Okechukwu Nnodim
1 November 2021
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The sabotage of oil installations and the resultant repairs of pipelines have depleted Nigeria’s income by N898.93bn this year, Okechukwu Nnodim reports
Between January and September 2021, Nigeria lost N898.93bn to crude oil losses and repairs of vandalised pipelines, among others, documents obtained from the Nigerian National Petroleum Company Limited showed.
Also, it was gathered that the oil firm deducted a total of N1.78tn from its remittances to the Federation Account Allocation Committee during the 10-month period.
Data from 10 various NNPC reports indicated that the reasons for the repeated product losses and its attendant value shortfall include sabotage on oil installations and pipelines, community interference, production shutdown, etc.
The October 2021 report of the oil firm to FAAC, for instance, stated that Seplat (Jisike) terminal suspended crude oil production due to sabotage on it Izombe-Ebocha line.
The report further showed that the shutdown dragged on from July 21 to August 8, 2021 and led to the halt in the production of thousands of barrels of crude.
Similarly, in the NNPC’s September 2021 presentation to FAAC, it stated that the Energia terminal injection of crude into Brass line was suspended from July 1 to 31 due to pipeline damage.
It further stated that third party interference on Nigeria Agip Oil Company Akiri pipeline led to the suspension of Pillar terminal injection into Brass.
Monthly revenue plunge
An analysis of the monthly losses beginning from January this year revealed that the country had been losing humongous sums as a result of crude oil losses and pipeline repairs.
The NNPC’s presentation to FAAC in February showed that nothing was expended on pipeline repairs in January, as there was also no record on product losses and value shortfall in same month.
But in March, the oil firm told FAAC that it spent N4.19bn in the preceding month on the repairs of pipelines, adding that crude oil valued at N26.99bn was lost in the same month.
In its April presentation, the company said repairs and management of pipelines gulped N3.68bn in March, while total product losses and value shortfall was put at N62.03bn.
The report presented to FAAC in May showed that N1.68bn was spent on fixing pipelines in the preceding month and during the same month, the NNPC recorded N62.93bn product losses.
In its presentation in June, the NNPC said a total of N4.15bn was used for pipeline repairs from its receipts in May, while total product losses and value shortfall were N127.41bn.
Data from the July report showed that N4.53bn was used to fix and manage pipelines in June and product losses in same month were put at N165.98bn.
Figures contained in the presentation to FAAC in August indicated that N3.66bn was spent in repairing pipelines in July, while oil products valued at N106.98bn was lost.
The September report showed that nothing was expended in the preceding month on pipeline repairs, but product losses and value shortfall were put at N173.13bn.
The NNPC’s October 2021 records showed that the total pipeline repairs and management cost in September was N629.28m, while total product losses and value shortfall during same period were N150.96bn.
Resultant FAAC deductions
The oil company explained that the above developments were contributory to the massive deductions in its monthly remittances to FAAC.
Its October 2021 presentation to the committee, for instance, showed that the deductions from September receipts include funds for joint venture recovery, cost spent on pipeline repairs and product losses in the month, as this was put at N299.1bn.
In its September report to FAAC, the NNPC said it deducted N277.64bn from August’s receipts, while its deductions in July was N181.1bn.
In April, May and June, it deducted N140.49bn, N255.88bn and N277.18bn respectively from its remittances to FAAC.
Also in January, February and March this year, the oil firm’s deductions from its remittances to FAAC were N83.29bn, N110.75bn and N153.27bn respectively.
Deploy technology, experts tell NNPC
Commenting on the development, a former Director-General of the Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, described the situation as sad and highly counter-productive economically.
He noted that if the development was not nipped in the bud, it would further worsen the already sorry state of Nigeria’s economy.
Yusuf, who is the chief executive officer, Centre for the Promotion of Private Enterprises, called for the strengthening of surveillance through the use of drones and the deployment of other forms of technology.
He said, “If there is any way we can strengthen surveillance around our infrastructure, I think we should do that. We have to use technology and deploy drones to ensure that there is proper surveillance around these critical infrastructure.”
On his part, a former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said the vandalism of revenue generating infrastructure was dangerous to the economy.
He said, “This is a very dangerous situation for our economy. However, these acts of vandalism did not start now. Even on our bridges, you will notice that some people go there to steal the railings.”
The former ANAN president urged vandals to desist from the act of vandalism in order to forestall further misfortune in the country.
Nzekwe, however, called on the government and oil companies not to be deterred by acts of vandalism of their installations, stressing that all security agencies should go against vandals.
“The government has to apply technology, probably by using drones to monitor our various revenue generating infrastructure,” he said.
He added, “They can use it to monitor the facilities in their various locations, particularly in the oil rich region. Government should also mobilise security agencies to deal decisively with vandals.”
The NNPC in its most recent financial and operations report stated that it was collaborating with local communities and other stakeholders in a bid to reduce and eventually eliminate the menace of pipeline vandalism nationwide.