• Monday, May 20, 2024
businessday logo

BusinessDay

Economy: Why Nigeria must consider punitive measures to end oil theft

Libya overtakes Nigeria to become top African oil producing country

Oil theft in Nigeria, a country with the largest oil reserves in Africa, has become a major economic and environmental issue.

Stealing oil involves illegal siphoning of crude oil from the country’s pipelines and wellheads. This practice has far-reaching implications for the nation’s economy, security, and environment.

All efforts of the Federal Government, including military intervention, pipeline surveillance, and others, have failed to stop the economic sabotage.

Many Nigerians believe that there is the need to introduce death penalty to halt the illegal business going on in the country.

According to them, “Nigeria cannot afford to leave this major foreign exchange earner to thieves and saboteurs on a daily basis.”

There is a widespread belief that oil theft is facilitated by corrupt practices within the government and security forces, allowing the illegal trade to flourish and yet pretending to be fighting the scourge.

Security forces have seized numerous small boats, detained individuals, and also ex-militant Government Ekpemupolo, known as Tompolo, was to monitor pipeline integrity and combat unauthorised oil activities.

Despite the arrest of lower-level individuals, no high-ranking participants in the illegal oil market face charges.

The criminals have become more skilled at evading detection, using methods from damaging pipelines in concealed areas to paying off officials for information on patrol movements.

Nigeria blames oil theft, declining investment, and sabotage for missing its Organisation of the Petroleum Exporting Countries (OPEC) quota of 1.6 million barrels per day.

Recently, Mele Kyari, the group chief executive officer of the Nigerian National Petroleum Company Limited (NNPC), during an appearance before the National Assembly said that the extent of illegal connections to oil pipelines is unbelievable. He also said that efforts to remove these connections are futile, as new ones appear almost immediately in the same spots.

“Some of the scale of the infractions that we see is unbelievable. We are not able to deal with it. When you remove one connection, the next day in the same location, someone will replace it,” he said.

Kyari noted that many of these connections are located close to settlements and even local government offices. He expressed concern that the rampant oil theft disrupts the ability to forecast daily crude oil production.

Kyari emphasised that the ongoing issue hinders the ability to ensure consistent production levels. The company faces challenges in achieving the budgeted target of 1.6 million barrels per day, which is not solely due to oil theft.

A Chatham House report analysed the trade in stolen Nigerian oil, valued between $3 billion and $8 billion annually.

The report, ‘Criminal Crude’, indicates that various groups, including politicians, military officers, communities, criminal organisations, and individuals in the oil sector, benefit from illegal trade. This activity began in the late 1970s and expanded recently due to insufficient regulation and elevated prices.

The report states that theft of Nigerian crude oil occurs on a large scale. The money from this theft is processed through global financial centres and invested in assets within and outside Nigeria.

Transparency International, an anti-corruption organisation, also published a report suggesting that the success of Nigeria’s crude oil theft is linked to extensive military involvement.

This report, created with the Civil Society Legislative Advocacy Centre and initially released in 2019, describes a system of unlawful participants, including corrupt officials, security forces, and crime groups, who divert a large amount of oil each year.

Recently, an official of the NNPC lamented the level of thieving going on in the Niger Delta, expressing concerns that those apprehended and handed over to the appropriate authorities for prosecution are not being prosecuted.

“We see a lot in the Niger Delta when it comes to this issue of oil theft. As you well know, the NNPC does not have the prosecuting power. Whenever these suspected thieves are apprehended, we hand them over to the appropriate quarters but you don’t get to see these people prosecuted. We believe that if some people have been punished, others would have been cautious.

“Nigeria has the capacity to produce over 3 million barrels per day, even above OPEC quota, but I must tell you sadly that we are losing a lot of crude oil through theft,” he said.

An expert in the oil exploration, who spoke to BusinessDay on condition of anonymity said that the crime has continued because “big men” are involved in it.

“This oil theft of a thing is not done by poor people; it is perpetrated by the high and mighty in our society, even those who have deep contacts in the government. The boys we see in the creeks are mere errand boys. Some of the pipes pass through the compound of traditional rulers in the Niger Delta. Most times, when vessels are seized, within a space of three to six months they resurface somewhere else; the same vessels. So, you can see that it is not a ‘small boy’ business. For government to stamp it out, it needs an iron fist like it is done in other parts of the world. The buck must stop at the table of government,” the expert said.

[P1] A criminologist, who craved anonymity, wondered why it is difficult for Nigeria to fight corruption head-on beyond rhetoric.

“I have found out that government dwells so much on rhetoric, the action is not there. Why would a country that claims it was poor refused to punish those who are causing economic haemorrhage? I can’t get it. But the reason is simple, people are more interested in their personal interest than in the collective interest of the nation. That is why you find government officials sponsoring crimes. In other climes, we hear that past presidents are sent to prison for corruption while in office; some serving government officials are jailed for one misdeed or the other that run contrary to the oath of office they took. Even in the United States, we read about government officials being arrested, charged, prosecuted and even jailed for espionage. It happens all over the world except in Nigeria where the government appears to be its own major problem. Until we get to the point that people are publicly executed for economic sabotage, there would be no sanity in our society,” he said.

Nigeria must emulate China

Nwaeze Onu, Abuja-based public affairs analyst, believed that Nigeria must begin to consider punitive measures, including death penalty, to stamp out the menace.

“I have advocated this for a long time. This is because we are in Nigeria, a growing economy, and we need to protect it. This penalty is what obtains in China too. If our nation is really serious, economic sabotage is supposed to deserve the death penalty because this is the root of our socioeconomic underdevelopment.

“You saw what happened to a minister in China, who was caught in an issue concerning verification of drugs. He took drugs not properly verified into the country and the Chinese knew it would have effects on its imports and exports. The minister was dealt with. But in Nigeria, the corruption is such that if you soft-pedal on saboteurs, the economy will suffer for it. Besides, the worst kind of corruption is not about money hidden in boxes or apartments, the worst corruption is institutional corruption.

“If you are able to tackle institutional corruption, you will realise that individual acts of corruption will stop. And that is why the government needs to put in more efforts.”

Another analyst, who also did not want his name mentioned, put the blame squarely on the government.

According to him, “At the moment, government is not doing enough to curb economic sabotage or punish those involved in it and as a result, people are taking advantage of the system to perpetrate economic crimes. People take advantage of the system because they know that nothing would happen to them; there is no form of deterrence whatsoever. If there were, people would become extremely careful. Once they know that certain actions would attract maximum of life sentence or minimum of 20 years, they become careful and the possibility of doing the right thing would be there.”

Oil theft responsible for Nigeria’s position lost to Libya in March

The Organisation of Petroleum Exporting Countries (OPEC) earlier this month said that Nigeria’s average daily crude oil production dropped to 1.23 million barrels per day (bpd) in March 2024.

OPEC disclosed this in its monthly oil market report released recently.

It said that the current output figure represents a 6.88 percent decrease from the 1.32 million bpd recorded in February.

The latest figure also means that Nigeria’s output has steadily reduced since the start of the year — from 1.42 million bpd recorded in January.

Nigeria consequently lost its position as the biggest oil producer in Africa to Libya (which produced 1.24 million bpd in the month under review).