Heineken Lokpobiri, Nigeria’s minister of state for petroleum, has called on the Nigerian National Petroleum Company (NNPC) Limited to halt the sale of fuel below landing costs, arguing that this would help curb smuggling to neighbouring countries.
Lokpobiri, speaking at the 2024 Energy and Labour Summit in Abuja on Monday, said that as long as NNPC continues to sell imported fuel at a subsidised rate, smugglers will exploit the price gap to make high profits by transporting fuel across borders.
He said, “If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer (response).”
Crude oil theft continues to be a major challenge for Nigeria, significantly affecting the country’s revenue despite continuous government efforts to combat the problem in the Niger Delta region.
National Security Adviser Nuhu Ribadu revealed last year that Nigeria loses approximately 400,000 barrels of oil daily to illegal siphoning by thieves, highlighting the scale of the issue.
Between 2009 and 2020, Nigeria lost approximately 619.7 million barrels of oil, valued at N16.25 trillion to theft, the Nigerian Extractive Industries Transparency Initiative (NEITI) said, citing its past audit reports on the country’s oil and gas sector.
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NEITI also reported that from 2009 to 2018, Nigeria lost around 4.2 billion litres of petroleum products from its refineries, valued at $1.84 billion, highlighting the scale of losses faced by the country due to oil theft and vandalism in the sector.
Lokpobiri criticised security agencies for their complicity in fuel smuggling activities, suggesting that stronger measures are needed to address the issue.
He also pointed to the deteriorating state of Nigeria’s oil pipeline infrastructure as a significant contributor to the problem of crude oil theft and pipeline vandalism.
“Our pipelines, many of which date back to the 1960s and 1970s, are corroded and easily vandalised,” he said, adding that this facilitates the illegal transport of fuel.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired; they are completely corroded. So, anybody can just go and tap it, and the thing is busted.”
The minister stated that even with increased crude oil production, “the challenge lies in transporting it to terminals due to the deteriorated state of the pipelines.”
Lokpobiri called for a public-private partnership to address the infrastructure issues, saying, “That is why we have to go for the global model – PPP. We have to get the private sector to come in.”
He said there was the need for Nigeria to play a strategic role in ensuring energy security across West Africa, stressing that “Nigeria plays a very critical role in the energy security in Africa.”
Lokpobiri expressed concerns about supply of crude oil to local refineries, including the Dangote Refinery, noting that without increased production, meeting domestic and export obligations would be challenging.
Read him: “Our ambition is to ramp up production. It is only when we ramp up production that the midstream and the downstream can also be successful.
“Supporting local refining is the way to go. We can look for investors to explore and bring out this crude, so that we will be able to meet both our domestic obligations and also export some to be able to raise more dollars and meet our obligations.”
He highlighted the importance of ramping up production to support local refining and ensure healthy competition among refineries, assuring Nigerians that “We are committed to ensuring we support local refineries with all the feed-stock.”
