Confusion continues to be the order of the day in the country’s upstream sector as key government officials are struggling to agree on the specific barrels of crude oil lost to oil theft on a daily basis.
While President Muhammadu Buhari who is the Minister of Petroleum Resources has kept mum on the issue, there have been conflicting figures coming from his surrogates with respect to the level of crude oil theft in the country and the corresponding losses in monetary terms.
While the Nigerian National Petroleum Company (NNPC) Limited earlier claimed that Nigeria loses about 250,000 barrels of crude oil per day to theft, suggesting a total loss of about $1.5 billion, its Chief Executive Officer, Mele Kyari, told State House correspondents last week that the country actually loses 700,000 barrels of crude oil daily to thieves.
To worsen the confusion, the Minister of State for Petroleum Resources, Timipre Sylva, within the same period, said that the country loses 400,000 barrels of crude daily to oil theft.
Sylva, who made the claim during a recent visit to Governor Hope Uzodimma of Imo State in Owerri, regretted that the nation had fallen short of OPEC daily quota, from 1.8 million barrels to 1.4 million barrels, due to crude theft. He described the development as a “national emergency.”
Nigeria’s economy is sitting on a keg of gunpowder and is currently faced with a widening budget deficit, which stands at 7 trillion naira for the 2022 fiscal year.
With rising debt burden and shrinking revenue base, the government has for years been spending over 90 percent of it’s earnings on debt servicing.
In Q1 of 2022 however, the government doubled down by spending 300 billion naira more on debt servicing than what it earned, a dire situation which according to experts is a symptom of near bankruptcy, a vicious cycle that is not sustainable.
As a result of incessant oil theft which government has shown little or no political will to halt, crude oil revenue fell by 29 percent in Q1 of 2022.
According to the Central Bank of Nigeria (CBN), earnings from crude oil fell to N790 billion from N1.1 trillion in the previous quarter, which ran from October to December 2021.
Q1 of 2022 saw a 17.1 per cent decline in Nigeria’s crude oil and gas revenues compared to the N956 billion earned during the same time in 2021. Oil revenue accounted for 38 per cent of total earnings in the first quarter of 2022, totaling N2 trillion, while non-oil revenue accounted for 62 per cent of total earnings, totaling N1.1 trillion, according to the apex bank.
The development is also creating a rising inflation rate, which has worsened prices of food items and other products, created a high foreign exchange challenge, pushed unemployment rate to about 33.3 per cent while the government currently expends as much as 6 trillion naira on the controversial subsidy payment or under recovery.
NNPC boss, Kyari, identified oil theft as a major reason for the drop in production, ultimately leading to low revenue.
According to him, highly placed Nigerians, including religious, community leaders and government officials, were fully involved in crude oil theft on a large scale.
The National Assembly also noted recently that about $40 million worth of crude is being stolen in the country daily, translating to about $14.6 billion in a year.
Kyari had told oil and gas investors recently that the government was not helpless in dealing with crude oil theft, adding that a new control system has been developed to monitor all oil sites in the country as well as an online real time incident report platform.
He disclosed that Nigeria’s crude would now carry special identity numbers, a development that would enable the country to take serious actions against countries condoning oil thieves, who are refining Nigeria’s crude illegally.
– ECONOMIC CONFIDENTIAL
