A Review of the Nigerian Energy Industry

Oil theft: Nigeria loses N1.2trn annually – Aregbesola

Governor Rauf Aregbesola, Osun State.
Governor Rauf Aregbesola, Osun State.

11 January 2015 – Governor of the State of Osun, Rauf Aregbesola has said that the country has lost at least N1.2 trillion to oil theft in one year of the last 18 months.

Aregbesola who stated this at a book launch in commemoration of 54th birthday of the Vice President of the Nigerian Labour Congress (NLC) Isa Aremu in Ilorin on Thursday evening said the loss occurred because the government of the country allegedly encouraged the theft.

The governor while explaining how he came about the alleged lost sum said, as disclosed by the federal government, 400, 000 barrels of oil of the country are being stolen every day since July 2013 with the cost per barrel in the international community between the date and July 2014 standing between $110 and $115.

He said because the perpetrators of the theft would want to make brisk business if it is assumed that they sold at $50 per barrel they would have made $20m per day which translates to $7.5billion in a year.

He stated: “From July 2013, the Federal Government announced to Nigerians that 400,000 barrels of crude oil were being stolen everyday and as a result the revenue coming to government either federal or states fell by 40 percent.

“We must ask ourselves how does 400,000 barrels translate to 40 percent decline in revenue? Nigeria produces about 2.5 million barrels of crude oil per day, about 500,000 of that go into what they call domestic consumption, so we are left with two hundred million barrels. If we want to use local calculation that cannot and must not be 40 percent, it should be at best 20 percent.

“So how does 20 percent now translate to 40 percent reduction in revenue of government in Nigeria?

If that is too mathematical for us to comprehend, let us look at what Nigeria has lost in twelve months between July 2013 and July 2014 as a result of the loss of 400,000 of crude oil being lost to theft.

“Let us assume that stolen oil cannot attract premium price. Between those months, oil price in the international market was between 110 and 115 dollars. Let’s say because the 400,000 barrels of crude oil would be sold at 50 dollars per barrel.

“If you multiply 50 dollars by 400,000 barrels of crude oil you will get 20 million dollars. It simply means 20 million dollars is being lost to theft. Now multiply 20 million dollars for twelve months by seven days in a week and by 54 weeks. I did a summary of this and arrived at $7.5 million dollars. Between July 2013 and July 2014 Nigeria has lost that princely sum of money to oil theft.

“For those of you who can still not comprehend what 7.5 dollars means, practically Nigeria lost N1.2 trillion to oil theft.

Aregbesola expressed suspicion that the theft of the oil is not with connivance of the security agencies because according to him it is incredible that such a huge amount of oil would be taken away with the security agencies being caught unaware.

He also described the theft as possible cause of the global fall in oil price that is constituting economic hardship on the country.

“Imagine, how can Nigeria lose about four tankers daily in the face of a collection of military men; even if they can’t catch them, should the military men throw a banger on the tankers, the operators? Nay, bunkerers will run away.

“I want to hazard a guess that it is the accumulation of this stolen crude oil coupled with what is happening in Iraq and Syria that has affected the global price of fuel. So the consequence is that if there are shipped stolen crude from Nigeria and shipped stolen crude from the Middle East, that is why we have a gloat. So the indiscipline in the oil sector in Nigeria coupled with the madness in the Middle East is responsible for the depression in the oil market.

“Only God knows when and how this will stop. Beginning from August last year, oil is now at its lowest level in recent times. It sells for below 50 dollars now. I pray that God will not bring it to as low as 10 dollars; if that happens, Nigeria will be in such a dire situation that riding an Okada, as depressing and degrading as it is will be a luxury.

Also speaking, Aremu bemoaned the worsening state of corruption and the level poverty has degenerated in the country.

The NLC boss who celebrated his birthday alongside his wife who also clocked 50 said the country needs to return to the days when there was better management.

“Because Nigeria is no more working, our leaders have become so corrupt they buy houses in London, Dubai. We no longer think big. What I’m saying in essence is that Nigeria must wake up to the good old days of Shehu Shagari, Ahmadu Bello, Muritala Mohammed,” he stated.
*Daily Independent

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