2018 budget and curbing oil theft

Nigeria is reported to have lost about N3.8 trillion to oil theft between 2016 and 2017 according to a recent report by the UK funded NGO, Nigeria National Resource Centre (NNRC). In its report the “NNRC’s Oil Theft in Nigeria”, the NGO affirms that the figure represents what the government and oil companies posted as their losses to theft of crude oil in 2016, with the government share amounting to about N1.6 trillion or about 42%. In its comparative analysis, the NNRC that the loss is higher than the combined allocation by the country to health and education in the current 2018 federal government budget. The sum of N184.4 billion for as combined allocation for health and education constitutes a mere 8.4% of the money lost to oil theft.


The report queries the country’s disposition towards oil theft, ahead of the anticipated adoption of the Final Investment Decision (FID) on the development of the $10 billion Bonga South West/Apara (BSWA) deep-water project in 2019 notes that the Nigerian government passed a record budget of N9.12 trillion with a revenue target of N7.2 trillion, most of which it aims to achieve from the petroleum sector. Therefore, at a time when the country has just exited from recession and the economy remains fragile, with national debt on the rise, reducing oil theft should be an urgent national priority.


The agency attributed the causes of oil theft to factors such as the neglect of the oil rich Niger Delta, poverty, unemployment, poor governance and pervasive corruption.  While oil theft is as old as the sector in Nigeria, the level of stealing rose with time, as the stakes became higher and oil prices rose above hundred dollars a barrel in the early 2000s, it has become a cottage industry that creates far-reaching  consequences. It is a matter of fact that over the last decade, oil theft has risen to unprecedented levels, peaking between 2011 and 2014. The inability of the government and oil companies to curb this epidemic has made Nigeria the country most plagued by oil theft in the world. 


Factors identified as causative to the problem of oil theft include the incidences of force majeure declared at the Forcados Terminal, combined with wider pipeline infractions and theft.  Force majeure is the declaration by an oil supplier that it is compelled by factors beyond its control to violate meeting a particular oil supply contract.  The typical instances of force majeure in Nigeria are usually those bordering on human activities such as insurgence, pipeline vandalisation and even oil theft.

Similarly, factors such as poor governance mechanisms at federal and state levels have spawn the neglect of the Niger Delta region with respect to the promotion of meaningful economic development. The neglect of the oil rich region has intensified the crisis of unemployment of poverty among the teeming population of the zone especially the restive youth. Hence the sporadic instances of unrest and attendant declaration of force majeure.

Against the backdrop of the realities in the oil sector, the report leaves little to be added with respect to the challenge of oil theft in the country. In fact, the scope of the enterprise – unlawful as it is, has grown   beyond a cottage industry to a major- yet underground business, that is based on outright criminality featuring virtually all faces of high profile illegalities. In its contemporary state, oil theft in Nigeria enjoys the participation of the high and mighty in government, military and private sectors of the economy. Curbing it is therefore a major challenge the federal government needs to address with all seriousness that can be mustered. 

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