The recent report on the theft of crude oil in Nigeria released by UK based think tank, Chatham House said a few new things. Yet it was not any less strategic and symbolic. That Nigeria’s oil industry is one of the world least transparent is a fact known to many. The rampant corruption and frequent fraud in the industry does not make headlines anymore. What will probably make a headline is that transparency accolades and murky notoriety exist side by side in the same country with the active endorsement and conspiracy of the international community. As the second country to become compliant with the UK led Extractive Industries Transparency Initiative (EITI) globally, Nigeria is often applauded and advertised as a key country where all payments in the oil and gas industry are fully audited and reconciled. How come? Only a few weeks ago, former British Member of Parliament and former Secretary for International Development, Right Honourable Clare Short visited the Nigerian President Goodluck Jonathan and commended the country’s impressive implementation progress. Only last May, Nigeria received an EITI Chairman’s award in faraway Sydney, Australia for showing leadership, determination, resourcefulness and going beyond the minimum standards of transparency in influencing country policy.
Yet despite the comprehensive oil and gas audits that have become a ritual, every figure about the Nigerian oil and gas industry remains an estimate. The exact production figures are unknown, the metering infrastructure have remained untidy, export figures are guarded secret, marketing procedures are purposefully convoluted and the transaction environment remain infamously murky. While the beneficiaries remain relatively unknown, the casualty remains the state whose revenue continues to dwindle amidst competing pressures of growing poverty, decaying infrastructure and underdevelopment. If current estimates contained in the Chatham House report, due to be launched later this week, are things to go by, Nigeria may be loosing about 100,000 barrels of oil per day totalling up to 1.2 trillion naira (8 billion US dollars) per annum. While many see this as a very conservative estimate, it translates to a very significant figure (about a quarter) when compared to our annual budget of 4.987 trillion in 2012.
It is however not surprising that it has been revealed for the umpteenth time that high level politicians, military officers, militants groups (‘repented and unrepented’), oil industry personnel, traders, organised criminal groups and communities may be beneficiaries of the lucrative illicit business. With a clear possibility of structured international linkages, the hope of eradicating this deadly business may still remain as hazy as the business itself. With the volume of money involved and pointers to international financial centres like Hong Kong, London, New York, Singapore, Geneva etc, stolen oil and its proceeds should not be difficult to locate except for a hypocritical international community that sees nothing wrong in the continued existence of secrecy jurisdictions and tax havens, even within their own territories.
With the proliferation of armed gangs and extremist groups in Nigeria, the need to locate and halt the channels of criminal trade have become very imperative. Just like oil theft, the proliferation of arms that fuel these frequent insurgencies in Nigeria remain a puzzle. Unmasking the perpetrators of oil theft and their channels may provide the needed clues. Conventional wisdom will naturally link those who have ensured that the Niger Delta waterways remain unsafe to those who are profiteering from such climate of insecurity. One will argue as I did naively many years ago, that the elevation of someone from the Nigeria Delta to the office of the Presidency will provide the much needed impetus to combine stronger military might, vast intelligence gathering and political settlements to unravel and eradicate this dangerous trade once and for all. However, the results remain food for unpleasant debate. The implementation of the amnesty program and the recent award of a big surveillance contract to one of the repentant militants were seen by many as indirect ways to reach out strategically in search for a solution, but not much has happened since then in terms of noticeable reduction in the scale of estimated losses.
Many multinational oil companies that operate in the country have not helped matters. Some analysts accuse of them of turning blind eyes to the menace of oil theft because it does not cost them anything, at least economically. The current poor metering regime means that only the number of barrels exported is made available. Which means that the companies will conveniently avoid paying royalties and taxes on the real production figures as required by law. We know that not all the stolen crude find their way out of the country. Some are refined locally in makeshift refineries constructed by local actors while some are spilled into the environment. As a practice many of these companies pay limited attention to clean up such spillages as they are conveniently labelled as sabotage. Consequently, oil theft makes an important contribution to the continuous pollution in the Niger Delta environment. With the recommendations of the UNEP Report on Ogoniland still gathering dust, will the quantum financial haemorrhage from oil theft provide the essential catalyst for action?
The renewed effort of Nigeria’s Minister for Petroleum, Diezani Alison Madueke, seeming interest by the oil companies and growing international support must be commended. However one wonders if the high level political will needed to confront this evil is now available. The facelessness of the whole illegitimate trade makes any campaign for its eradication, a mere gamble. President Jonathan has promised to match rhetoric with action this time, however, speculation that he may be standing for the 2015 elections and the potential ‘nuisance’ value of alleged oil thieves in politics could make the taciturn leader to beat a retreat. Is it true that some proceeds of oil theft have been ploughed into political campaigns in the past? If proven, that will be a clog in the wheel of potential reforms. With the facts that have been echoed in the Chatham House report, one will not be surprised if knowing who to engage in a possible campaign will become the issue. Erroneous engagement with the perpetrators posing as reformers in any effort to eradicate this trans-national criminality will reduce all efforts to a mere perambulation. The public presentation of that report should serve as another wakeup call for all stakeholders to face this problem with the multi-layered partnership, rigorous analysis and sincerity of purpose that is required in order to defeat it. Otherwise it could grow to distort market opportunities for our chief foreign exchange earner, feed violent opportunism and organised criminality, provide logistics and funding for terrorism and possibly create another Somalia in the Gulf of Guinea. We need to jettison this unhelpful lip service to transparency and brace up for real action. With oil theft still flourishing in Nigeria, the EITI transparency brand remains tainted. In the end, everyone committed to a transparent, safer world becomes the looser. (Nigerian views,Reports,News Analysis)
Uche Igwe wrote from the Department of Politics, University of Sussex. He can be reached at [email protected]