Renewed militancy in the Niger Delta and oil pipe vandalism have cost Nigeria about $7bn, ( equivalent of N2.1tn) this year alone, according to the Nigerian National Petroleum Corporation (NNPC).
NNPC Group Managing Director Maikanti Baru speaking at the 2016 Fiscal Liquidity Assessment Committee Retreat in Abuja put the total volume of crude oil thus lost to vandalism at 7000kpd.
“Over 7000kpd of crude oil has been lost due to vandalism this year. A bulk of the loss is from JV assets,” Baru said in his paper “Global Oil Prices, Militancy and Terrorism and its Impact on Government Revenue in Nigeria.”
“This implies that 60 per cent of oil production lost is NNPC-FGN equity.
“At an estimated price of 45 dollars per barrel, the total 2016 revenue loss to the Federation Account translates to about 7 billion dollars.
He said that apart from security challenges in the region, politics, judiciary, oil prices and production cost continued to impact negatively on the oil industry.
He said the money lost in this process to “could have used to achieve major infrastructural milestones.
“This loss is equivalent to a new 7,000mw power plant; new 350kpd refinery; over 30 per cent of National budget; and a new 1,700 kilometre pipeline.”
To resolve this, Baru said the NNPC planned to increase security of oil and gas assets, improve its community social responsibility and the Amnesty programme.
He said the NNPC planned “to renegotiate terms of Production Sharing Contract with deep offshore operating companies because with the current agreement, only 17.7 per cent of total revenue comes to government.”