• Thursday, July 18, 2024
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National Assembly’s serial probes fail to curb oil theft

The National Assembly is again probing the perennial challenge of crude oil theft after a series of past investigations have yet to yield tangible results.

Despite assurances from lawmakers, concerns persist over the effectiveness of the probes done to address a menace that is robbing the nation of significant revenue.

Both the Senate and the House of Representatives launched investigations in July and October 2023, respectively, to address the threat posed by oil theft to the economy.

The country’s oil production remained below one million barrels per day for most of 2023 – it improved to 1.37 million barrels per day (bpd) in November. The oil output still fell short of the 1.74 million bpd quota allocated to Nigeria by the Organisation of Petroleum Exporting Countries for 2023, below the 1.69 million bpd in last year’s budget.

Experts in the security as well as the oil and gas sector argued that these inquiries lack efficiency and transparency, failing to produce meaningful outcomes, leading to a decline in public confidence and prompting calls for more transparency and accountability.

Kabiru Adamu, CEO of Beacon Consulting, a security risk management and intelligence consulting firm, said that addressing crude oil theft requires a more serious and effective approach from all involved including the National Assembly.

Adamu said crude oil theft could be curbed if the lawmakers treated the matter more seriously and conducted its oversight function effectively.

He cited lack of technical expertise among legislators as a major challenge to their oversight function.

Over the years, there have been numerous parliamentary inquiries, such as the 2016-2017 investigation into stolen crude oil costing $17 billion. In 2022, the then Senate president Ahmed Lawan set up a 13-man committee to investigate oil theft in Nigeria and its impact on petroleum production and oil revenues.

The House of Representatives launched an investigation into an alleged loss of over $2.4 billion from the illegal export of 48 million barrels of crude oil as well as all crude oil exports and sales by Nigeria from 2014 to 2022.

On July 12, 2023, the House of Representatives opened another investigation of alleged crude oil theft to the tune of $4 billion.

The country had been grappling with dwindling oil production in recent years.

In 2018 and 2019, the government set a budget benchmark of 2.3 million bpd. But in 2020, 2021 and 2022, the production benchmark was cut to 1.8 million, 1.88 million, and 1.86 million bpd respectively.

Adamu emphasised the urgent need for the National Assembly to harmonise recommendations from its probes and ensure implementation by the executive.

He also advocated for enhanced oversight to hold stakeholders accountable and potentially eliminate crude oil theft.

According to the 2023 European Modern Studies Journal, Nigeria lost an unprecedented oil revenue of $7.2 billion and $22.4 billion for 2021 and 2022, respectively, due to oil theft. In the first eight months of 2022, N1.3 trillion was lost from oil theft, which is more than the total allocation to health in the 2023 budget.

Late last year, Heineken Lokpobiri, minister of state for petroleum resources (oil), banking on improved security around the oil assets, said the country will reach and exceed the 2024 crude oil production target of 1.7 mbpd, having reached 1.5 million barrels of crude daily.

Some oil and gas experts believe that the Nigerian government has not exercised enough will to halt theft in the industry, even at a time when the country is scrambling for revenue to tackle worsening socio-economic conditions.

Bala Zakka, an oil and gas analyst, said Nigeria needs to adopt international best practices, particularly from oil-producing countries such as Saudi Arabia, in deploying the instruments of transparency and accountability.

Proshare, a market intelligence and data analytics firm, in its 2022 report titled ‘The anatomy of crude oil theft in Nigeria’, said N1.03 trillion, up to 54 percent of actual gross oil revenue earned in the first half of 2021, was lost to crude oil thieves, marking a notable deterioration compared to previous years.

According to the report, Nigeria needs to improve its fiscal revenue, and one relatively quick fix would be to block the revenue leakages caused by pipeline vandals and oil pirates, without which the economy will continue to suffer amid exacerbating existing challenges such as inflation and unemployment.

Nuhu Ribadu, the national security adviser, said in August that the country continued to lose 400,000 barrels of crude oil to thieves.

The Proshare report proposes various measures, including aerial surveillance of oil-producing areas to assist in production audits and prosecution of pipeline vandals and illegal local oil refiners.

Others include community incentives to encourage people to report theft, tighter border controls, rehabilitation of local refineries, and a shift towards clean energy alternatives.

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