By Simon Peter N. Okanumee, Smmm (Rev. Fr.)
The world’s largest single-train $20 billion oil refinery by the Dangote Group was inaugurated on May 22, 2023. This giant stride was greeted with mixed reactions by Nigerians. For some, it is an obvious reminder of what the past successive Nigerian governments could not achieve. For many, it is a game changer, a right step in the right direction towards ending the economic woes of Nigeria’s oil and gas sector of the economy. This 650,000 barrels per day oil refinery is designed to process crude oil grades from three continents of Africa, Asia and America. It is expected to meet 100 per cent consumption needs of Nigerians through daily delivery of surplus of 38 million litres of petrol, diesel, kerosene and aviation fuel. This will ensure availability of good quality petrochemical products as well as generate over 100,000 direct and indirect jobs for Nigerians.
In its Tuesday, 23rd May, 2023 edition, PUNCH newspaper reported that the Governor of Central Bank of Nigeria, Godwin Emefiele, among others who spoke during the inauguration, disclosed that Dangote oil refinery could spare Nigeria about N5tn to N7tn annually in the fiscal expenditures of the Federal Government over the next five years. In his words, “in addition to the nearly $30bn foreign exchange savings from the reduction in petroleum imports, the economy is projected to benefit an extra $10bn of foreign exchange inflow annually through the export of refined petroleum products, which will further boost our official reserves and enhance exchange rate stability.” He equally noted that the oil refinery would generate up to 12,000WM of electricity.
The foregoing positive economic effects of Dangote oil refinery notwithstanding, the one disturbing concern or question which no one seems to have addressed is: will Dangote oil refinery eradicate oil theft in Nigeria? The Nigerian successive governments have always dreamt and desired her economy to flourish while the plundering of her commonwealth (oil) goes on unabated and without visible commitment to eradicate it and bring the perpetrators of this organized crime to book. Perhaps the protagonists of this economic crime connive with people in power who have arrogated to themselves and their generations yet unborn the right to appropriate our common patrimony to their private bank accounts. The ripples reverberate across the four factors of production, resulting in economic stagnation, inflation, poverty and hunger. Hence, this article highlights adverse effects of oil theft on the realization of Nigeria’s economic potentials and makes recommendations.
OIL THEFT IN NIGERIA
In its Tuesday, 6th December 2022 edition, ThisDAY newspaper published this shocking revelation: “Experts say that Nigeria losses about 600,000 barrels of crude oil per day to oil thieves. The Nigerian National Petroleum Corporation (NNPC) however admits losses of 470,000 barrels per day. While this discrepancy exists, what is, however certain is that much of our crude oil is stolen on a daily basis.” In its Saturday, 15th April 2023 edition, Business Insider Africa reports a policy dialogue on oil swap that was co-hosted by the Nigeria Extractive Industries Transparency Initiative and Policy Alert, on Thursday, April 13, 2023, wherein Orji Ogbonnaya-Orji, said that information from industry reports and the NEITI policy brief “showed that Nigeria lost 619.7 million barrels of crude oil between 2009 and 2020 (12-year period), valued at $46.16bn or N16.25tn.”
As expected, this development has caused brutal damage to Nigeria’s economy and its devastating effects which include low output, reduced exports, and low foreign exchange earnings for the country, leading to weakening of the naira and inflation. Oil theft has been going on in Nigeria for decades now. Unfortunately, not much can be said to have been done to curb or conquer it. From the foregoing worrying negative consequences, one could see that although oil theft has been part of the history of oil exploration in Nigeria, recent developments show that the upsurge is taking a rather dangerous dimensions on daily basis with the resultant heavy devastating blow on our economy, felt in its direct impacts on the factors of production: land, enterprise, capital and labour.
THE ADVERSE EFFECTS
The four factors of production- land, enterprise, capital and labour – are adversely affected by spate of oil theft going on in Nigeria for decades now. On the issue of land, oil theft is usually perpetrated through illegal mining or exploration. Such illegal oil exploration, production and transportation result in various ecological hazards like oil spillage, gas flaring, habitat destruction, air and water pollution as well as land degradation. Oil theft leading to spills has caused loss of lives and properties worth millions of naira arising from fire outbreak. These immediate negative effects have long term impacts on entrepreneurship. For instance, the economic impacts of oil spillage resulting from illegal oil theft would eventually lead to high cost of clean-up and compensation for damages to agricultural lands, fishery and wildlife, tourism and hospitality industries. The latter industries are adversely affected, which in due course results in job retrenchment, unemployment, and poverty. Oil theft in Nigeria encourages wealth without enterprise/entrepreneurship.
The report of Orji Ogbonnaya-Orji, states unequivocally that oil theft takes a heavy toll on Nigeria’s capital and fiscal stability. Between 2009 and 2020 (12-year period), Nigeria lost crude oil valued at $46.16bn or N16.25tn to oil thieves. According to Orji, “the figure in relative terms is equivalent to Nigeria’s entire budget for health, education, agriculture, and defense in the last five years, and almost the capital expenditure for 10 years between 2011 and 2020.” Based on the abovementioned ThisDAY newspaper report, “between January and July 2022, Nigeria lost 10 billion Dollars to this crime and this is equivalent to 4.3trillion Naira which is more than fifty percent of Nigeria’s Foreign Reserves. The above figure is more than double Nigeria’s total revenue between January and April 2022. It is on record that during this period, Nigeria’s total revenue was unable to service its debt. Nigeria had to borrow for everything, including payment of salaries.”
The above revelation on payment of salaries gives credence to the fact that labour is the most affected factor of production by the spate of oil theft in Nigeria. The labourer is at the receiving end of this organized crime. Thus, in my previous article “The Labourer Deserves His Wages,” I noted: “Regrettably, in Nigeria, workers are paid pea-nuts as salaries and such tokens remain stagnant for years, with little or no increment, even amidst economic inflation. Worse still, these pea-nuts of salaries are not paid as at when due. Workers dare not demand for allowances. There is hardly promotion for workers and when such happens, it is not based on merit. Other welfare and retirement packages like gratuities, pay-offs, pensions and death benefits are not paid.”
I hereby call on the new Nigerian government to deal with oil theft as a matter of national emergency, especially with the recent inauguration of the Dangote Refinery. It is unfortunate that after decades of oil theft, the past successive governments seemed clueless on how to tackle this pain in the neck. However, I have no doubt the government has what it takes to stop oil theft or at least stem the tide, if not that some people in government are alleged to be accomplices in this crime. It is particularly disheartening that notwithstanding the urgency and seriousness of this crime on our national economy and its impact on Nigerians, the silence of the past governments was deafening. For a country that depends almost entirely on oil for its survival, further inaction from incoming administration will only confirm the latter allegation since there is no reason why the government should not declare a national emergency on crude oil theft and deploy massive human resources and modern technological devices to tackle oil theft as well as prosecute the perpetrators.
The Security Agencies should be more committed in tracking down oil thieves. The need to deploy modern technology in the management of our oil and gas industry cannot be overemphasized. As a matter of urgency too, a Special Court of Competent Jurisdiction should be set up immediately to try perpetrators of oil theft. Government should name and shame those involved directly or indirectly in this crime. There should be no sacred cows. Anyone involved, no matter how highly placed, should be brought to book. When these steps are taken in managing our oil and investing the resources in land development, small and medium enterprise boost, capital investment and improved conditions of service, we can then re-echo the words of a 14th century mystic, Julian of Norwich, that “all shall be well; and all shall be well and all manner of things shall be well.” Meanwhile, the question that forms the theme of this article still persists – will Dangote oil refinery eradicate oil theft in Nigeria? Of course it can, especially now that we do not have to export crude oil to import subsidized refined products. However, my concern is: will it? It remains to be seen as only time will tell.