oilA non governmental organisation, the Civil Society Legislative Advocacy Center (CISLAC) has called for more transparency and total restructuring in the running of the oil sector in Nigeria.
The group stated this yesterday at a media chat with newsmen in Abuja, insisting that there was need to promote transparency and accountability in the sector.
The Executive Director CISLAC, Auwal Ibrahim Musa (Rafsanjani), while pointing out that the absence of metering facility has made it impossible to ascertain the exact amount of crude oil that is stolen from the country, maintained that lack of political will on the part of the government had made it difficult to act decisively to tackle the issue.
“Even though this menace predates this administration, its effects are nonetheless even more grievous.
“So serious is this problem that stakeholders are unable to determine either the volumes of crude stolen or the magnitude of the financial loss to the nation. The Chair of Shell Companies in Nigeria puts the estimates at about $6 Billion loss annually in 2014.
“The immediate past Finance Minister in 2013, indicated a volume of over 300,000 bpd and a financial loss of some $12 billion annually, corroborating the figures of survey conducted by the Global Financial Integrity at the instance of the Central Bank of Nigeria in the same year.
“The immediate past Minister for Petroleum Resources estimated that Nigeria lost N1.29 trillion to industrial scale theft of crude oil and production shutdown last year in 2014. PENGASSAN puts the estimates at $25 million daily,” the CISLAC Executive Director said. He further noted that In spite of the numerous committees set up by the previous administration, the problem had escalated-an indication that obvious beneficiaries of oil theft which included top politicians, high ranking military officers, militants, unscrupulous oil company personnel, rogue oil traders, disgruntled communities, and a range of local and international facilitators” were not interested more in rhetoric and media grandstanding than in tackling the menace of crude oil theft.
The group hailed the steps so far taken to tackle the oil theft issue, iurging the government to intensify its effort through its various agencies to block leakages in the economy occasioned by oil theft.
“The Nigeria Maritime Administration and Safety Agency, NIMASA must strictly enforce the Ship Registration; the Nigeria Ports Authority must strictly enforce the Ship-to-Ship Transfer regulations. A recent report by the Natural Resource Governance Institute indicates the potential for the non transparent and complex oil sales arrangement of crude oil by the NNPC to middlemen to create confusion that can provide a cover for criminal groups to perpetrate oil theft, further buttressing the case to urgently address the corruption.
“The government must also strengthen vessel clearance practices around oil installations and enforce the rule to arrest ships with their Automatic Identification Systems (AIS) transponders switched off. The government should also institutionalise the practice of publishing the names of suspect ships and updating it regularly to serve as a deterrent.
“Government should commence the process of installing independent metering facilities that will ensure real-time measurement of crude production, transmission and export to prevent rogue oil firms from exploiting the current system to perpetrate oil theft. We are aware that illegal oil refining contributes to the levels of oil theft but the substantial culprits are the large scale off-shore players who ferry crude to the internal market,” he said.
On the Nigeria National Petroleum Corporation, the CISLAC boss said a total restructuring was needed to make it more efficient and eliminate the massive corruption in the Corporation.
He added that the Corporation had in the past 16 years been at the centre of monumental corruption that has robbed the nations of much needed revenue and inflicted hardship on Nigerians.
“The latest of this is the report by the Natural Resource Governance Institute on August 4, 2014 which estimated that Nigeria lost N6.4 Trillion to fraudulent oil sales arrangements, $32 Billion to mismanaged Domestic Crude Allocation, used discretion to spend $18 Billion in three years (2011-2013), failed to forward about $12.3 billion being proceeds of about 100 million barrels of crude from an entire stream of the country’s oil production for a whole decade, cost the nation about $1.9 Billion since 2010 till date from a single poorly and secretly negotiated offshore processing agreement and channelled Nigeria’s crude worth about $35 billion to swap deals between 2010 and 2014, through the recent offshore processing agreements (OPAs) containing unbalanced terms that did not efficiently serve Nigeria’s needs and interest,” Rafsanjani said.
He therefore, called on the Federal Government to explore all opportunities to properly monitor activities in the sector and to determine not only the refining capacity of the country’s refineries but also stop all existing offshore processing agreements and institute a competitive and open process and employ the more universally practiced format of refined product exchange agreements.
“Direct the NNPC to design a crude sales system that eliminates the use of multiple middlemen and companies that are unqualified to operate in the sector; Direct the publication of annual reports and regular reports to relevant agencies. In the Long run, the government should amend the NNPC Act and unbundle the corporation by separating its commercial and regulatory function to make it more efficient and accountable,” He said.
According to the CISLAC boss, weak legislative oversight contributed to the damage caused in the oil and gas sector, adding that to remedy this, the government should re-constitute the NEITI Board.
“We therefore again call on the government to expedite the formation of a Board made up of competent, credible and passionate persons without partisanship and any other consideration as envisaged by the NEITI Act 2007. Such a Board, when it comes on stream must make the implementation of the recommendation of the reports from the NEITI Audit reports its primary priority.”
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