crude oil daily.

This kind of operation could not have been done without the tacit support of Nigeria’s security architecture, because transporting 63.6 million litres of crude oil daily is not a joke.

Development finance institutions such as the World Bank, International Monetary Fund (IMF) and the African Development Bank (AfDB) have emphasised the need for the Nigerian government at the national and sub-national levels to be prudent with their resources. But Nigeria is yet to take heed to the pieces of advice.

In the last few years, Nigeria’s fiscal status has deteriorated with fiscal deficit ballooning, domestic and foreign debts accumulating at a geometric rate, with the resultant impact on debt servicing. The difficulty in servicing Nigerian debt could be seen in the presentation made by the minister of finance, budget and national planning, Zainab Ahmed, who disclosed that between January and April this year, total revenue was just N1.23 trillion as against an expenditure of N4.72 trillion, leaving the nation with a budget deficit to the tune of N3.09 trillion.

Read also: Oil theft spooks operators, deepens underinvestment

It is time for Nigeria to take the bull by the horn. This kind of situation persists because of the little private sector engagement in the sector. The Petroleum Industry Act (PIA) should be given enough wings to fly. It should be implemented holistically as nothing should be sidestepped.

The segments of the Nigerian Navy, Customs, Army and Police in charge of the management of the nation’s pipelines are due for a complete overhaul. This is because for this amount of crude oil to have been stolen under their watch is a clear admission that they are not fit to secure these national assets.

Community engagement in the Niger Delta region is at its lowest ebb in view of these developments. The region is not too big a place that the traditional leaders and youth associations are difficult to approach. Government should step up community engagement. Promises made in the past should be fulfilled.

Government must convince the locals of their seriousness. Nigeria cannot be losing $1.9 billion monthly while government officials continue to handle the issue lackadaisically. There is much more at stake because the nation is approaching a fiscal cliff. Government’s major obligations may be abandoned if the disappointing revenue generation continues.

Lastly, the Nigerian petroleum ministry and its agencies must put their house in order. With the signing of PIA, the era of two government agencies in the same ministry providing conflicting figures on the same subject matter should come to an end. There was a time in this country where different government agencies provided different figures as per the amount of premium motor spirit (PMS) Nigeria consumed. Till today, people use estimates.

On crude oil theft, while the NNPC’s CEO gave the total monetary loss to the tune of $1.9 billion, the minister of state for petroleum said it was 400,000 barrels daily, which amounted to 12.4 million barrels monthly for a 31-day month.

The highest that crude oil price had attained this year was $130 per barrel. Even at that price, the 400,000 barrels quoted by the minister of state for petroleum resources would amount to $1.612 billion, still less than $1.9 billion quoted by the NNPC. Then something is wrong since both officials are in the same petroleum ministry. This is not a good development.

Get real time updates directly on you device, subscribe now.