Time to investigate Nigeria oil and gas sector

The last time Nigerians benefited from their country being an oil producer was during the post-civil war years under General Yakubu Gowon. It was not that there was no corruption then but the head of state was clean of any allegation of corruption. Since that time, every regime has flagrantly soiled its fingers in corruption. It has been the story of one woe and fluctuation of prices after the other until the four major refineries collapsed despite the spending of billions of dollars annually in so called turn around maintenance (TAM). We also saw regimes of oil bloc allocation to all sorts of people including those who had no idea of oil except that it was the fastest way of becoming billionaires without any sweat. Nigeria is the only country that distributes national patrimony to individuals without anybody asking questions. The oil sector became the target of adventurers in power who overthrew governments just to corner the hydrocarbons sector and to distribute its commissions to friends and relatives while the rest of Nigerians were left with the crumbs coming from the table of the emergency billionaires and so-called “oil men”.  It became financially advantageous to know which men and women had access to getting you into the mystery of the hydrocarbons sale and commissions in the oil industry. Things got so bad that the local people of the Delta from where the oil and gas are located took up arms to try to get their own share of the oil booty. The security forces which are supposed to ensure that oil production, the  economic lifeline of the country, went on without disruptions got entangled in the problem of corruption to the extent  that it became expedient for people in power to hire some of the illegal pipeline breakers as protectors at billions of Naira per year since  the formal security forces appeared incapable or unwilling to secure this important national asset.


In a recent book on ExxonMobil with the title of EXXON MOBIL AND AMERICAN POWER,  a disparaging comment on the Nigerian Navy went thus: “American military officers come in here and they see a navy with  all the trappings, the ranks, the uniforms and so on, and they think it’s a real navy- poor but earnest. But it’s not that at all. It was not obvious what policies the Americans could bring to bear on a sister service that was mainly a criminal enterprise dressed up in epaulettes. It’s hard to get used to the fact Nigerian officials will lie to you straight up. The chief of navy staff told us there has been no incidence of piracy in Nigerian waters between 2006 and 2009. Exxon Mobil itself was struck in some seasons as often as three times per month. Arguably, the effect of American military assistance to the Nigerian Navy had been to abet attacks on the property of America’s largest oil corporation”. The book indicated that the Nigerian Navy was complicit in the theft of oil in the Niger Delta.  This account may be an exaggeration but is no smoke without fire.

At the height of oil production in Nigeria in the 1970s and 1980s, the country was producing 2.3 million barrels daily and was a major player in OPEC – the international oil cartel that at one time its oil minister served as president of the organisation and recently the late Mohammad Barkindo served as its Secretary General. Over time, the corruption ruined the oil industry and production went down below one million barrels by the time Muhammadu Buhari became president.  Nigeria indeed was producing below its OPEC allocation. Although in recent times production has gone above one million barrels because oil pipeline vandalism has reduced due to better policing, not by security forces, but by some Niger Delta militants that the government has been compelled to hire to protect pipelines. The situation in which the country now finds itself is that money coming from crude oil sale cannot pay for the inflated cost of importing refined petroleum since the four local refineries are not working even though billions are spent annually in so called “turn around maintenance”. The most galling and sordid part of Nigeria’s oil industry is that while the refineries are down, the “workers” are being paid and promoted and sent abroad for training at humongous cost to government.

For almost a decade, a regime of subsidies has been put in place to make imported oil cheap, so cheap that it provided an avenue for border communities to become very rich at the expense of Nigeria. Any observer can drive to Marua in northern Cameroons, Cotonou in Benin Republic, Zinder in Niger and Abacha in Chad republic and see how smuggled Nigerian imported petroleum is openly sold.  Col. Hameed Ali who was brought in by Buhari to knock sense into the heads of corrupt Customs officers cried for eight years that the daily consumption of refined imported petroleum put at 60 million litres was a fraud because the previous consumption up to 2015 was half of this figure. If this is true, the figure of $800 million spent on subsidies monthly should have been half of that figure. Curiously, Buhari apparently did not listen to him and 50% of imported petrol found its way out of the country to countries in ECOWAS, the Cameroons, Chad and as far as the CAR in central Africa. This is where we are now. Nigeria is importing refined petroleum virtually for the whole of West Africa using sometimes foreign loans in addition to the income from exports of crude oil and agricultural products since we now earn less than what we spend because of this corrupt subsidies regime.

The solution seems simple to any lay man: Ban the importation of refined petroleum and free $800 million from this corrupt system for development of education, infrastructure, security and health sectors. This is what the new government is trying to do and must do if our country is not to go under. Eggheads and ideologues may argue from now till kingdom comes but the task of government must be done. It is true that the opacity of the oil sector is so great that no one can come up with figures with mathematical exactitude about how much oil we produce or how much we consume. This is the shame of a country that has been producing oil since 1956 with little or nothing to show for it in terms of development and amelioration of the lives of the poor masses. But a serious government must take the bull by the horns and try to do something. This is what the new government is trying to do.
Of course the vested interests in this smuggling business and the beneficiaries of the subsidies regime will fight back. They will infiltrate the Labour movement and convince other ordinary people that their government, out of the wickedness of its heart, is deliberately bent on making the lives of everyone worse than it met it. Government must put on its thinking cap and campaign vigorously about its intentions and the reasons why certain actions are necessary to save the country. Government should invite top flight auditing company from outside the country to do a clinical audit of the oil sector over the last 20 or so years and come up with names of people and companies that have ripped off Nigeria. If we are paying billions or is it trillions in judgement debts, we must have facts with which we can sue local and international companies that have defrauded Nigeria over the years. This is going to be a long journey but as the Chinese say the journey of a long distance must begin by taking the first step. This government has taken the first step of abrogation of the subsidy regime and it must be backed by all Nigerians if they know what is the best for their country.