Wednesday, February 27, 2013

Nigeria and the twin evil of Pipeline Vandalism and Oil Theft

“It is embarrassing that it is only in Nigeria that crude oil is stolen. We will be decisive in putting an end to this malaise. Our charge to all relevant agencies and departments of government is to work cooperatively with the required urgency this challenge deserves.”
—President Goodluck Jonathan at the presidential maritime security retreat held in Abuja, on July 23, 2012
There are several problems bedevilling Nigeria’s maritime and petroleum sectors. According to President Goodluck Jonathan, the sectors are under threats of poaching, piracy, vandalising of pipeline, coastal insecurity, crude oil theft, illegal bunkering, non-payment of statutory levies and charges. Others include illegal entry of ships into our territorial waters, illegal importation of arms and hard drugs, amongst other sundry crimes. I intend to dwell on vandalising of pipeline and oil theft among the various threats. Recently, I watched with rapt attention the interview the Managing Director of Petroleum Products Marketing Company, Mr. Haruna Momoh, granted the duo of Alero Edu and Kayode Akintemi on Sunrise, the Channels TV breakfast show, on Saturdays. Momoh was interviewed on Saturday, February 23 on a wide range of issues affecting the oil industry in Nigeria. He spoke with facts and figures on the issues of vandalising of pipeline, oil theft, kerosene, LPG (cooking gas) among others.
Momoh said the PPMC was seriously challenged to police the over 5,120 kilometres of pipeline that crisscross the entire Nigerian landscape. He said the country loses over N162bn or thereabout to vandals and that the organisation was working with the security agencies to protect the pipeline as well as the state and local governments to secure the pipeline right of way. He disclosed the PPMC was embarking on directional drilling in order to further secure the pipeline. The question that was not asked or answered is why would people embark on vandalising of pipeline and oil theft? I got an insight into that during the Nigerian Navy 2013 Retreat held in Uyo on February 25, 2013. According to one of the paper presenters, a Navy Commodore, a number of reasons can be advanced for the soaring incidence of oil theft and vandalism in the country. One of such is the unemployment and abject poverty plaguing the Niger Delta.
According to him, the environmental degradation occasioned by oil spill through the activities of the international oil companies destroyed farmland and the ecosystem rendering the people of the Niger Delta who are into farming and fishing jobless. In addition, some of the communities do not have access to refined petroleum products yet they need such to power their boats, grinding machines and generators. When they get these products to buy, they are sold to them at prohibitive prices. On top of this, many of them have yet to feel government presence or enjoy dividends of democracy. With their environment degraded and their means of livelihood lost, some of these people are believed to resort to vandalism and oil theft to survive. In the process, they created worse environmental degradation as only about 30 per cent of stolen crude is refined through these artisanal means.
The naval officer noted, unfortunately, that many of Nigeria’s oil fields are built without much thought given to the security of the facilities and the personnel manning them. He cited the example of Bonga Oil Field which is about 140 nautical miles to the sea all alone without a good security network. It also came out clearly that the Nigerian Navy is grossly underfunded. The Navy got less than $1bn in 11 years which is just a fraction of what the country annually lost to oil theft. Figures from different sources showed that Nigeria loses between $10 and $20bn annually to oil theft. According to him, the Nigerian Navy spends an average of N6.6bn to fuel eight of its vessels in a year. Yet, the entire overheads of the navy in 2012 is N12.01bn.
The Chief of Defence Staff, Admiral Ola Sahad Ibrahim, in 2012 gave further insights into the challenges of fighting oil theft in Nigeria. According to him, these include complicity of insiders that worked in oil companies in the past; lack of information sharing among security agencies as well as a ready-made market for stolen crude oil. Despite its numerous challenges, in 2012 alone, the Nigerian Navy arrested over 40 vessels, 900 Cotonou Boats, and destroyed over 7,380 illegal refineries with thousands of these artisanal illegal refiners arrested and currently being prosecuted by the Economic and Financial Crimes Commission and the Nigerian Police.
Back to the Channels TV interview with the MD of PPMC, he revealed why kerosene is scarce and expensive more than petrol in the country. As he put it, about two years ago, the Petroleum Minister directed the PPMC to increase the importation of kerosene from nine million litres per day to 11million litres. In spite of this measure, it turned out ordinary citizens still had to pay more than the subsidised price of N50 per litre. In my area, a litre of kerosene is sold for between N150 and N180. This is triple the official price. He listed the problems to include trucking of the products which made it easy to be diverted by unscrupulous businessmen and women. According to him, the easiest, safest and cheapest way to transport petroleum products is through the pipeline but since they are routinely vandalised, the PPMC resorted to distributing them by trucks which is prone to diversion. He revealed further that kerosene is smuggled across the porous Nigerian borders to neighbouring countries to be sold at exorbitant prices.
Nigerian kerosene, being Dual Purpose Kerosene, can be upgraded and downgraded into other products. For instance, the aviation industry uses it as JET A1; that is, it is upgraded into Aviation Fuel. It could also be blended with diesel in what is known in the industry as rice and beans. Furthermore, it is used by construction companies in building roads and by manufacturing companies. The question is: Where are the men of the Department of Petroleum Resources, who are supposed to ensure quality assurance by checking adulteration of petroleum products as well as curtailing the activities of marketers who under dispense products or sell them above the official prices. The agency is simply not doing enough to protect the citizens. Momoh enthused that only five per cent of Nigerian households use LPG, better known as domestic cooking gas, 27 per cent use kerosene while over 50 per cent rely on firewood and charcoal for their cooking. Though he claimed that cooking gas is grossly underutilised, it is expensive. It is heartwarming to note, however, that a road map is being developed to encourage the use of cooking gas.
I align myself with the solutions put forward by the naval officer quoted earlier. Among other things, he proffered that there is the need for a Maritime Security Trust Fund; increased budgetary allocation to the Nigerian Navy and other agencies responsible for maritime security to enable them to effectively perform their role; provision of cheap refined petroleum products to the riverine communities in the Niger Delta (this could be done through the establishment of the NNPC floating mega stations) and ensuring environmental resuscitation through the clean-up of the despoiled Niger Delta communities to enable those who want to earn legitimate income through farming and fishing to go back to their business. He also mentioned the idea of backward security integration and the need to factor security into the building plan of our oil fields. Lastly, he called for the sustenance of the amnesty programme. I would add that the Niger Delta Ministry, the governors of the nine Niger Delta states, and the Niger Delta Development Commission need to do more to make the impact of good governance felt in the Niger Delta areas through the provision of good road networks, pipe borne water, schools, hospitals and other sundry social amenities. Government also needs to fish out the godfathers of these oil thieves and bring them to justice alongside their foot-soldiers. Even if all these antidotes were to be promptly applied, it would take a long time to come before vandalism and oil theft will be a thing of the past in Nigeria. Reason? They constitute an irresistible honey-pot for the courageous.