Editorial

NNPC, national assets and economic saboteurs

A few weeks ago, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, raised the alarm over unending crude oil and product pipeline vandalism. In this case, he did not mince words in alluding to the fact that the sabotage is carried out in collusion with security agents. His outcry with regard to the allegation would not be the first as some government officials in and outside the petroleum sector had raised similar alarm in the past.

 

While it is on record that he merely stated the obvious, the fact that it came from him speaks to the corporation’s frustration considering the fact that what himself and his predecessors had done to stem the menace appears to pale into insignificance when placed vis-a-vis the resources so far committed. Nothing can be more abhorring than a government watching its primary source of revenue continuously being drained by a set of criminals, who are, unfortunately, given cover by those paid to smoke them out. While extractive industry watchdogs are still battling to come to terms with the actual volume of crude produced in the country, as some are stolen, sold and refined illegally, the theft of refined and crude products through pipeline vandalism has become another burden to the government and drain on the economy.

 

NNPC and some international oil companies (IOCs) operating in the country stake as much as N350.4 billion for staff and asset protection yearly. These attacks on the oil facilities are persistent, sophisticated, and appear timed to inflict debilitating and disruptive effects. Regrettably, these vicious and malicious exertions by individuals and faceless entities are having that unavoidable effect.

 

The disruptions have led to direct, irretrievable and significant losses in production and consequently have created revenue deficits that directly impact all the stakeholders across the relevant value chain. Besides the resource loss to the country in financial terms, the degree of destruction vandalism poses to human life in terms of environmental degradation, businesses and property has remained massive and unimaginable over the years.

 

Specifically, the vandalism of oil assets cost the country $825 million in 2018 while $725 million was lost to pipeline vandalism in 2019. Cumulatively, losses to crude and refined petroleum products have been estimated at $42 billion in the past 10 years. For this year alone that has just gone past half a few days ago, the country has lost about $48 million worth of crude oil due to pipeline vandalism. In 2016, an average of 700,000 barrels per day of crude oil was  deferred due to pipeline sabotage. This brought Nigeria’s production down to as low as 1.3 million barrels per day from 2.2 million barrels targeted for the period.

 

 

 

At approximately $52 per barrel, Nigeria lost more than $13 billion that year due to pipeline theft and vandalism. While the situation remains condemnable, the fact should not be lost that NNPC’s strategies to curb the menace appear to be yielding little fruits as the current number of attacks on installations is lower when compared to what transpired in the past years. One cannot forget in a hurry the level of widespread destruction instigated by fire from failed vandalism, which the victims are still lamenting. A deluge of reports have shown, for instance, that the prevalence of pipeline vandalism has greatly affected the environment and the people who live in Nigeria’s most oil rich region, the Niger Delta.

 

There have been nearly 5,300 recorded oil spills between January 2005 and July 2014, nearly 75 per cent of which are caused by sabotage and theft. Since then, more had happened with attendant explosions leading to loss of lives and properties.

 

 

Lagos has had its share of pipeline vandalism with a majority leading to inferno. Last year, hoodlums, who were dressed in military uniforms, reportedly vandalised a petrol pipeline in Mafon, Ejigbo area, Lagos. In November of the same year, another incident took place along Ayobo Road, Ipaja, Lagos, where a petroleum tanker loaded with 33,000 litres of Premium Motor Spirit (PMS), went up in flames as a result of activities of pipeline vandals from a nearby ruptured pipeline. A pipeline owned by NNPC exploded on Sunday, January 19, 2020, at Ekoro area of Abule-Egba, Lagos, claiming three lives.

 

The sabotage has been sustained despite the enactment of the Petroleum Production and Distribution (Anti-Sabotage) Act of 1990, which has proven not to be effective. In addition, spillages have contaminated primary water resources and crops, causing health issues for many of the residents and even increasing infant mortality rates.

 

The situation has not only created a state of hopelessness for the NNPC, but also for oil companies that record huge losses to the carnage. As it is, we suggest the need for the Federal Government to restrategise by improving on community policing to stem the tide and enact laws for stricter punitive measures to deter the criminals.

 

In the same vein, we advise the NNPC to review its contracts with organisations that have failed in this agreement. Significantly, we also call on Nigerian security agents to perform their duties by protecting government installations in their domain.

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