At least crude oil worth $20 billion (estimated N14 trillion at N700/$1) may be lost to theft in Nigeria in one year just as the Nigerian National Petroleum Company (NNPC) Ltd said it has heightened the surveillance of its pipeline systems.
In an analysis on crude oil theft, Taiwo Oyedele, a Fiscal Policy Partner and Africa Tax Leader at PWC Consulting, said the average daily production in the first six months of 2022 was 1.22 million barrels per day (bpd) compared to the average OPEC quota of 1.72m bpd for the period.
“This amounts to about 500,000bpd shortfall all of which can be attributed to oil theft directly and indirectly.
“While most oil producing countries are smiling to the bank, given high oil prices, Nigeria is virtually broke resorting to heavy borrowing to fund the budget,” he noted.
Oyedele, who also referred to a briefing by the Group Chief Executive Officer of NNPC Ltd, Mele Kyari, on Tuesday, stated that Kyari said the oil thieves included senior government officials, security forces and religious leaders, among others.
“With an average crude oil price of $112 in the first half of 2022, the financial loss translates to about $10bn for six months or $20bn if extrapolated for the year.
“This is more than 50 per cent of our external reserve or over N8trn, which is more than the entire tax revenue collected by the Federal Inland Revenue Service (FIRS) and the 36 states plus the FCT in 2021,” he stated in the analysis.
Oyedele listed the effects of the theft to include loss of foreign exchange receipt, revenue shortfall, increase in crimes as a result of huge cash in the hands of oil thieves, higher production cost of crude oil due to pipeline vandalism, production losses and associated overheads, among others.
“This must now be treated with utmost sense of urgency. The private sector should resist any new or further tax increases until the government can demonstrate that it has done everything within its powers to stop the siphoning of our commonwealth,” he noted.
How FG is tackling crude theft – Kyari
Decrying the huge oil theft at his recent State House briefing, Kyari said government was dealing with the menace. He revealed that between April and August 2022, government deactivated 199 illegal refineries and arrested 122 persons; and $35.8m worth of crude oil was either recovered or destroyed.
He said NNPC has created a centre to harness energy theft data and people can report theft and vandalism.
“We are following the cash and I can confirm to you at this moment that you will see more things will happen. The 122 people that we have mentioned, they have names and at the right time we will disclose them,” he said.
Kyari noted that the compromise cuts across board. “There are oil company workers, maybe even NNPC workers, government security workers, some of them have been arrested and some from the communities, some are elite and the government is after them, and we will get them.”