Nigeria: The Economist – Nigeria Missing Out On Rare Global Oil Boom Opportunity

Nigeria has continued to waste the rare opportunity presented by the global rise in oil prices to grow its economy like other oil-producing countries, London-based The Economist has stated.

While a surge in oil prices could do astonishing things, like in Saudi Arabia where a futuristic city was planned to rise from the desert or Angola where its currency has suddenly become one of the strongest performers against the dollar, it noted that in Nigeria, the reverse was the case.

The report came just as the leadership of the Senate yesterday asked heads of military and security agencies in the country to start prosecuting suspected members of the public who are involved in oil theft.

The upper chamber of the National Assembly also tasked the Judiciary, to grant accelerated hearing to matters on oil theft and other forms of economic sabotage.

This was just as yesterday, Nigerian lawyer and human rights activist, Mr. Femi Falana disclosed that he has evidence to show that people in government were involved in crude oil theft and smuggling of petroleum products in the country.

Also commenting on the matter which is largely behind the country’s economic woes, the Labour Party presidential candidate, Mr. Peter Obi, who yesterday said he was not going to blame past government in the country for their failure when elected president next year, but would rather focus on fixing the economy, alleged that trillions of naira of crude oil had been stolen from the country.

In the Middle East and Central Asia, The Economist stressed that exporters could pocket $320 billion more in oil revenues this year than previously forecast, adding however that Nigeria has been a conspicuous absentee from the merry 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.

According to the news outlet, price controls remain the biggest reason the boom was ruining the public purse, noting that whereas elsewhere, as the price of crude rises, drivers pay more at the pump, it was not so in Nigeria.

“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.

With the subsidy covered by the state-owned Nigerian National Petroleum Company, the paper stated that the “prognosis is grim”.

Recalling that in June, the World Bank projected that the government will spend N5.4 trillion or $12.6 billion on fuel subsidies this year, more than three times what it coughed up last year, the news medium said that that is more than the increase in revenue the government will get from higher crude oil prices.

“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.

Another reason Nigeria’s public finances benefit so little from high oil prices, it reasoned, was that production itself has slumped to 1.13 million barrels per day, the lowest in more than 50 years, which is partly why the oil industry has also been a drag on headline economic growth.

“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.

Though estimates vary, it quoted the oil industry’s regulator as disclosing that thieves are snaffling 108,000 barrels a day, about seven per cent of production. This, it said, cost the government $1 billion in the first quarter of this year alone.

“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.

According to the report, one way to steal the commodity was to overload legitimate shipments with more oil than is declared. Another, the report stated was to break into pipelines and siphon oil off, then cook it up in bush refineries before selling.

Plenty of stolen crude goes straight into the international market, it noted, adding that small boats glide along the delta’s canals, filling up from illegally tapped pipelines.

“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.

Prosecute Suspected Oil Thieves, Senate Orders Military, Security Chiefs

Meanwhile, the leadership of the Senate yesterday asked heads of military and security agencies in the country to start prosecuting suspected members of the public who are involved in oil theft.

The upper chamber of the National Assembly also tasked the Judiciary, to grant accelerated hearing to matters on oil theft and other forms of economic sabotage.

President of the Senate, Ahmad Lawan, stated this in his remarks before a closed session involving the principal officers of the red chamber and the military and security chiefs to review the progress made in the fight against insecurity in the country.

With Nigeria’s petrol subsidy bill skyrocketing in 2022, the estimates for the whole year would exceed the total expenditure by all the states of the federation in 2021, which was $9.8 billion, a new report by a member of President Muhammadu Buhari’s Economic Advisory Council and Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, indicated on Monday.

The report came as the Nigerian National Petroleum Company Limited (NNPCL) also revealed that crude oil theft was taking a severe toll on its performance. NNPCL disclosed that it lost 470,000 barrels of crude oil per day, which amounted to about $700 million monthly, saying this is in addition to security challenges that hinder oil production in some terminals.

Group General Manager, National Petroleum Investment Management Services (NAPMS), Bala Wunti, made the revelation during an interview with journalists in Abuja.

The meeting with the Senate was a follow up to a similar one held early in August and it was presided over by Lawan.

It was attended by the Deputy Senate President, Ovie Omo-Agege, other principal officers of the Senate and Chairmen of security related committees of the Senate.

Also in attendance were the Chief of Defence Staff, the three Service Chiefs, Inspector General of Police, Directors-General of National Intelligence Agency(NIA), and the State Security Service(SSS).

Others were, the Commandant General of the National Security and Civic Defence Corps while the Acting Comptroller General of the Immigration Service was represented.

Lawan lamented the massive theft of the nation’s crude oil and insisted that the development must be halter while the perpetrators must be arrested and prosecuted immediately.

He said, “Those who have made every effort to steal our oil at an industrial scale, I’m sure some of them may not be that lucky to escape.

“We want to see trials of people who are caught because when that happens, citizens will know that nobody, no matter how high that person is, can go scot free if he or she decides to get involved in this kind of criminal activities.

“Of course, I will appeal to our courts – judiciary – once we have cases like this, we must give expeditious consideration, because these are the issues that, today, are militating against our stability and even against our democracy.

“We lose so much of our oil. As at the last count, the report was that we export just little above 900,000 barrels. And that is just about 50 percent because it is supposed to be 1.8million barrels per day and that is halving our revenues and our resources for development.

“So I want to appeal to the judiciary to give a special consideration once a suspected oil thief is taking to Court. We must prosecute them. It is not enough to just take away whatever they have stolen and say go and sin no more.”

Lawan said the meeting was to review the earlier one held early in August meant to look into the security situation in the country.

He expressed delight that the security situation in the country had improved tremendously after the August engagement with the security and military chiefs.

He said, “Before we closed for our annual summer recess, Distinguished Senators and indeed, members of the National Assembly expressed so much concerns with respect to the security situation prevailing and we felt we must engage our security agencies so that together, we will continue to fight these challenges in our country.

“I am happy and I’m sure I’m speaking the mind of my colleagues, that after that meeting, till today, we have seen remarkable difference in the fight against insecurity in our country by our Armed Forces and other security agencies and we are very proud of that.

“We pray that this continue because we have seen the initiative and it is for us to finish the job. When Mr. President spoke of ensuring that we return to normalcy by December 2022, I’m sure he had in mind what you have been doing recently.

“I believe that you, our Armed Forces and other security agencies have everything in terms of the morals and determination, even though we still have to give some other support. This meeting therefore is to review what has happened so far.

“While we fight the insecurity in the country, sometimes we capture bandits alive.”

Lawan also appealed to the Security Chiefs to take them (lawmakers) into confidence during the closed door session.

“We are responsible people. There are things that we know are very sensitive but some things are treated better when we are on the same page so that we also don’t legislate blind folded or without the necessary background information.

“Where there are requests or requirements to enhance the capacity and the competence for Armed Forces and other security agencies, I think we should consider that as a priority as well,” the Senate President said.

Falana: I Have Evidence Govt Knows Those Behind Crude Oil Theft, Smuggling

In the meantime, Falana has disclosed that he has evidence to show that people in government were involved in crude oil theft and smuggling of petroleum products in the country.

This was just as he threatened to expose those in government behind crude oil bunkering and smuggling cartel.

Falana made the disclosure yesterday, at a two-day leadership retreat organised by Labour Party in Abuja, with the organised labour, captains of industries and other stakeholders both in the private and public sector.

Falana, who spoke at the event titled: ‘Nigeria at Cross Road; Labour Party the Only Option,’ said the government cannot feign ignorance about the identities of criminals in the up and downstream sectors of the country, adding that until this was addressed, ordinary Nigerians would continue to live at the mercy of a few 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.”

Also speaking, Obi said he was not going to blame past government in the country for their failure when elected president next year, saying he would focus on fixing the economy of the country.

Obi who was welcomed at the event by the founding fathers of Labour Party; its National Chairman, Julius Abure; leadership of the NLC, led by its President, Ayuba Waba; the Trade Union Congress (TUC) Chairman; Prof. Pat Utomi, Sam Amadi, Doyin Okupe, among other dignitaries and party leaders across the 36 states of the federation and the FCT, said his assignment was to solve problems.

He said has no intention to go into government to victimise past leaders, but to address the challenges bedeviling the nation’s economy.

Obi said: “My assignment here is to listen and take note. It would be disappointing and grave bondage to Nigeria’s existence, if Labour goes through this efforts and support somebody to lead this country and it fails. God forbid.

“For me, I want to listen. I want to take note. That note is important to me because I don’t want to give excuses. I don’t want to get in there and start blaming past leaders.

“If they have done better, there wouldn’t have been need to hire me. I am being hired to solve problems, not to remind Nigerians of where they are coming from”

“By the time you ask yourself what is wrong with Nigeria, ASUU has been on strike for seven months. What ASUU is asking for is an agreement entered into since 2009, when I was governor of Anambra State. ASUU is asking for N1.3 trillion. Are we saying Nigeria cannot raise N1.3 trillion to support education in 12 years?

“Our Oil is today being stolen. For oil to be stolen, a ship has to be cleared by the Navy to enter Nigeria’s waters. Who is approving the ship coming in and who is stealing Oil? N1.3 trillion is involved in this shady deals.

“Apart from Venezuela that is facing sanctions, Nigeria is the only OPEC country that is not meeting its quota. In fact, other countries are asking to produce more.”


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