Nigeria: A Spotlight On Oil Theft in Nigeria

By IndepthAfrica
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Oct 23rd, 2012
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By William Wallis, Leadership (Abuja)

The world is in the midst of a sustained oil boom. Yet Africa’s leading producer is haemorrhaging the proceeds. The Nigerian treasury, which should be raking in record revenues, has been squeezed at both ends of the oil trade – upstream, by one of the biggest frauds in Nigerian history related to a fuel subsidy bill worth upwards of $16bn in 2011, and downstream, by the theft of oil on an industrial scale at source.

Patrick Dele Cole, who hails from the delta town of Abonnema, in early colonial times Nigeria’s largest port but now a centre for the illegal trade, has for years been quietly advocating action to curb the theft. On Monday, the veteran diplomat, newspaper publisher, and international affairs adviser to former president Olusegun Obasanjo, launched a new website – Stop The Theft NG – to “raise awareness about the scale and consequences of the illegal theft of oil… and to work with partners and other interested parties to propose and advocate for long term and tangible solutions.”

Typically, some 180,000 barrels of oil are siphoned off and sold illegally each day at a cost of something like $7bn a year. The proceeds finance the political patronage system as well as personal fortunes, and have been corroding the legitimacy of the state at local, national and federal levels.

In the absence of effective action, the trade has been growing steadily. In April according to Ngozi Okonjo-Iweala, the finance and economy minister, the theft of oil from pipelines and well-heads accounted for a 17 percent drop in official sales. That is equivalent to nearly 400,000 barrels a day. At this rate, the Nigerian treasury and oil companies are losing more than $1bn a month.

The consequences are not only financial but environmental. “The tapping of pipelines on an industrial scale and the use of the stolen oil in illegal refineries contributes significantly to the environmental damage in the region, although the percentage of oil spills that can be attributed to theft alone is a question for debate,” Dr Cole writes on his new site, in an oblique reference to the blame that lies also with the oil majors.

“Perhaps most importantly, the on-going process of theft is an obstacle to the resolution of legacy environmental issues, as a full scale and effective clean-up operation cannot be implemented while it continues,” he says.

President Goodluck Jonathan commissioned an inquiry earlier this year into fraud and theft in Nigeria’s oil industry and appointed Nuhu Ribadu, a former anti-corruption tsar to head it. However, while his findings have been ready for over a month, they have yet to see the light of day.

But the pressure is growing on the federal government – and Dr Cole’s website is just one manifestation of that – to tackle a scourge which is eating away at the authority of the Nigerian state.

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