The huge negative impacts of petrol subsidy payment and losses as a result of crude oil theft have brought excessive pressures on the country’s economy and its growth, the Executive Secretary of the Nigerian Extractive Industries Transparency Initiative (NEITI), Orji Ogbonnaya Orji, has said.
Orji who spoke in Abuja on Wednesday at the expert validation meeting on the Report of the 2020/2021 Marginal Fields Bid Licensing Rounds organised by the Human And Environmental Development Agenda (HEDA) Resource Centre, described crude oil theft and fuel subsidy as twin evils that have bedevilled the oil sector for decades.
He said the combined effect of fuel subsidy and products importation was responsible for a large part of Nigeria’s current economic challenges, including low gross product (GDP) growth in the petroleum sector, foreign exchange and balance of payments problems and a worsening debt profile.
Given this reality, Orji said neither government nor other stakeholders in the petroleum industry can continue to ignore the severe danger that fuel subsidy and crude oil theft pose to the economy and the future of the country.
Orji said NEITI audit reports between 2009 and 2020 revealed that Nigeria lost a total of 619.7 million barrels valued at $46.16 billion, or N16.25 trillion to crude oil theft over a 12-year period.
Also, between 2009 and 2018, Orji said the country lost 4.2 billion litres of products from refineries valued at $1.84 billion.
These losses and their attendant effects on the economy, the NEITI Chief said, informed President Muhammadu Buhari’s decision to constitute a Special Panel on Oil Theft /Losses to study the problem and make recommendations on how to fight the menace.
He described as mind-boggling findings contained in a new report by the Panel to be presented to the President for action on the problem.
On fuel subsidy, Orji said the latest NEITI oil and gas report and other publications by the relevant agencies showed that subsidy was no longer sustainable and must be removed.
“In April 2022, the National Assembly passed the 2022 supplementary appropriation and increased the subsidy budget by 700% to N4 trillion. The 2023 figures are even higher. The allocation to subsidy reflects the increasing and mounting cost of financing fuel subsidy in Nigeria.
“Between 2005 and 2021, Nigeria spent 13.7 trillion to finance fuel subsidy. This amount would have revolutionized Nigeria’s energy (power and downstream petroleum) sector, making the country a net exporter of refined petroleum products with its far-reaching impact on the economy beyond the downstream petroleum sector,” he said.
Human Rights lawyer and senior advocate of Nigeria, Femi Falana, who was a special guest at the ceremony said the continued complaint by the Federal Government about oil theft without taking steps to redress the problem admission of failure on its part.
Falana said no producing country of the world complains about oil theft or smuggling of petroleum products like Nigeria.
He said what bothers him was why the government has refused to adopt several solutions available towards solving the problem, adding every oil-producing country has acquired the equipment for knowing the volume of products produced daily and stored in the different product terminals across the country.
Falana recalled that in 2018, the then Minister of State for Petroleum Resources, Ibe Kachikwu, announced the decision by the government to acquire ‘Aquilla’, equipment for monitoring the volume of crude oil and petroleum products from Nigeria in any part of the world.
He said although about N17 billion was approved by the government for the acquisition and installation of the equipment, nobody seems to know where the money or the equipment has been.
“Is there any evidence that this equipment was installed? The information I have is that no such equipment was installed, and the money was diverted. I have taken it up with the EFCC to investigate,” he said.
He said the present administration, through the Minister of State for Petroleum Resources, Timipre Sylva, also announced the use of compressed natural gas (CNG) as an alternative to petrol for vehicles, which he said about 10,000 vehicles were then being run with CNG.
To help trace the crude oil stolen from Nigeria, Falana said Lloyd is an international company with a daily record of the movement of all vessels all over the world, that can be of service to Nigeria.
“Between 2011 and 2014, oil stolen from Nigeria traced to one port in America was 60.2 million barrels valued at about N12.7 trillion. The House of Representatives also reported another case of about N17 trillion. We thought the government would give us fiat to pursue the well-known oil companies behind these crimes,” Falana said.
The review report was presented by two experts in the extractive industry, Henry Adigun and Dauda Garuba on the theme: 2021 Petroleum Licensing Round for Marginal Fields in Nigeria: An Appraisal.