Executive Viewpoint

As we bear witness to a steadfast “rise of the rest” within the global marketplace, Nigeria has proven to be not simply geopolitically ambitious, but also boasting an early competitive advantage. We harbor a bevy of natural resources that should earn the admiration of our esteemed colleagues in the BRIC (Brazil, Russia, India and China) nations. This would-be envy might lead to resentment, were it not for the oft-unspoken reality that precautions are seemingly in place at home, and abroad, to ensure that our highest peaks in sustainable development are not met.

Though there is much to be accomplished in fortifying our infrastructure, and in fostering a climate of political unity, crude oil theft no longer occupies a low rung on the priority ladder for reform in Nigeria. This widespread larceny, occurring through various innovative and even entrepreneurial methods, collectively tarnishes our GDP, as well as our reputation for energy procurement and, importantly, refinement and export.

Squandered oil. Today, Nigerian oil is exported absurdly in crude form from West Africa, shipped for distillation and then imported back to us. For those who inquire as to why this is the case, why such a blatant opportunity is autonomously squandered, we must answer that today, almost three years since amnesty was agreed to with Niger Delta militants, crude oil theft is on the rise again.

Shell, the biggest operator in the region, has stated previously that Nigeria loses over $1.6 billion annually to oil theft, equating to approximately 150,000 bopd. The domestic and, indeed, international ramifications are immediately obvious; earlier this year, increasing oil thefts prompted multinational corporations to close down, outright, in certain parts of the country.

Although illegal refiners only comprise a small portion of the theft, their environmental impact is vast, with degradation near-irreversible. The thieves’ destructive methods have helped to further ruin fishing habitats and contaminate water, the air and, indeed, arable lands already sullied by decades of oil production in the area. The majority of the theft is on a broader scale, however, when coordinated groups of workers siphon crude into barges, before transporting the oil onto larger crafts for refining in haphazardly volatile “firewood” distilleries offshore.

Weak reforms. The complicity of security officials and even executive political authorities, means that there is little will to find a lasting solution, to creating reforms that stifle these fruitful operations. Although the government allocated a portion of the budget to regenerating the Niger Delta after the amnesty agreement, many local politicians have not delivered on their promised jobs, roads, schools and hospitals. Unemployment has, therefore, not fallen, and has begotten further poverty and crime, a vicious cycle throughout many states within West Africa.

President Goodluck Jonathan’s administration has pledged to crack down on oil theft, but this ambitious initiative has failed to bear fruit. No sooner is one hole on a pipeline shut, or one illegal distillery closed down, than two others arise in their places. Over a three-week period, the Nigerian Navy blocked 600 illegal distilleries, only to find that 400 new ones had been established around them.

While I laud the Joint Task Force (JTF) and, indeed, the current administration’s own efforts to deal with oil theft, I believe that we will continue to see limited success in the fight. This will be the case, until we secure the support of forward-thinking international businesses, and business men and women, that have the innovative minds to realize that Nigeria presents unprecedented opportunities that are, yes, complex, but at the same time, too worthwhile to pass up as a result of misplaced, exacerbated fears or stereotypes.

Refining capability would help. There are many options available to cultivate a refreshed narrative of Nigeria’s energy-driven potential. However there is one pertinent, viable solution to achieving prosperity from within, one tangible alternative that should overwhelmingly surpass bureaucracy and be put forward to implementation—Nigeria can, and should, build and maintain a thriving refining industry.

Many would challenge the notion that Nigerians can foster an infrastructure conducive to deterring corruption, and adhere to best practices. However, I am one entrepreneur, who has succeeded by staking his bets, not on what most people would do, but rather on the right thing to do. If we refined our own oil, we would not be at the mercy of import prices and fuel subsidy scams. If neighboring communities were regenerated, we would reduce criminal activity. If people had jobs, they would not steal.

Nigeria has two refineries in the Port Harcourt area, but neither runs close to full capacity. And while I support steps undertaken by everyone interested in investing in refining—my own SLOK Group is exploring options—similar efforts have been wrecked to protect the interests of powerful fuel importers. It is a scandal that, for all of these reasons, our nation has to import more than three-quarters of its own fuel, despite being the continent’s biggest producer, serving to douse the hopes for a new Nigerian century.

If we fail to invest in our refining sector, if we fail to effectively deter massive theft, if we fail to provide jobs, and if we fail to advance our local communities, then we will only increase insecurity in the Delta region and perpetuate Nigeria’s reputation as a nation abundant with ambition, but mired in mismanagement.