Experts Blame Political, Economic Elites for Nigeria’s Crude Oil Theft
*Flay award of pipeline protection contract to non-state actors
*Want involvement of oil producing communities in pipeline surveillance
Deji Elumoye in Abuja
Public policy experts under the aegis of Nextier SPD have lamented the quantum of financial losses the country incurs as a result of crude oil theft, saying the bigger culprits are political and economic elites
They also posited that the incessant award of pipeline protection contracts to non-state actors is a clear case of abdication of state responsibility.
The experts were,however, quick to warn that the federal government should not revoke the N48 billion annual pipelines surveillance contract awarded to a company where a former militant leader, Government Ekpemupolo popularly known as Tompolo has significant interest.
These were the highlights of recent research carried out by two scholars namely Dr. Iro Aghedo, an Associate Consultant at Nextier SPD and senior lecturer, Department of Political Science, University of Benin, Edo State, and Dr. Ndu Nwokolo, a Managing Partner and Chief Executive at Nextier and an Honorary Research Fellow at the School Government and Society, University of Birmingham, UK.
According to the experts, “The nine oil-producing states are critical to the political economy of Nigeria because of the enormous oil revenues generated from them.”
They noted that in the mid-1990s to late 2000s, a revolt against the federal government and oil companies in the Niger Delta region reduced oil production from two million to 700,000 barrels.
“The deployment of state military power against the Niger Delta militants could not secure peace amid structural violence in the region. Hence President (Umaru) Yar’Adua had to grant amnesty to the fighters in 2009 to obviate the costly threat to oil production in the volatile region,” they said.
The duo contended that despite the amnesty programme, oil theft has continued at an alarming rate in the region.
“While there are different accounts of the volume of oil stolen every month, the industry regulator, the Nigerian National Petroleum Company Limited (NNPCL), confirms that the country loses about 470,000 BPD of crude oil, amounting to $700 million monthly as a result of oil theft.
“The Nigerian government has contracted pipeline protection to non-state actors in response to this haemorrhage. The latest award of a ₦48 billion-a-year contract to the former warlord of the Movement for the Emancipation of the Niger Delta (MEND), Government Ekpemupolo alias Tompolo, has generated both applause and opposition.”
According to them, “the perpetrators of the horrendous oil theft are varied and contentious, including local gangs, communities, and even religious groups.
“However, the bigger thieves are political and economic elites who use superior technology and experts to drain off about 80 per cent of crude oil.
“The alleged involvement of security operatives in criminal sabotage and illegal bunkering is more puzzling. In 2019, Governor Nyesom Wike of Rivers State had fingered even a General Officer Commanding in the scandalous theft of crude oil in Rivers State.
“A few weeks ago, a 3-million capacity supertanker, MV Heroic Idun, illegally loaded crude oil in the Niger Delta and sneaked into the nation’s territorial waters, curiously escaping the efforts of the Nigerian Navy to stop it. The Navy of Equatorial Guinea later arrested the ship.
“Oil theft engenders several implications for Nigeria. Besides those killed in the act of siphoning oil from active pipelines or the inferno that often accompanies the sabotage, the negative environmental impact of the crime is enormous.
“The impact on the country’s economy is scary. The 2018 oil and gas audit report revealed that 1,894 breaks were recorded on pipelines that year, resulting in a revenue loss of ₦27.551 billion. The loss increased to ₦851.84bn in 2019 and reduced slightly to ₦159bn in 2020. Between 2021 and June 2022, the Nigeria Upstream Petroleum Regulatory Commission reported that the nation’s oil output dropped by 12.5 per cent to 1.4 million barrels per day, including condensate, in the first half (January–June) of 2022, from 1.6 mb/d in the corresponding period of 2021.
“Occasionally, members of the security agencies arrest some local vandals, but the big oil thieves often curiously escape their grips.”
They noted that “the recent award of a ₦4 billion-a-month pipelines surveillance contract by the NNPCL to a company where Government Ekpemupolo (alias Tompolo) has dominant interests has generated both commendation and condemnation.
“Those in support of the contract emphasise Tompolo’s familiarity with the terrain, his popularity in the Niger Delta and his experience from the initial pipelines surveillance contract awarded to him by President Jonathan’s administration.
“As a former commander of MEND, the man (Tompolo) knows all the creeks and waterways inside out. So, he can police oil theft in the area” (key informant).
“Besides, Tompolo’s performance stood out in the contract awarded to him between 2014 and 2015, leading to a tremendous increase in NIMASA’s revenues.
“However, those opposing Tompolo argue that a contract of N4 billion a month is too much for a company where the former freedom fighter has enormous shares. Other dissenters argue that the geographical coverage of the contract is too extensive, including parts of Rivers, Bayelsa, Delta, Imo, Edo and Ondo states.
“They said that under the (Goodluck) Jonathan administration, a similar contract was awarded to different groups of persons, including Tompolo, Emami Ayiri (Delta State), Boyloaf, Macaiver (Bayelsa State), Farah, Dokubo Asari and Ateke Tom (Rivers State).
“Some of the critics of the award, such as the Amalgamated Arewa Youth Groups, Dokubo Asari and Rita-Lori Ogbebor, castigated the Buhari-led government for lack of fairness and sensitivity in awarding the pipeline contract.
“Others, such as the Akwa Ibom youth group, have threatened that they would not allow the contract to be executed in their areas.
“From the preceding, several policy measures are needed to curb oil theft and the discontent generated by the pipeline contract award.
“First, the Nigerian state should stop abdicating its responsibility: The incessant award of pipeline protection contracts to non-state actors is a clear case of abdication of state responsibility.
“The protection of Nigeria’s territorial waters and surveillance of pipelines are vested in the Navy and the Nigeria Security and Civil Defence Corps, respectively.
“These security organisations should be better trained, equipped and held accountable to ensure that they live up to their mandates, including abhorrence of corruption and collusion with criminals such as oil thieves and pipeline vandals.
“Second, there is a need for conflict sensitivity in public policy making: Considering the volatility of Nigeria’s social milieu in general and that of the Niger Delta in particular, the government needs to ensure that its policies promote inclusion rather than segregation.
“One way of ensuring this is through applying early warning systems and sensitivity to issues that could spark conflicts among diverse groups. For example, the government could have conducted a pilot study on the pipeline surveillance contract to gauge the perception of different interest groups before awarding it.
“An independent consulting firm can competently handle this study to ensure objectivity.
“Third, more emphasis should be placed on communities rather than individuals in awarding contracts in the Niger Delta: Because pipelines criss-cross most Niger Delta communities, including those that are not directly oil-producing, the government would have involved the communities in the award of the pipeline protection contract rather than exclusively to individuals.
“This would have boosted their sense of collective ownership and generated employment for the locals. In addition, though many communities may not have the expertise required for pipeline protection contracts, community members can be trained on what is required of them.
“Besides, carrying the oil communities along is in tune with the recommendations of the Petroleum Industry Act.
“Fourth, the government should stop using pipeline contracts as political settlements: The federal government has used projects as political patronage to appease prominent individuals or conflict entrepreneurs over the years.
“Such politicisation has always produced winners and losers, leading to the use of violence as a bargaining strategy by losers.
“Finally, the revocation will do more harm than good: Some critics of the recent award of the pipeline surveillance contract have called for the revocation of the contract in the interest of peace, fairness and justice.
“However, we believe revoking the contract is not conflict-sensitive as it will trigger more crises. Instead, a meeting of companies awarded the contract, and those that were left out should be convened with the idea of having them work together as partners, employing local people in the various communities and states where the contract will be executed.”