• Says the bad economy is a factor in the rise in violence
• Calls the N4 billion Tompolo contract weird
•Falana: I have proof the government is aware of people responsible for crude oil theft and smuggling
According to the London-based The Economist, Nigeria has continued to squander the potential to build its economy like other oil-producing nations that has been provided by the rare spike in global oil prices.
While a spike in oil prices could result in amazing developments, such as the anticipated construction of a futuristic metropolis in Saudi Arabia or the sudden strength of Angola’s currency against the dollar, it was noted that in Nigeria, the situation was the opposite.
The report was released shortly after yesterday’s request by the Senate’s leadership that the nation’s military and security agencies should begin pursuing anyone who are thought to be involved in oil theft.
Just yesterday, Nigerian lawyer and human rights advocate Mr. Femi Falana revealed that he had proof that members of the administration were responsible for crude oil theft and the importation of petroleum products illegally.
The Economist emphasized that exporters in the Middle East and Central Asia could earn $320 billion more in oil profits this year than anticipated, but noted that Nigeria has been noticeably absent from the joyous petro-party.
“Africa’s most populous country, around 220m-strong, desperately needs the money an oil boom could bring. Some 40 per cent of its people live on less than the equivalent of $1.90 a day.
“The government is struggling to service its debts. Social services are dire. The woeful economy has contributed to the violence that afflicts much of the country. In the first half of this year, nearly 6,000 people were killed by jihadists, kidnappers, bandits or the army,” the paper stated.
The news source noted that whereas drivers everywhere pay more at the pump as the price of petroleum rises, this is not the case in Nigeria, and that price controls remain the key factor destroying the public purse as a result of the boom.
“In January, President Muhammadu Buhari reneged on his latest promise to reform the system, leaving the government to pay for the vast gap between Nigeria’s low fixed price and the global one,” the report added.
The government-owned Nigerian National Petroleum Company is responsible for the subsidies, according to the report, which declared that “the prognosis is grim.”
The news outlet noted that the World Bank predicted in June that the government would spend N5.4 trillion ($12.6 billion) or more on fuel subsidies this year, more than three times what it did the previous year. This is more than the increase in revenue the government will receive from higher crude oil prices, the news outlet claimed.
“As a result Nigeria’s net oil revenues are likely to be about 40 per cent lower than last year, despite the high global price. That squeezes everything else. In this year’s amended budget the government allocated more to the fuel subsidy than to education, health care and welfare combined.
“Price-fixing has other ill effects. Because petrol is artificially cheap, Nigerians burn more of it. Consumption of petrol has risen from about 58 million litres a day in 2021 to around 70 million this year,” quoting NNPC’s figures.
It said that the fact that output itself had fallen to 1.13 million barrels per day, the lowest in more than 50 years, and that the oil business had also been a drag on overall economic growth, was another reason Nigeria’s public finances benefited so little from high oil prices.
“One reason for falling output is that the NNPC is so short of cash after paying for petrol subsidies that it struggles to cover production costs for pumping crude oil. Yet another is that a lot of oil is never counted as part of Nigeria’s output because it has been stolen,” it stressed.
Although figures vary, it cited the regulator of the oil sector as saying that criminals are stealing 108,000 barrels per day, or around 7% of production. It claimed that this cost the government $1 billion just in the first three months of this year.
“The Trans Niger pipeline, which can transport 180,000 barrels a day (about 16 per cent of the country’s current production) suffers so much theft that its flow has been halted since June.
“Another big pipeline that carries 150,000 barrels a day has also been repeatedly attacked. Shell, a big oil firm, has declared force majeure since March on all its exports of Bonny light, a high-quality crude, permitting it not to meet its contractual obligations,” The Economist added.
The study claims that one method of stealing the product involved packing genuine shipments with more oil than is disclosed. Another method, according to the paper, was to breach into pipes and siphon oil out, then refine it in remote locations before selling.
It was reported that small boats cruise through the delta’s canals, filling up from illegally tapped pipelines, and that plenty of stolen crude flows straight into the world market.
“They deliver it to offshore tankers or floating oil platforms. Sometimes the stolen crude is mixed with the legal variety, then sold to unknowing buyers. Much of it, however, is bought by traders who pretend not to know it is stolen, or do not care,” it maintained.
“Buhari has promised a crackdown. The NNPC’s first move was to hire private security firms to protect the pipelines—a telling indictment of the army. But it is unlikely to solve the problem.
“Two of the firms are part-owned by a former warlord, Government Ekpemupolo, better known as Tompolo. He led a guerrilla campaign in the 2000s for the locals to control the delta’s oil, before agreeing to a deal whereby he would stop blowing up the pipelines in exchange for an amnesty—and for lucrative security contracts.
“That has fallen apart under Buhari’s government, which in 2016 issued a warrant for his arrest. Yet Tompolo is now bizarrely both a government contractor and still on the wanted list of Nigeria’s anti-corruption agency, which says he has earned $105m through graft. He denies wrongdoing,” the paper added.
Falana: I Have Proof The Government Is Aware Of Those Responsible For Crude Oil Theft And Smuggling
Falana has revealed that he has proof that members of the government were involved in stealing crude oil and smuggling petroleum products into the nation.
At the same time, he was threatening to reveal the politicians responsible for the cartel that was bunkering and smuggling crude oil.
At a two-day leadership retreat the Labour Party organized in Abuja with organized labor, industry leaders, and other stakeholders from the public and private sectors, Falana made the revelation yesterday.
The government cannot pretend to be unaware of the names of criminals operating in the upstream and downstream sectors of the nation, according to Falana, who spoke at the event titled “Nigeria at Crossroad; Labour Party the Only Option.” He added that until this issue was resolved, common Nigerians would continue to be at the mercy of a small number of criminals.
He said: “Today the government is thinking of increasing fuel price to N500. I want to say this here publicly, about seven years ago, the government spent a colossal sum of N50 billion to acquire a software by the Petroleum Equalisation Fund to track and monitor all tankers that load fuel in any part of the country.
“Today you are being told Nigerians deserve to be punished because of the criminal activities of a few people. That the government will punish the people because of the criminal activities of a few.
“We have heard now that the Comptroller General of Customs has come out publicly to say that it’s impossible to smuggle daily about 10 million litres of fuel. Where did they pass?
“Nigeria is the only country where the government will come out and say we are losing $7 million every day because of oil theft. Nigeria is the only oil producing nation without data to know how much oil it is producing daily.
“Five hundred tankers loading 36,000 litres of fuel. The NNPC has confirmed that yes, this is what is going on. Who are the oil thieves? They know them. Oil theft, oil snuggling, all have official partner,” said Falana.
He pointed out that there was an organisation called Lloyd, which have records of all oil transactions in the world, saying the federal government has access to that it, “and yet we are saying we don’t know who is stealing our oil or where the oil is being taken to?
“So the government knows and if they want information, we can make it available to the government. If they are sure they want to know those who are stealing us and those who are spoiling our country.
“In 2023 budget, the government said they are going to spend N453 billion on fuel subsidy. By June, the president presented a supplementary budget to the National Assembly that increased the budget to N4 trillion. The National Assembly did not debate, they passed it.
“Now the Minister of Finance is saying that that figure will go to N6.5 trillion, that in the budget of next year, there would be no money for capital project.
“I challenge the Nigerian Labour Congress, TUC and others that you must get to the root of this criminality once and for all. We will decide today. We will set up a committee. I have all the right information to expose all the criminals behind smuggling of fuel and criminal behind oil theft.”