NIGERIA LOSES N5.3TRN TO N-DELTA MILITANCY

NIGERIA LOSES N5.3TRN TO N-DELTA MILITANCY

THE nation's economy lost $45.49 billion (about N5.3 trillion based on current exchange rate of N117) in the last three years - 2005, 2006 and 2007 - to shut-in crude oil production in the troubled Niger-Delta.

The shut-in was occasioned by the activities of militants. The amount lost is in excess of what is actually required to provide infrastructure in the area.


The lost revenue in the three-year period is almost the equivalent of the N5.137 trillion the Federal Government received as its share from the federation account between 1999 and 2005, representing 45.9 per cent of the total allocation from the federation account.

It is a little lower than the N6.047 trillion which the states, local governments and the Federal Capital Territory (FCT) got during the six-year period. This amount represents 54 per cent of the allocation from June 1999 to December 2005.

The lost revenue in the three-year period is about half of the N11.185 trillion shared out from the federation account in the six-year period, to the three tiers of government.

Industry experts have also estimated that Nigeria loses between 70,000 and 300,000 barrels of oil per day to illegal bunkering, outside the shut-in crude, the equivalent output of a small oil-producing country.

In its annual report released in late August 2006, Shell Nigeria estimated illegal bunkering losses at 20,000 to 40,000 barrels per day in 2005, down from 40,000 to 60,000 in 2004. In a December 2005 report, the Washington-based Council on Foreign Relations Independent Task Force calculated that a loss of just 70,000 barrels a day at a price of $60 a barrel "would generate over $1.5 billion per year - ample resources to fund arms trafficking, buy political influence, or both."

Shell Petroleum Development Company (SPDC) former Managing Director, Mr Basil Omiyi, estimated in November 2004 that 70,000 barrels a day were lost to bunkering.

The figure of 300,000 bpd cited by the Council on Foreign Relations' Independent Task Force No. 56 Report (January 2006) and subsequently by the Commander of US Naval Forces in Europe and Africa, Admiral Harry Ulrich, in a speech on May 30, 2006, available at Shell, did not say if its figures were country-wide totals or limited to its own facilities.

According to government sources, demands from militants, the cause of the huge revenue loses, has included the creation of additional states for Ijaw, amenities and jobs for rural communities, contracts and oil concessions for faction leaders and even calls for independence.

Spokesman for the Movement for the Emancipation of the Niger Delta (MEND), the most vocal of the militant organizations to emerge in 2006, said his group's goal was to achieve resource control concession, or wreak "anarchy."

Attacks since December 2005, including a spate of kidnappings of oil workers, have sometimes forced oil production shutdowns of up to 800,000 barrels per day, threatening government's plans to nearly double production to four million barrels a day by 2010. Only some of those production losses have been offset by recent offshore developments.

Yet, there are important differences between oil bunkering and other illegal smuggling trades. As MEND's spokesman, Jomo Gbomo, pointed out in an e-mail in February 2006, drugs and diamonds are easily hidden in baggage or cargo containers whereas oil is transported in slow-moving barges and ships that are difficult to hide.

Whereas diamonds and drugs "offer greater marginal benefits to weaker combatants," oil requires a sophisticated security and transportation infrastructure to collect, transport and sell when sold in large quantities. Militant leaders interviewed by Crisis Group insisted that medium-and large-scale bunkering depended on at least the inattention or collusion and, more often, the active participation of Nigerian law enforcement authorities.

The complicity in oil bunkering, by necessity, goes far beyond Nigeria's borders. Border and port officials as well as purchasers in neighbouring states and distant destinations, are to a greater or lesser extent, involved, even if it is only willful ignorance.

The official statistics of the International Energy Agency (IEA) show at times implausibly sized imports into OECD countries from Nigeria's South- Eastern neighbour, Cameroun. Discrepancies in non-OECD imports are less well documented but of equal or greater concern.


During a boat trip through Bayelsa State in mid-2005, a Crisis Group researcher counted more than 20 vessels that his local travel companion identified as illegal bunkering barges.

In another case, the same researcher watched suspected smugglers pump crude from barges into awaiting tanker trucks in full view of residents and a small group of soldiers guarding Bomadi Bridge in Delta State.

In 2004, two Nigerian Navy Admirals were convicted of involvement in the disappearance of an oil bunkering tanker and its Russian crew from military custody. The officers were dismissed from service.