Refining Fraud: Nigeria Loses $1.8bn in 9 Years
Nigeria Loses $1.8bn to Fuel Theft in 9 Years
Nigeria's refineries lost $1.8 billion worth of petroleum products to theft and vandalism between 2009 and 2018, according to NEITI. The country's economy faces significant threats from the global energy transition and must invest in renewable energy to mitigate the impact.
The Nigeria Extractive Industries Transparency Initiative, or NEITI, Executive Secretary Dr. Ogbonnaya Orji disclosed that during a nine-year period, the nation lost petroleum products valued at $1.84 billion from its refineries.
On Monday, July 15, Orji spoke at the 2024 NEITI board retreat in Lagos, making the declaration during the meeting.
He clarified that between 2009 and 2018, oil theft caused refineries to lose 4.2 billion liters of petroleum products, or about 140,000 barrels per day.
The head of NEITI expressed confusion at the rising rate of oil theft, “Figures contained in our 2009 to 2020 audits have put Nigeria's losses to crude oil theft over a 12-year period at 619.7 million barrels valued at $46.16 billion or N16.25 trillion. Similarly, between 2009 and 2018, the country also lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.”
Orji said that the current administration should examine and put into practice the recommendations made in a study by NEITI on how to reduce oil theft in Nigeria.
He emphasized that the five-day retreat provided a forum for discussing solutions to governance problems that have resulted in lost revenue and lost investment possibilities, such as pipeline problems, illicit mining, oil theft, and other governance issues.
As the need for oil declines, the global energy transition from fossil fuels to renewable energy is posing challenges to the country's economy, which worries the executive secretary.
Orji emphasized that nations that rely significantly on hydrocarbon-based exports face serious dangers as the world shifts from fossil fuels to renewable energy sources.
“Our country, Nigeria is heavily dependent on oil revenues for survival. It is within the ambit of this board to support our government and citizens with timely policy decisions and strategies to deal with this unavoidable unfolding development in the extractive sector.
“The fear of the known risks in most of the affected countries far outweighs the potential unknown opportunities except we utilise the immense opportunities within the Extractive Industries Transparency Initiative, its global network and multi-stakeholder framework to search for solutions.
“At current dependency levels, Nigeria already faces significant threats to its economy from the prospect of a permanent decline in global demand for crude oil. The demand for our oil keeps going down daily,” he remarked.
He said that given Nigeria's financial difficulties resulting from temporary disruptions in the production of gas and crude oil, the longer-lasting and irreversible drop in demand will have a significant effect on the country's economy.
Orji continued, “While the transition from carbon-based fuel will have a significant long-term impact on Nigeria's revenue and exports, the transition would also have other impacts on the economy. A direct consequence of the transition would be the loss of fossil fuel as a source of energy.
“In 2021, crude oil and gas accounted for 46 per cent of energy use and 78 percent of electricity generation in Nigeria. The transition would therefore require significant financial investment for the country to generate renewable energy to replace energy previously generated from carbon fuels. This financing (and technological) burden is in addition to the equally significant amount of money that is required to close Nigeria's current energy supply gap,” he explained.
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