New Telegraph

Report: Failure to tackle oil theft may spark social unrest

Oil theft

Unless the Federal Government takes steps to effectively tackle the theft of crude oil, the problem could “lead to social unrest that may be difficult to contain as income disparity and poverty lead to a mass movement of the unemployed and socially marginalised,” a report by Proshare, a market intelligence and data analytics firm, has warned. In the report titled: “The Anatomy of Crude Oil Theft in Nigeria: Understanding the Graft, Impact and Implications,” the firm stated that addressing the problem of crude oil theft would require political will, which, according to it, is currently in short supply. It pointed out that crude oil theft in the Niger Delta part of the country was not the “casual roguery of a ragtag band of militants but a well-structured and coordinated criminal enterprise,” adding that “the enterprise comprises a network of highly placed individuals from different walks of life, from the military to politics, commerce, and banking.” “Players are entrenched, ruthless, and unforgiving.

The oil vandals’ vast connections and deep pockets make them formidable and explain the difficulty in dislodging them,” Proshare added. Furthermore, the firm stressed that the prominent role of non-state actors in crude oil market disruption would not be ended by fiscal economics alone, but “would require the political firmness and commitment of the Federal Government to take on the illegal local oil cartels.” It, however, noted that there was a remote possibility of the government summoning the political will to deal with the problem given that “oil pirates and their political associates are pod partners.” The firm stated: “Rich oil vandals support the funding of election campaigns of politicians who would be remiss in supporting any decisive government action that would adversely affect the interests of their electoral piggy banks. The complex relationship between politicians, illegal oil bunkers, and local oil communities makes a firm resolution of the problem more improbable than impossible.” According to Proshare, “curbing crude oil theft would require political will, which is in short supply. With political will, the country would have seen geospatial technology, high-impact drones, and sweeping ground forces combine to create a canopy of forceful correction.

“The orchestrated interplay between technology and troops would have translated into higher official oil output, higher fiscal earnings, and more considerable private sector investment. “The elite conspiracy to allow crude oil theft to breed and flourish reflects the integrity gap in governance at all levels. In the short term, the politics of crude oil theft trumps the economics of national survival.

“However, refusing to address the crude oil theft problem frontally will do the economy and lead to social unrest that may be difficult to contain as income disparity and poverty lead to a mass movement of the unemployed and socially marginalised.” Noting that the problem would persist as long as the “underlying economic returns of vandalism compensate for the risk of oil piracy,” the firm emphasised that “the more powerful and forceful the government is in confronting the problem, the better the outcome for Nigeria’s fiscal situation and the longer-term sustainability of the sector.” It proposed several longterm measures to curb oil theft, including scrapping domestic petroleum subsidy, “to reduce the incentive to vandalize oil pipelines and ferry products across sub-regional borders,” rehabilitating the four local NNPC refineries and moving away from fossil fuel to clean energy alternatives.

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