Crude Realities: Untangling the Secrecy in Nigeria’s Oil Industry

BY MATTHEW MEGWAI

The Nigerian oil industry, the nation’s economic backbone, is steeped in opacity and inefficiency. From conflicting production and consumption figures to the pervasive menace of illegal oil bunkering, the sector reflects a troubling lack of accountability. If Nigeria is to achieve sustainable growth and unlock the full potential of its vast resources, these issues must be addressed decisively.

One of the most glaring challenges is the mystery surrounding production and consumption figures. As of early 2023, in an interview reported by “The Cable”, Mele Kyari, Group Chief Executive Officer of NNPC Limited, admitted, “there is no credible data to ascertain the daily consumption of petrol in Nigeria.” This revelation prompts uncomfortable questions: how was the petrol subsidy calculated before its removal, and what data underpins budget projections? Without clear answers, it becomes evident that the lack of transparency feeds inefficiency and corruption.

Even investigative efforts to uncover the sector’s murky underbelly face stiff resistance. The arrest of journalist Fisayo Soyombo, who was probing illegal oil bunkering, highlights the risks associated with exposing the truth. Soyombo’s findings point to a deeply entrenched system where illegal bunkerers collude with security operatives. His chilling assertion, “Illegal oil bunkering cannot stop in this country… illegal bunkerers have collaborators in security formations,” underscores the depth of the challenge.

The Production and Theft Dilemma

Despite technological advances, Nigeria struggles to accurately measure its oil production and theft. The creation of a “Production War Room Team” in mid-2024 to tackle these challenges has yet to yield notable results. Meanwhile, billions of dollars are lost to oil thieves annually, undermining the economy and draining public funds.

The complicity of security agencies, as highlighted by Soyombo, exacerbates the issue. According to him, “It happened that someone within the security setup got offended for not being bribed… suddenly they arrived.” Such incidents highlight the urgent need for systemic reform to address corruption within the ranks of those charged with safeguarding Nigeria’s resources.

The Consumption Conundrum

The long-awaited Dangote Refinery sparked hope that Nigeria might finally move past decades of reliance on imported petrol. Yet, the lack of clarity on the country’s actual consumption rate remains a significant hurdle. Historically, inflated consumption figures have been linked to corruption in the subsidy regime.

The situation has improved since the subsidy was removed, with reported daily petrol consumption dropping from 69.54 million litres in May 2023 to 45.74 million litres by July. Still, accurate, technology-driven tracking is needed to eliminate discrepancies and ensure transparency. Dangote himself has promised a revolution in monitoring, stating, “With this refinery in operation, we will have a clear picture of Nigeria’s true consumption. We will be able to track every truck and shipload.” Such measures could mark a turning point for the industry in Nigeria.

Environmental and Social Fallout

The Niger Delta bears the brunt of the oil industry’s failures. Illegal oil bunkering has ravaged the environment, destroyed livelihoods, and escalated violence. This has continued unabated. The profits of this illicit trade rarely benefit local communities, leaving them mired in poverty and environmental degradation. As Soyombo aptly put it, “It would shock you the kind of people who escort illegal oil bunkerers out of Port Harcourt.” This points to collusion of security operatives in fleecing the nation of its natural resources and a major disturbing trend at that.

These revelations call for urgent interventions to protect the region and its people. A sustainable approach must prioritize environmental restoration and community development alongside efforts to curb illegal activities.

Charting a Path Forward

To rebuild trust and efficiency in Nigeria’s oil sector, the government must take bold, transformative steps. Declaring a state of emergency in the oil industry would signal a commitment to reform. Security agencies must undergo a comprehensive overhaul to weed out saboteurs and rebuild public trust. Soyombo’s recommendation for systemic reform rings true: “We need to clean up the saboteurs who enable oil bunkerers to thrive.”

Technology must play a central role in tracking oil production, consumption, and theft. Deploying advanced systems for real-time monitoring will provide the transparency that has long been missing. Supporting the Dangote Refinery’s pledge to track petrol distribution and refining NNPC Limited into a publicly listed company will further enhance accountability.

Civil society has a critical role to play, ensuring that the government remains accountable and pushing for a transition to renewable energy. This shift not only promises environmental benefits but also offers economic opportunities for Nigeria’s unemployed youth.

The stakes are high for Nigeria’s oil industry. Without decisive reforms, the secrecy and inefficiencies that plague the sector will continue to exact a heavy toll on the economy and the lives of ordinary Nigerians. Transparency, technology, and accountability must be the cornerstones of a new era in Nigeria’s oil industry. As the nation grapples with soaring petrol costs and environmental degradation, the call for bold, transformative action has never been more urgent.

• Matthew Megwai doubles as a Programme Officer and an Assistant to the Executive Director, Africa Network for Environment and Economic Justice (ANEEJ).