Petroleum sector contributes less than 10% to Nigerian economy-Research
Petroleum Sector
Curb oil theft to improve economic diversification, Experts tell FG
Despite holding the 10th largest oil reserves in the world at 37 billion, standing as the second largest in Africa after Libya, the petroleum sector in Nigeria contributes less than 10 per cent to the economy.
According to a research carried out by the trio of Dr Ibilola Amao, Engineer Alex Ogedegbe and Dr Uyiosa Omoregie of Lonadek Engineering with the objectives of accountability deficit and inefficiency in the Nigeria oil and gas industry, conflicting government policies and other factors have influenced the development and the abysmal performance of the refineries.
Gowon to Nigerians: Fear God, love God, love your country
This was revealed at a one day workshop to discuss the findings from the research report on crude oil theft and a study on the existing refineries from a cost perspective, efficiency, and value.
The workshop on crude oil theft report was organised for media practitioners and civil society organisations commissioned by the Nigerian Natural Resource Charter to increase access to information, improve knowledge and enhance the capacity and advocacy skills of CSOs and Media and to increase the level of public commentary on the identified issues and influence government action.
According to the research which data was based on 2013 to 2017, within the period, Nigeria recorded over $31.5 million Revenue Loss on a daily basis, Budget Deficit depleted Foreign Exchange Reserves, low economic growth due to zero infrastructure and $36 billion was spent on product importation.
Addressing participants at the workshop, Engineer Niyi Awodeyi said the complexity of establishing refineries in Nigeria has to do with various factors such as corruption in license award, politics in the petroleum industry, Militancy and pipeline vandalisation, racketeering, leadership failure among others.
He said Nigerian refineries are among the league of refineries with the highest operating costs worldwide.
He therefore recommended that there is the need to get the four refineries back to function optimally at their combined nameplate capacity of 445,000 barrel per day.
Awodeyi, also said the government should make sufficient petroleum products available for local consumption and guarantee expansion as well as self-sufficiency.
Other recommendations by the expert include engaging service of competent consultation on the valuation of the assets of the refineries and supervisory sale of the refineries to work with the Bureau of Public Enterprise (BPE).
“The federal government under the auspices of the BPE and National Council of Privatisation (NCP) must ensure that the processes leading to the divestment of the four refineries are not politically hijacked and devoid of political interference or bureaucratic infraction of any sort”, he said.
He said various initiatives have been explored to curb oil theft but these have largely been inefficient.
There have been huge revenue losses with estimates of N995.2 billion per annum while it is difficult to assess volume stolen.
Under the categories of oil theft, a report of Nigeria Natural Resource Charter (NNRC) shows that these involve vandalising infrastructure to divert oil adding that between 2003 to 2013 there were a total of 15,685 pipeline breaks caused by vandalism.
In 2016, Shell reported daily losses of 5,660 barrel per day as most siphoned oil are refined locally in firewood refineries.
Other categories of oil theft include under-declaration of the total number of barrels received at any point of the extension process in order to sell the rest on the black market.
Inflated volumes from drilling through production to receipt at the refinery allowed for by the oil companies. Companies also under-declare to avoid paying petroleum profit tax.
“For instance in 2016 federal government sued Shell for under-declaring $407 million between 2013 and 2014”, he said.
