By Ishaya Ibrahim
and Henry Oduah
How Abuja intends to fund the N6.07 trillion federal budget remains tricky. The treasury is broke. Oil revenue declines. External reserves deplete. And it is hard to generate enough tax as businesses collapse in the faltering economy.
The budget deficit is N2.2 trillion. Yet Nigeria loses N2.8 billion a day to oil pipeline vandalism alone.
President Muhammadu Buhari plans to borrow money to fill the gap, as well as level off oil revenue, the country’s main foreign exchange earner.
However, a more aggressive and sophisticated form of attacks by militants in the Niger Delta – the country’s oil basin – has reduced oil production from 2.2 million barrels per day (bpd) to 1.4 million bpd.
Also, multinational oil companies whose technology and capacity Nigeria relies on to compete in the industry, are freshly divesting out of Nigeria, a source told TheNiche.
The source was, however, silent on the particular oil multinational firms that are moving out of the country.
On Monday, May 16, Minister of State for Petroleum Resource, Ibe Kachikwu, said the inability of Nigeria to meet its crude oil production target of 2.2 million bpd was due to pipeline vandalism.
He made this known at a special session of the House of Representatives convened over the new petrol price hike.
“We declined from 2.2 million barrels, which was the focus of the 2016 budget, to 1.4 million barrels as of today. We are going to work hard to see how we will get these issues resolved and get our production back,’’ Kachikwu said.
But a high profile source well versed in the oil sector told TheNiche that Kachikwu was being economical with the truth.
“Let [him] deny or confirm whether some oil companies are divesting from Nigeria silently. They are leaving Nigeria. We cannot produce 2.2 million barrels per day not only because of Niger Delta militancy.
“Some oil companies are slowly and silently slowing down their investments in Nigeria because the Petroleum Industry Bill (PIB) does not encourage oil investments,” the source said.
Grouse with PIB
Multinational oil companies are required by the PIB to give 10 per cent of their profits to host communities.
The bill also confers enormous power on the minister of petroleum resources to make unilateral policies that could affect their investments.
Oil companies are scared of that power because everywhere in the world, foreign investors do not trust governments to protect their interest.
The delay in the passage of the bill slashes significantly the confidence of the oil companies in Nigeria’s oil and gas industry.
Former Public Relations Officer of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Oluseyi Gambo, had sounded the alarm in 2013 that international oil companies are leaving Nigeria for other countries in Africa.
They are also peeved with the increase in gas tax from 30 per cent to 80 per cent, and royalty payment from 7 per cent to 12.5 per cent.
Niger Delta Avengers
Buhari’s policy on the Niger Delta has not been clearly defined.
Although he has shown more commitment in the clean-up of the region and compelling oil companies to operate within global acceptable standard, collecting largesse in the name of “amnesty programme” seems the immediate grouse of pipeline vandals.
While the government was recording successes in suppressing Boko Haram militants in the North East, a new band of terrorists emerged in the South South taking responsibility for the vandalism. They go by the name Niger Delta Avengers (NDA).
NDA members said in their blog that they are young, educated, well-travelled persons.
They declared that “most of us were educated in Eastern Europe; but don’t worry, when we achieve our goal (sovereign state of Niger Delta) then you people will be proud of us.
“In as much as we respect you as our elder brothers (former agitators) please don’t dare to stand in our way because if you do we will crash you.
“To former agitators of the likes of [Government Ekpemupolo] Tompolo, we know why you people are after us. Our agitation is more civilised than yours.
“The Niger Delta Avengers is more concerned with people of Niger Delta unlike you (former agitators) that were into kidnapping, killing of Nigerian soldiers, sea pirates, vessel and tanker hijacking.
“But we were able to carry out all our operations without killing a fly. We have sophisticated arms far better than what you use to have during your kidnapping days.”
Nigerian National Petroleum Corporation (NNPC) spokesman, Garbadeen Mohammed, did not answer calls to his telephone line at press time. He also did not reply to a text message.
Vandalism threat
The government is also at a loss on how to deal with the renewed vandalism in the Niger Delta.
At the 67th meeting of the National Economic Council (NEC) in Abuja on Thursday, May 19, the Adhoc Committee on Crude Oil Theft Prevention and Control disclosed that the government does not have adequate operational vessels to patrol and secure the network of pipelines in the area.
The committee decried the massive unemployment of the youths in the Niger Delta, most of whom see pipeline vandalism and oil theft as a means of survival.
Our source said these reasons, coupled with the insight into provisions in the PIB, are making the oil majors uncomfortable.
