Nigeria lost $46.16bn to crude oil theft between 2009 and 2020, while it lost $10.7bn annually to subsidy on Premium Motor Spirit, popularly called petrol, the Energy and Natural Resources subcommittees of the Advisory Council of President Bola Tinubu, has revealed.
A summation of the amounts lost to oil theft and subsidy indicated that the country lost a total of $56.86bn, going by figures released in the Policy Advisory Council Report, dated May 2023, which was prepared when Tinubu was still President-elect.
On highlights of economic and sector challenges in the report, the council also stated that $70bn worth of investments was lost in the petroleum industry since 2011 due to the absence of the Petroleum Industry Act.
The PIA was signed into law by former President Muhammadu Buhari, after dragging for decades as a bill at the National Assembly.
The report further pointed out that at seven per cent, Nigeria’s revenue to Gross Domestic Product ratio was among the five lowest in the world.
It read in part, “Insecurity is a major sector challenge. $46.16bn was lost to crude oil theft between 2009 and 2020. $10.70bn lost annually to PMS subsidy and inefficiencies associated with the purchase, distribution, and sale of PMS.
“Governance and regulatory concerns have eroded investor confidence, diverting private capital needed for the development of critical oil and gas infrastructure.
“Cumulatively, these have reduced the energy sector contribution to economic growth and deprived citizens of the necessary infrastructure and social amenities required for improving living standards.”
The council outlined some targets to be pursued by the President between 0 to 100 days, adding that there was a need to unify exchange rate window, reorganise the Nigeria Upstream Petroleum Regulatory Commission/Nigeria Midstream and Downstream Petroleum Regulatory Authority.
It said the reorganisation of the agencies would be to deliver set milestone goals, adding that there was a need to headhunt/place capable resources in critical positions.
“Head-hunt competent, tested, reform-focused leaders in NNPCL (Nigerian National Petroleum Company Limited), ensuring its function as commercial entity per PIA (Petroleum Industry Act); paying taxes, royalties and profit to Federation Account and properly regulated by NUPRC/NMDPRA/NCDMB.
“Deregulate PMS pricing and implement Federal Direct Cash Transfer Programme. Signal determination to end insecurity in oil producing states (Imo, Delta, Ondo, Rivers, Bayelsa, Akwa-Ibom) by engaging key political and community stakeholders
“Reform the operations of the military task force with clearly defined KPIs (Key Performance Indicators) and consequent management to tackle deficiencies. Improve financing, agree on cash call arrears and debt repayment framework. Transition to market prices for gas,” the report stated.
On some of the things to execute within 18 to 24 month, the council advised the President to “mandate the NNPCL and NUPRC/NMDPRA to close out outstanding divestments and contract issues for project delivery clarity.
“Strip NNPCL of policy making roles and keep NCDMB within its Act mandate. Consider integrating NUPRC, NMDPRA, and NCDMB into a single regulator or include all midstream activities into NUPRC scope.”
The council called for the expansion of domestic gas reserves and the promotion of the development of a diversified oil and gas industry by implementing reforms in the PIA including “network code.”
It advised the President to develop a sustainable financing model, and to facilitate a third-party gas pricing framework for export market.
The council recommended that the President should enact fiscal enablers for natural gas and deepwater via the Finance Act, and expand stabilisation in the PIA to cover full credit for post FID (final investment decision) levies and taxes.