Nigeria: Petrol and the Looming Catastrohpe
Scores of pipelines vandals lost their lives at the weekend at Arepo Village in Ogun State, following an explosion which occurred as they struggled to siphon fuel. According to media reports, it all started with an argument between some of the thieves. When one of them shot into the air, obviously in ignorance, the fire that consumed them all
was sparked off.
While this is a tragedy that has become all too familiar and frequent, it is evident that many Nigerians do not appreciate the danger these pipelines vandals pose to themselves and the larger society. The series on the Petroleum Industry Bill (PIB), which I started last week and which was to continue today, can therefore be accommodated in the consideration of this vexatious issue of pipeline vandals and the mismanagement of our oil and gas assets.
The point is that what has been happening at the Arepo axis, where some dare-devil bandits have continuously ruptured pipelines to steal fuel, is symptomatic of what is going on within the sector. The vandals have only decided to appropriate to themselves our collective patrimony by breaking into the pipelines to scoop fuel, the same way some fat cats have been sharing fuel subsidy money in Abuja.
The only difference between these two kinds of criminal impunity is that one carries greater physical danger, both to themselves and other innocent people. But our society must deal with the two sets of thieves, if it is not to be permanently imperilled. It is all the more important now that the International Energy Agency has revealed that Nigeria loses about $7 billion annually to oil theft in its upstream operations. Indeed, until we successfully tackle the menace of pipelines ruptures, it is a waste of time talking about any PIB, because there must first be an industry before you think about its regulation.
With 5,120 kilometres of pipelines network, 2,965 kilometres of sea-lines, 112 flow stations, 16 gas plants, 126 production platforms, 17 loading buoys, 13 export terminals, 21 petroleum products depots, nine LPG Depots and 14 pump stations, Nigeria has a huge oil and gas assets but these assets are also perhaps the most unsecured in the world. That explains why we now have a situation in which almost everyone believes he could help himself with what belongs to all of us without consequences. And as these vandals become more and more emboldened, they have started killing security men and officials of the Nigeria National Petroleum Corporation (NNPC) who accost them when they are carrying out their nefarious activities. Available records indicate that between 2007 to date, five senior officials of NNPC have been killed with two severely injured.
Pipelines vandalism has indeed become such a lucrative and organized criminal enterprise that in its Christmas edition last year, PUNCH carried a story of how a young medical practitioner abandoned his stethoscope to act as middleman for vandals. “People started calling me ‘oil doctor’ because I always had ready buyers for all kinds of petroleum products. Oil business is very lucrative especially in Kogi State where as many as 17 trucks of petroleum products could be siphoned and sold in one night,” the medical doctor turned pipelines vandal said.
I have had occasions to interact with the current Pipelines and Product Marketing Company (PPMC) Managing Director, Mr Haruna Momoh, and I can attest to the fact that he is a thoroughbred professional. But as passionate as he is about the sector and despite his desire to bring about the requisite change, the activities of such ‘oil doctors’ have made his job practically impossible given the number of pipelines ruptures he has to contend with on a daily basis. Yet this is something that has been going on for far too long. For instance, a March 4, 2010 working paper by then NNPC Group Managing Director, Mr Mohammed Barkindo, is quite revealing. Looking at the number of incidences and the costs incurred on losses and repairs of petroleum products pipelines over a period of ten years (between 2000 and 2009), Barkindo painted a picture of a sector in serious crisis.
According to his figures, within that ten year period in Port Harcourt, there were 199 fire incidences, 7,961 cases of pipeline vandalism and 144 ruptures, the total cost of which amounted to N78.15 billion. In Warri, there were 95 fire incidences, 3,181 cases of vandalism and 78 ruptures, the total cost of which was N20.39 billion. In Mosimi, there were 69 fire incidences, 2,320 cases of vandalism and120 ruptures, putting the total cost at N78.15 billion. In Kaduna, there were 33 fire incidences, 817 cases of vandalism and 51 ruptures, totalling N1.6 billion in financial cost.
In Gombe, there were 22 fire incidences, 1406 cases of vandalism and 5 ruptures, with the cost put at N690 million. In all for the five pipelines highlighted, within a period of a decade, there were 418 fire incidences, 15,685 cases of vandalism and 398 ruptures. The total cost for that ten years was N174.57 billion.
Even if we use today’s value, that is more than a billion dollars stolen or wasted! Yet as grim as that may seem, the situation is actually worse today given the latest statistics on breaks and ruptures where year 2010 recorded the highest number in history followed by 2011 and 2012 in descending order which is at least good news. According to a November 2011 PPMC data, financial losses incurred between 2006 and July 2011 to pipelines vandals are as follows: N69,764,197,815 for PMS; N7,556,346,473 for DPK; N9,970,210,900 for AGO and N169,869,483,266 for crude. The total: N257,160,238,454. We are talking of almost two million dollars for a period of just five and a half years. How can a nation continue to waste its resources like this?
But the impact of the activities of these criminal gangs goes beyond the value of products being stolen, the money spent on expensive repairs, litigation and remediation costs. The real problems are that they force refineries to operate below their installed capacities; encourage high level of trucking thus putting more pressure on our roads (aside causing several accidents). They ignite fire incidences that have claimed several lives, including innocent bystanders and also cause environmental pollution.
There are yet bigger issues. With an average of one case of pipelines rupture per day, there is no doubt that Atlas Cove, which is the nation’s gateway for importation of products, is seriously challenged. According to the recent PPMC report earlier mentioned, the limited tankage of Atlas Cove “was further decreased when two of its three PMS tanks experienced roof collapse and the contents sank into the ground. The facility’s environment is always charged with hydrocarbon fumes. When it rains, hydrocarbon products seep onto the surface…Its entire right of way is laden with petroleum products floating on water due to years of vandals’ activities. This makes Lagos prone to petroleum fires and contaminated portable water.”
There are four serious concerns here. The first one is economic sabotage, given the huge sums of money we lose to the activities of these vandals. The second is the explosions that have over the years killed hundreds, if not thousands of people. The third is the environmental challenge the whole thing poses, while the last is the associated health hazards, especially for people living within the Lagos axis.
Pipelines are vital security assets of any nation and in most countries, tampering with them is almost akin to treason. But we are yet to come to terms with this critical challenge and for that reason, criminals are having a field day at our collective expense as a nation even as they expose our people to the possibility of a major catastrophe if care is not taken. I just hope some people are paying attention.
Gaming the Rural Farmers
My late father was a carpenter and a subsistent farmer, so I grew up in the village and tilled the land. For that reason, whenever any of those “A for Apple” school products talks about rural farming, I pay considerable attention. Yet the more the Minister of Agriculture, Dr. Akinwunmi Adesina, “blows grammar” on this his multi-billion Naira cell phone project, the more I fail to understand what his real motivation is. Now that he has told Nigerians, right inside Aso Villa (where else?) that he doesn’t give a damn about how we feel on the issue, he can go ahead and procure his handsets. Of all that ails Nigerian farmers, how anybody would argue that doling out free handsets (that almost every Nigerian can afford) is the solution beats me.
Just last week, the All Farmers Association of Nigeria, Gombe State Chapter, lamented the declining price of cotton in the market. The secretary of the association, Gambo Sarkin-Noma, said that a kilogramme of the commodity now costs between N70 and N75.
He therefore appealed to the federal government to intervene. He also called on the government to provide farmers with insecticides, fertilizers and other agricultural inputs to boost cotton production in the state. “We want government at all levels to double efforts during the 2013 farming season in assisting farmers as it will improve the economy,” Sarkin-Noma said.
For me, that is a real problem. With a tonne of cotton which used to cost about N200, 000 in the past now selling for between N75, 000 and N80,000, why would the farmers continue to plough their fields? The sad bit is that the challenge with cotton is almost similar to that of many agricultural products in our country today and the subsistent farmers are the worse for it. To the extent that information has become an important factor of production, it is commendable that the minister is providing information for farmers but I refuse to buy his arguments for the procurement of handsets. If farmers know that they can get productive information from government, they will buy their own handsets.
I have read the minister’s explanation to the whole controversy and I have two questions for him: If these rural “Facebook Farmers” cannot afford buying cell phones of their own, who is going to be paying for their air times? And for the umpteenth time, how much will this project cost since he has not told us the Americans and the Chinese are supplying these handsets free of charge?
I was in the village about three weeks ago for Christmas and none of our people (all of who are basically farmers) was aware of Dr. Adesina’s “e-wallet and electronic voucher” that have been delivering fertilizers, seedlings and farm implements, as he claims. Even if we agree with the minister that the farmers need phones, the question to ask is whether that is the most pressing of their needs. I may not know much about economics, but I recall being taught a topic called scale of preference. If we were to draw one for Nigerian farmers, would cell phone come tops?â€¨â€¨The pertinent point which the minister ignores is that of misplaced priority. In his quiet moment, I hope Dr. Adesina, who most people agree has been doing well (and is generally regarded as one of the shining lights of this administration) can ask himself whether the billions he intends to spend cannot be deployed to something more worthwhile than free cell phones, most of which will, in any case, end up at Alaba international market!