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The plan to end oil theft and the importation of petroleum products is cheering and must be pursued with vigour and tenacity of purpose. Oil theft and fuel imports have done much harm to the nation’s economic growth. While oil theft has led to loss of billions of dollars, importation of petroleum products has precipitated the corrupt and unsustainable oil subsidy regime.
It is, therefore, heartwarming that the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Ltd, Mele Kyari, has vowed to end oil theft and the importation of petroleum products by June 2023. The NNPC boss, who disclosed this in Abuja at the State House Ministerial briefing organised by the Presidential Communication Team, said the combined output of Nigeria’s refineries being revamped and the Dangote refinery located at Lekki, Lagos State, would be enough to end fuel importation.
The Dangote refinery is estimated to produce over 450, 000 barrels per day. The Federal Government owns 20 per cent equity in the Dangote refinery. The move to end oil theft and the importation of petroleum product should be supported by all the stakeholders in the oil sector. As an oil-producing country, it is ironical that Nigeria depends on importation for all her petroleum products. It is also saddening that the oil subsidy regime is riddled with corruption. The inability of the government to stop the oil theft is puzzling. The government cannot be said to be ignorant of those behind the oil theft.
While we applaud Mele Kyari for its optimism to stop oil theft and importation of petroleum products, the problem cannot be solved when the government is tepid in apprehending and prosecuting the oil thieves. Also, the problem of fuel importation cannot be significantly reduced or stopped when our refineries are not working optimally. Checking the menace of oil theft has dominated the national discourse in recent times. Mele Kyari had accused high-placed Nigerians, including religious, community leaders and top government officials, of being deeply involved in crude oil theft. He also said that the entire network of pipelines for petroleum products distribution had been deliberately shutdown as a result of the activities of vandals.
Data from the NNPC Ltd showed that the country lost about 7.56 million barrels of crude oil in July due to oil theft, shut-ins and other facilities’ failures. But the Nigerian Navy has alleged that a few top officials of the corporation were found by its monitoring team to be aiding and abetting oil theft. Besides, it claimed that its renewed fight against oil theft through its “Operation Daka tar Da Barawo” had saved Nigeria over $30 billion from illegal refining sites across the Niger Delta region. Despite the seeming limitations of the government to deal with oil thieves, we urge the military and the NNPC to collaborate in the fight against oil theft. If the figures from the NNPC are anything to reply on, Nigeria loses about 400,000 barrels of crude oil per day due to the activities of oil thieves and pipeline vandalism. At the current oil price, this translates to about $40 million daily. The NNPC boss has also accused some Nigeria’s elite of “stealing over 42 million barrels crude oil worth over $3.3billion annually.”
Without effective metering system in place, the figure could be higher than what Kyari stated. Without doubt, oil theft will cripple the nation’s economy if left unchecked. Already, the economy is seriously challenged. Unfortunately, Nigeria spends about N60 billion yearly to repair damaged pipelines. Meanwhile, the revelation that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will soon commence the installation of its own flow meters on oil production facilities and pipelines in the upstream sector is laudable. The Federal Government spent a hefty $36.3billion on fuel importation in five years. Nigeria remains the only OPEC member that imports 95 per cent of refined petroleum products.
This means Nigeria’s petroleum imports have exceeded exports by $58.5billion. According to CBN data, Nigeria spent $1.0billion on fuel imports in 2021. Fuel imports should no longer be a major user of the scarce foreign exchange. Due to high reliance on imported fuel, Nigeria’s foreign reserves have been on a downward spiral in recent months, falling to a low $39.77billion on February 15, 2022, from $40.54billion at the end of last year. All the same, the NNPC should give priority attention to fixing the refineries. That must be the first step towards ending fuel imports by June, 2023 as promised by Kyari.
Expectedly, the diligent implementation of the Petroleum Industry Act (PIA) will usher in an era of accountability and transparency in the sector. That is what has made Saudi Aramco a reference point in the global oil industry. Let it truly serve as a template for the nation’s oil sector.
