Business
Oil Exports slump: Team Tompolo ‘saves’ Nigeria’s economy
Okey Onyenweaku
The death clouds that have been hovering around the Nigerian economy, no thanks to the monumental challenge of crude oil theft may presently have been slowed down, courtesy of the effort of the Tompolo team, Business Hallmark reports.
And this is courtesy of The Tompolo strategy, a rugged private guards security initiative that sees the controversial militant and warlord, Government Epemupolo, aka Tompolo, along with his associates and co-travellers spread across the Niger Delta region, manning and executing pipeline surveillance measures and preventing oil theft.
Sources say that the activities may presently be working well in favour of the country
and is also likely to reduce the rate of recent economic deterioration.
Since the pipe line surveillance contract of N48billion was awarded to Ekpemupolo, popularly known as Tompolo, to ensure the protection of oil pipelines, crude oil production appears to be on the rise again and Nigeria now expects higher revenues.
Recently, the NLNG spokesperson, Andy Odeh confirmed that some successes have been recorded in the volume of crude production after NNPC increased surveillance and the fight against oil thieves and vandals.
“We have begun to see improvement in the availability of key crude oil transportation trunklines,” Odeh had told reporters.
“If this trend is sustained, we expect it will support improved gas supply to NLNG once currently flooded oil and gas infrastructures becomes accessible,” he also said.
BH findings show that Nigeria loses about 700 barrels per day to crude oil thieves amounting to $70m daily at $100/barrel.
Nigeria has not been able to meet its 1.8 million OPEC quota due to crude oil theft as production remained below one million barrels daily.
The Nigerian authorities recently revealed that more than $3.3bn (£2.9bn) has been lost to crude oil theft since last year.
This is happening at the time other countries are taking advantage of their crude and are raking in huge revenues given the high price of crude and Nigeria can’t even meet its production quota.
On a broader perspective, Nigeria Extractive Industries Transparency (NEITI)had in 2019 said Crude
oil and refined products worth $41.9 billion have been stolen from Nigeria in the last 10 years.
Details had shown that the nation lost $38.5 billion on crude theft alone, $1.56 billion on domestic oil
and another $1.8 billion on refined petroleum products between 2009 and 2018.
In fact, many had alleged that even to government functionaries must be involved in the crude oil
theft given that security agencies ranging from the Army, Police among others have always been posted to man the crude oil pipelines.
When it seemed that all efforts to stop the crude oil theft which had almost crippled the country’s economy, the company resorted to engaging private security firms.
The International magazine, the economist, had in its October 2021 edition, titled ‘Nigeria; The crime
scene at the heart of Africa’,reported that, ‘’Oil-fuelled corruption can foster division, since different groups fight for a slice of unearned wealth. But it also gives elites from all groups a stake in
preserving the system’’
GMD, NNPCL, Mele Kyari said the company engaged private security firms to police the pipelines in collaboration with other security agencies.
“We didn’t know that this (oil theft) was happening. The scale is enormous,” Kyari had said. “We have seen pipelines taken from our main trunk lines to abandoned platforms. We have
thousands of illegal refineries that we have taken down in the past few months.
“We have seen over 295 illegal connections to our pipelines. Many of them have been there
for years. You have a situation where your production came down to 1.1 million barrels from 1.8 million, but the truth is that not all of them are stolen. Let me clear the misconception that the remaining balance is stolen.
“Companies will stop injecting oil into the pipeline the moment they discover it can’t get to the terminal.”
For the first time since July this year, Nigeria’s crude oil production rose above one million barrels per day. This development is due to the reinforced fight against oil thieves by
security agencies which is gradually yielding results. Industry observers hope that it be effectively sustained.
Since the award of the contract to Tompolo, the NNPC has uncovered many
illegal pipelines and arrested oil thieves. In October, the national oil company
intercepted and arrested a vessel loaded with stolen crude in the creeks of Warri in
Delta State. The stolen crude was discharged in Tema, Ghana.
An illegal pipeline was also discovered by operatives of Tantiter Security Services
working in collaboration with security agencies.
Enthused by that development, Bala Wunti, the Chief Upstream Investment Officer,
NNPC Upstream Investment Management Services (NUIMS), had said during the interception of the ship that with the detection, the country would begin to witness improved oil supply.
“I think there is no doubt that we have made significant success in terms of detection, deterrence, and in term of response.
“What is now left is for Nigerians to start witnessing the recovery journey and I think before the end of the month, you will see the benefits of all the architecture that has
been put in place.
“We have anticipated that this architecture will start yielding results in 90 days, but with what we are seeing, we will start seeing results in about 60 days. We are in our 40 days and we believe in another ten days we will start seeing results.”
The Upstream Petroleum Regulatory Commission noted the massive theft in the Niger Delta was leading to humongous financial losses for the country and the exit of some international oil companies.
Crude oil production had crashed in below one million barrels between August and September. But
country’s oil production averaged 1,014,485 barrels per day in October, indicating an increase of 8.18 per cent compared to the 937,766 million barrels per day production in September.
Additional data showed that The amount of crude produced between the months of August and September decreased drastically at the Bonny terminal (749,463 barrels to 167,582 barrels), declined at the Brass terminal (270,932 barrels to 172,814 barrels), and increased
only slightly at the Qua Iboe terminal (4.79 million barrels to 4.97 million barrels for the month of September).
This development is due to the reinforced fight against oil thieves by security agencies is gradually yielding results, as industry observers prayed that it be effectively sustained.
The data showed that against the projection of 1.88 bpd crude output, the country was only able to produce just about 60 per cent of its total projection for the period.
Nevertheless, Analysts believe that these are pointers to curbing of losses in revenues in Nigeria.
Implications for the Economy
The economy has suffered immensely to the point that its debt over hang has become a threat to the continued solvency of the country.
Critically, recent statistics reveal that the rate of unemployment, the second highest in the world is 40%. At the same time, the underemployment rate stood at 25%; even as inflation, which is hitting the roof top stood at 20.6 per cent( A report said inflation stood at 52 per cent) ,highest point in the last seven years.
At the same time, Diaspora remittances inflow has fallen below what it was in
2020.
Also remarkable is the country’s heavy debt burden at N43trillion ($103bn)and
expected to grow higher at the end of 2022 and still growing; of the budget of
N17.6 trillion for 2022, budget deficit stood at over N6trillion as over 101 per
cent of revenues is used to service debt. More worrisome is that the country has set new borrowing limit from 25 per cent of GDP to 40 per cent of the GDP. This was contained in the Medium Term Debt Strategy.
The major revenue earner for the country, crude oil price, which has hit $80 pbd
and above presently still fluctuates.
Insecurity has not only hobbled agriculture, many parts of Northern Nigeria have been taken over by bandits such that not much business activities can subsist.
The World Bank just noted that Nigeria’s revenue to GDP ratio hovered between
five and six per cent last year and remains the lowest in the world. These days almost every everybody is aware that Nigeria is the poverty capital of the world recently over taking India with over 100 million people. The Naira which sold at N220/$ in June 15, 2015 has depreciated by about 100 per cent to N730 as at November 11, 2022.
With the fearful scenario above, economic trajectory of the country is still
uncertain. This is because even the apex bank has warned that care must be
taken to galvanize and push the economy out of slumber.
FDI is expected to shrink to reflect the worsening operating environment and
investment climate, analysts reckon.
Further explanations consider some of these risk components to include; the
political risk components, government stability, socioeconomic conditions,
investment profile, internal conflict, external conflict, corruption, religious
tensions, democratic accountability, and ethnic tensions have a close association
with FDI flows.
The above scenario, in fact, captures dramatically what Nigeria is experiencing
today. Analysts are in awe how such economy can give hope of pulling up
surprises in the near future. They seem discomforted that the same vulnerabilities that impeded economic growth pre-Covid-19 are still visibly
predominant in the system and are even worsening.
In a recent forum, Dr. Abiodun Adedipe , MD/CEO of B. Adedipe Associate limited, bared his mind and told the audience that the pre-Covid-conditions which obstructed economic broadening were still there and have not changed.
According to him, these vulnerabilities included resource dependent/mono-product that accounted for almost 90 per cent of Nigeria’s foreign trade earnings in 2020 were from hydrocarbons; Portfolio
investments evaporated; highly- indebted; large informal sector; weak MSME’s represented large proportions of GDP and manufacturing activities; large populations and high poverty incidence.
According to the report released in Singapore, Nigeria was ranked very low in
governance, leadership and foresight, scoring the country 102 out of 104 countries with a score of 0.319 points, ahead of Zimbabwe and Venezuela.
It also ranked Nigeria low in other parameters, scoring the nation 98 in leadership and foresight; 85 in robust laws and policies; 101 in strong institutions; 88 in financial stewardship; 97 in attractive marketplace; 72 in global influence and reputation and
helping people rise 98.
Unlike Nigeria, Finland ranked number one with 0.848 points followed by Switzerland; Singapore; Netherlands; Denmark; Norway; Sweden; Germany; New Zealand and
Canada.
These limiting conditions will obviously rob Nigeria sustainable growth as envisaged by the Chairman of Fidelity Bank Plc, Mr. Mustafa Chike-Obi who believes the country needed to grow by 10-15 per cent consistently for about 10 years to achieve meaningful milestone.
‘’The Nigerian economy must grow consistently by 10-15 per cent for 10 years to make meaning to Nigerians’’, said Chike-Obi.
But many still wonder what magic will change the trend of things in the short to long term given the policies which analysts consider not good enough for a turn around. They think that of all of the trumpeted achievements of the government nevertheless, it is not fully assuring that Nigeria’s hope now lies on Team Tompolo’s ability to curb crude oil theft.
