………..Oil theft, rather than low investment, explains why Nigeria can’t meet OPEC quota
Like one programmed to lurch from one crisis to another, Nigerians cannot but wonder if any good news can ever come out of the nation’s beleaguered oil sector.
After enduring nearly month-long fuel scarcity induced by corruption, incompetence and sundry regulatory failures, it is unfortunately the case that Nigerians are having to put up with a lecture circuit as if to justify why Nigeria could not meet the 1.8 million barrels per day oil production quota set by the Organisation of the Petroleum Exporting Countries, (OPEC) at a time other major producers are reaping a windfall from the current high prices of crude.
Currently, Nigeria’s production is said to have stagnated around 1.4mbpd in the past 11 months.
Last week, minister of state for petroleum resources, Chief Timipre Sylva, had announced at an oil and gas conference in faraway Texas, United States, that the speed with which international oil companies and other investors were withdrawing investments in hydrocarbon exploitation had contributed significantly to Nigeria’s inability to meet OPEC targets.
His words: “The rate at which investments were taken away was too fast. Lack of investment in the oil and gas sector contributed to Nigeria’s inability to meet OPEC quota. We are not able to get the needed investments to develop the sector and that affected us”.
Of course, like a failed workman quick to blame his tools for a poor outing, the recourse to alibis by the minister does not come as strange or entirely unexpected.
Not only has this been the lot of the managers of the incomparably inept oil corporation since time immemorial, it is sadly at the heart of the failure of the organization to justify its rationale, both as a national oil corporation and as a major player in the extractive sector, for the more than half-century of its existence.
So much for the minister’s strange logic; we are here referring to a country that once netted a daily 2.2 million barrels of crude production now struggling overnight to produce 1.4 million barrels.
Clearly, if the situation is to be blamed on anything, it would be on the extremely poor governance structure that pervades the sector, the corruption and the intolerable culture of non-transparency and subversion that characterize the day-to-day operations; rather than lack of investments.
This is why the likes of businessman Tony Elumelu deserve commendation for rejecting the jaded position of the minister. In a series of tweets that followed the minister’s position, he had stated point-blank that the reason Nigeria cannot meet its crude oil production quota and so benefit from high oil prices is due to theft.
His words: “How can we be losing over 95% of oil production to thieves? Look at the Bonny Terminal that should be receiving over 200k barrels of crude oil daily, instead, it receives less than 3,000 barrels, leading the operator Shell to declare force majeure…
It is clear that the reason Nigeria is unable to meet its OPEC production quota is not because of low investment but because of theft, pure and simple!”
We could not agree more. As for those Nigerians who want additional evidence, they only need to grab a copy of the scathing findings by the Auditor-General of the Federation (AuGF) as contained in the Federal Government’s Consolidated Financial Statements for the year ended December 31, 2019, submitted to the Clerk to the National Assembly on August 18, 2021.
Not only is the report a summary of how things came to be, the massive pilfering is more accurately, the story of the benumbing paradox of an oil corporation that is everything that an accountable business entity should not even pretend to be.
Among the key findings of the AuGF report are that the defunct Nigerian National Petroleum Corporation (NNPC) now NNPC Limited could not account for about 107,239,436 barrels of crude oil lifted for domestic consumption in 2019; that about 22,929.84 litres of PMS worth N7.06 billion claimed to have been pumped to the two depots (Ibadan-Ilorin and Aba-Enugu) between June and July 2019 were not received by them; and that while the NNPC records showed that N1,272,606,864,000 was transferred by the corporation to the federation account, the amount recorded by the Accountant-General of the Federation was N608,710,292,773.44 – a whopping discrepancy of N663,896,567,227.58.
The group managing director of the NNPC, the report averred, should be asked to explain the discrepancy between the two figures and remit the balance of N663,896,567,227.58 to the Federation Account or face sanction.
There was also the case of a certain N519,922,433,918.46 said to have been transferred to the Federation Account by the NNPC based on transfer mandates. Summary: NNPC should provide “reconciliation statement for the difference of N88,787,862,853.96 between AGF’s figure of N608,710,296,772.42 and NNPC’s figure per transfer mandate of N519,922,433,918.46″.
Those were the findings for 2019.
Meanwhile, there are no indications that anything has changed in any real sense. If anything, the facts so presented, far beyond the typical book-keepers’ nightmare, represent the jumbled paper trail of an organization not only steeped in crime, but one in which criminal behaviour is enabled by powerful figures at the highest levels of government.
It explains why not a few Nigerians sometimes wonder if anything could be salvaged by the mere name-change being presented as transition from the old NNPC to NNPC Limited. It is at the heart of why the current high oil prices, rather than benefit the country, will in fact leave her much worse – in the environment of low output and at a time the cost of imported fuel has hit the roofs.
If it is not late in the day to ask the Buhari administration to shed its stasis mode, one decisive step it could take is to move swiftly to address the issue of oil theft. For, while the argument about lack of investment might sound plausible, what the regression on the whole suggests is massive leakages in the chain of production and transportation. As for instances of massive corruption identified in the AuGF report, the expectation is that the government will at least go after those so identified.
While the former and the associated criminality are at the heart of why the international companies are exiting our shores, the latter explains why the nation is not only denied full value of its accruals but why the crime and impunity in the sector persists.
We urge the Nigerian Navy as indeed other agencies charged with maritime security to step up their surveillance and policing duties on our sprawling waterways to stem the practice of crude theft. At the same time, the upstream regulator needs to step up its game of monitoring how much crude is produced and delivered at the export terminals.
The Nigerian lack of values is sinking the nation’s only bread basket: oil. The oil majors are leaving because we no longer run businesses in the sector but installing rackets like a gangster paradise. Even those responsible for bad fuel and long queues at fuel stations are walking the high places of power like lords.
As for the NNPC, perhaps what is needed is a comprehensive overhaul of its personnel and systems. Needless to state that the economy would sooner than later be brought to its knees if nothing is done to arrest the situation.
The Nation
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