End oil theft and make history

President Goodluck Ebele Jonathan PhD GCFR
Presidential villa
Abuja
Nigeria
14 October 2010

Our dear president,

I bring you warm greetings and heartfelt regards at this auspicious time in the history of our nation. Fifty years ago, our founding fathers under took this bold journey into nationhood for the world’s most populous black nation. It has been a long and tortuous journey but let me say that we have emerged a united, strong and prosperous nation. Thank you for the sacrifices that all of you our leaders have made and are still making to move Nigeria forward.

As a Nigerian, I share your disappointment at the embarrassing bombing that almost marred our 50th anniversary celebrations in Abuja. I also share your grief at the painful loss of innocent lives through that unfortunate incident. I am confident that all concerned security agencies would uncover the perpetrators and prosecute them according to the laws of the land.

I equally share your optimism in the speedy restoration of peace and sustainable development in the Niger Delta region and indeed other parts of the country that are still witnessing pockets of unrest.

My main purpose of writing you at this time is to seek your intervention on the menace of oil theft in Nigeria. It is a well-known fact that hundreds of thousands of barrels of our crude oil leave our shores illegally to the international market daily.

The clandestine nature of the trade has made reliable statistics impossible. However, estimates leave the number of stolen barrels to an alarming 400,000 daily. At the current crude rate of US$82 per barrel, this would amount to a whooping US$32.8 million (4.920 billion naira) daily worth of revenue lost to criminals. It is believed that Nigeria has lost close to US$25 billion in the last 10 years (an assertion by one of the major players in the oil industry in Nigeria). Indeed, the extent of the loss is simply unquantifiable.

This national haemorrhage is not only embarrassing but unacceptable.

As an indigene of Otueke community from Ogbia extraction, same as Oloibiri where oil was first discovered in a commercial quantity, this sad reality must be twice as worrisome to you, your Excellency.

A few years ago, an audit conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI) revealed that the number of barrels of oil produced in Nigeria is yet unknown because of the absence of precision meters at flow stations. Currently what is known is the amount of oil exported as metering is done only at various export terminals. The report further reveals that all the losses of crude oil happen between the various flow stations and these export terminals. This also affects the current calculations of royalty and Petroleum Profit Tax (PPT) as defined in our laws. These revelations have been in the public domain since 2006.

A peep into global best practice reveals that precision meeting can happen at various flow stations to get accurate hydrocarbon mass balance (actual number of barrels of oil produced) and that it is both technically and financially feasible to do the same in Nigeria.

All concerned regulatory agencies are aware but for some reasons no one has dared to break the status quo and that is why I seek your kind intervention. The Norwegian government had once offered technical assistance in this regard to deploy a technology in monitoring oil production in the Niger Delta. The institutional reforms proposed in the Petroleum Industry Bill (PIB) (currently awaiting passage) have done nothing to improve the metering regime. This is an opportunity to make history by stopping these predatory activities, privileged criminality and economic sabotage.

It may also please our Mr President to note that it is widely believed by the public that the same route through which our barrels of oil leave serves as the route of entry for all forms of arms and ammunitions that are currently used to perpetrate mayhem in many parts of our country today. From Jos to Maidugiri, from Aba to Bauchi, the new wave of crime that we are witnessing today is a direct reflection of reckless inflow and stock-piling of small arms and light weapons mostly received from external sources.

I respectfully ask you to take advantage of the goodwill that your government is enjoying internationally, especially among energy partners in the Gulf of Guinea, to ensure that this wicked economic crime is put to a stop. Late president Umaru Yar’Adua at the G8 summit in 2008 called on the world to ‘treat stolen crude oil as it treats stolen diamonds as both generate blood money’.

Citizens deserve the maximum benefits that are possible from our natural resource endowment. Our oil will not last forever and so we must hurry to ensure that we use the revenue to diversify our economy. This will require rapid infrastructural development, industrialisation and job creation. The beginning of this will be to plug any form of leakages in revenue and improve our national earnings to be able to finance these capital-intensive, long-term projects. There will also be no need for a nation like ours to borrow at this time. Generations yet unborn will not forgive us if we fail. No other Nigerian leader is better positioned than you, your Excellency, to match rhetoric with action in this regard.

I respectfully await your usual swift action, action which has endeared you to many as a listening and responsive leader. May wisdom be stirred up in you to lead our country especially through a free, fair and transparent election in 2011.

Yours sincerely,

Uche Igwe
Africa policy scholar
Woodrow Wilson International Center for Scholars
Washington DC, USA

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