It is no longer news that the nation recently experienced one of its worst fuel scarcities in its history. The scarcity dragged on for months and even though there seems to be respite now, things are not totally back to normal yet. This was even made worse by the downward turn of events in the power sector.
Already, there is barely any part of the country that enjoys uninterrupted power supply, but with things have gotten worse regarding power supply across the country and even those that could afford power-generating sets find it difficult to get fuel to power them. The reason for this is not far-fetched as the vandalism of major crude oil and gas pipelines seems to have come to stay.
Speaking on the fuel scarcity, the Minister of State for Petroleum Resources, Ibe Kachikwu, said the scarcity, first and foremost, is partly as a result of foreign exchange shortage which has prevented importers from having easy access to forex for purchase of petroleum products; thus, oil importers pulled out from importation business.
This, he added, increased the bulk of importation obligation percentage of the Nigerian National Petroleum Corporation (NNPC) from about 40% to almost 90% which was a problem as the corporation did not have the necessary logistics put in place to fulfill this obligation.
Furthermore, according to him, incessant pipeline destructions, has increased by two times this year alone, the number experienced in the last two to three years.
According to the Minister of Power, Works and Housing, Babatunde Raji Fashola, the attack on the Nigeria gas company’s pipeline connected to Chevron Nigeria Limited’s facility at Escravos, “is costing the country a whopping N470 million daily.”
He said: “This attack has impacted negatively on the Olorunsogo Nigerian National Integrated Power Project (NIPP) plant with 600 megawatts capacity, as well as other power plants.
“The sabotaged gas pipeline which contributes to the Escravos Lagos Pipeline System (ELPS) has led to a loss of 160 Million standard cubic feet of gas per day (mmsfcd) of gas daily, at a cost of $2.50 per thousand standard cubic feet. This loss means about $400,000 loss to the country on a daily basis (N78, 800, 000 daily) in gas volume. This is in addition to losses to be incurred daily from affected Power generation ($1,988,223 or N391, 680, 000 daily). The total daily loss to the country is therefore estimated at N470, 479,931. Repairs of the damaged pipeline are estimated as costing ($609,137 or N120,000,000).”
Continuing, he said: “For instance, available records show that six incidences of vandalism from December 2014 to February 2015 which affected the Trans Forcados Pipeline (at Oben, Sapele, Oredo) and Escravos Lagos Pipeline System (CNL) led to a loss of 1,100 mmscfd. According to industry experts, a loss of 200 mmscd is equivalent to a Power reduction of 700MW.”
Fashola added that while the industry “is currently generating about 4120Mwh/h on average (as at 17/01/2016), it is without doubt that performance would have been better without the additional setback caused by the weekend’s incident.”
He noted that the resurgence of pipeline vandalism on a larger scale may not be unconnected to the federal government grouse against Government Ekpemupolo (alias Tompolo), a former Niger Delta militant, over an allegation of fraud to the tune of N47 billion in the course of the pipeline protection contract he signed with the previous administration.
“This is because there was an increase in the number of pipeline sabotage since the period the Economic and Financial Crimes Commission (EFCC) instituted a case against him, Tompolo continues to deny any role in the sabotage.”
Also, the Federal Government’s plan to replace ex-militants protecting pipelines, like Tompolo, with the military may also have triggered the increase. Unfortunately, the sabotage keeps crippling the nation’s economy as the government continues to record crude oil and product losses to vandalism. Consequently, funds need to be allocated to repairs of these pipelines when they happen; between January and December 2015, it was gathered that the NNPC spent N103.4 billion on pipeline repairs and management.
According to a report, between January and March 2016, the country recorded over 400 breaches to pipelines. Apart from this, the environment suffers tremendously from vandalism; in 2014 alone, 52,000 hectares of land were soiled as a result of spills.
Furthermore, the Economic Confidential reports that due to the series of pipeline vandalism, Nigeria has suffered setbacks in meeting its gas obligation to Ghana and other West African countries through the West Africa Gas Pipeline Company. It was learnt that Ghana has already started making alternative arrangements to get gas in order to provide regular electricity, which has been epileptic for several months due to the deficit in Nigeria’s supply. It is important that the government gets a grip on this menace in light of the damage it causes the nation.
President Muhammadu Buhari recently threatened vandals, saying they would be dealt with in the way Boko Haram insurgents were being dealt with; but this situation may require more brain than brawn. This is because the dynamics of the two situations are vastly different. First, government needs to investigate the root cause of this surge in vandalism.
A report by The Guardian of London suggested that militarising the region may not be the answer, but providing jobs to unemployed youths and giving communities a share in legitimate oil profits, the youth benefit from clean-up after every spill, why won’t they continue to sabotage pipelines if they see it as source of income?
Perhaps, another approach could be taken by borrowing a leaf from some indigenous companies that have avoided vandalism. For instance, the Niger Delta Petroleum Resources gives back a percentage of every barrel of oil produced back to a community trust find to support development, while another, Addax Petroleum employed community pipeline surveillance teams, which include ex-military, who are given mandate to patrol 1km lengths of pipeline. Another, the Indorama Eleme Petrochemical Company, operates an equity-sharing model with six communities together having a 7.5% stake in the company. According to the report, it has not had any of its pipelines vandalised.