Nigeria: Oil Bunkering, Government Revenue, and Allegations of Corruption in the Niger Delta

A report from This Day (via Reuters) leads us into the complex terrain of Nigeria’s Niger Delta. Stolen oil, the government says, is depriving the country of needed revenue, but other reports suggest government actors may be complicit in the theft.

Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has expressed concern over the spate of oil theft in the country, saying it would impact negatively on the nation’s revenue profile.

The minister, who spoke with THISDAY in Abuja, said a recent media report that vessels loaded with about 1.2 million barrels of oil were seized from illegal bunkerers was a disturbing signal, and must be tackled headlong.

[…]

“Bunkering is an activity we just have to stop. This is one thing we just have to stop. The [Nigerian National Petroleum Corporation] reported that 17 per cent of oil production was lost in April, and this is about one fifth of the revenue,” the minister lamented.

As Reuters (link above) says, “The 2009 amnesty sharply reduced militancy in the Niger Delta…but bunkering has continued.” Analysts (including me) and journalists wonder from time to time whether a resurgence of armed groups like the Movement for the Emancipation of the Niger Delta (MEND) is in the cards, but the cumulative effects of bunkering appears to be doing significant damage even if violence remains relatively low.

But who does or enables the bunkering? Nigeria’s Tribune points a finger at the police:

A new dimension to the illegal activities is the involvement of security agencies, which give cover to the criminals, on the payment of certain agreed percentage running into millions of dollars and naira.

The Nigerian Tribune gathered authoritatively that these illegal bunkerers had been given assurances by senior police officers in Abuja that nothing would happen to them even if they were arrested.

It was reliably gathered that the bunkerers, who now resort to breaking pipelines, carry out their illegal activities accompanied by siren-blaring escorts thereby scaring people away and creating the impression that they were government officials on assignment.

An example was a cartel known as Tekeena Oil, that loaded two foreign ships in the Niger Delta last week at the Mobil Oil filed in Eket, Akwa Ibom State.

The illegal vessels, containing about 200,000 metric tonnes of AGO and crude oil, was loaded within 24 hours before they could sail off.

Nigerian Tribune was told exclusively that before the ships could be loaded with the crude, the sum of N50 million was paid to senior police officers to give them protection.

A columnist from the Niger Delta, discussing the region’s broader problems, points a finger at local and state government:

Leaders in the region such as ministers, governors, development agency (NDDC) executives, and local council chairmen [,it is believed,] are simply interested in looting and stealing, to make themselves and their future generations comfortable for ever.
There are cases of LGA chairmen who collect allocations and simply retire into hotel suites and squander the funds till the next allocation. They would have handed-down the share of their godfathers, touts, and hangers-on before swallowing the rest. A governor in one of the Niger Delta states has shown anger against this attitude and caused an assessment to be done by an independent body, which found only five out of 23 to have excelled. So far, two LGA bosses have been overthrown by their people. Now that the EFCC is toothless, the politicians are simply on the rampage.

If one believes such charges, they are a serious condemnation of the way power works in the region. They imply that fixing the bunkering problem – and the region’s other challenges – will require major governmental reforms. If one disbelieves the charges, the fact that they circulate so widely is still significant, as it indicates a pervasive distrust of the government and its claims.

13 thoughts on “Nigeria: Oil Bunkering, Government Revenue, and Allegations of Corruption in the Niger Delta

  1. This just in: First( amongst many) Somali oil well showed oil and lots of it.  The yet-not discovered offshore potential is even better. But should we start celebrating after reading  the Nigerian story if all it does is enrich the pockets of few? If Nigeria with its multi-party system and democratic institutions is not immune to grand theft of public resources, what about us with twenty years of instability under our belt? Should we blindly prescribe western democracy for Africa or come up with something else?  Any ideas?

    http://www.miningweekly.com/article/company-announcement-puntland-update-2012-05-14

    • What matters is the strength of the institutions that handle the entire industry in the nation. Western democracies tend to have less corruption than authoritarian states, but if there’s already a culture of corruption and/or little experience handling oil extraction then the results tend not to go well*. Does Puntland have any constant enemies to frighten it into unity?

      *It’s speculated that Israel might have hit on the best circumstances by discovering gas resources after its state institutions were properly established.

      • There really isn’t any correlation between democracy and corruption. Singapore is less corrupt than Bulgaria (a “Western” democracy).

        What matters are institutions, and you don’t need a democracy to create institutions.

        About Nigeria, Nigeria is a failed state. It is as simply as that. It is just a matter of time before the full manifestation of this failure is apparent to all.

      • Singapore is a rarity among authoritarian states*, very few have ever had any success replicating it, whereas Bulgaria is a pseudo-democratic state that only emerged from Communist rule twenty two years ago and only started seeing improvements ten years ago. In general democracies aren’t as corrupt as authoritarian states.

        As for Nigeria, Nigeria isn’t even close to a failed state. Things certainly aren’t as good as they could be but there are still police, an organized military, taxes, public services, elections, a middle class etc. Those elements of a state could be better but I’m not writing off Nigeria yet.

        *Incidentally it’s technically a democratic state. They do have elections and an opposition party, it’s simply that the economic success of the past decades, fear of Communism and the impressive state-building from those fears has resulted in a de facto one-party state that tolerates opposition. With fears of Communism long gone we’ll see if fear of China can replace it or if the nation will become a multi-party state.

      • I am a Nigerian, living in Nigeria and I will tell you straight upfront that Nigeria is a failing state. The problem is that most foreigners living in secluded estates like Victoria Island in Lagos and Maitama in Abuja, so they have very little understanding of how Nigerians live or how Nigeria is being torn at the seams.

        Nigeria has a full-blow insurgency going on in Northern Nigeria. Vast swathes of Nigerian territory are under seige – no functional police and Boko Haram is the law of the land.

      • My thoughts to this were that it’s been a poorly kept secret for years that there’s at the very least local government involvement in bunkering, and definitely security forces, particularly in areas where MEND was active. I agree, this is a poor testimony on belhaf of the government, but it’s been rampant for years. Additionally, as to comparisons I skimmed about Singapore – there’s no ‘resource curse’ there that I know of – mostly they export consumer goods. The oil in Nigeria has, for better or worse, been trapped in a ‘chicken and egg’ scenario with corruption in the Nigerian government. (sorry this comment is so late, I’ve been meaning to read this post for ages)

        As to a MEND resurgence, my guess would be that there will be another criminal network/insurgency entering the equation soon. I’m most curious as to how they’ll relate to the armed groups in the North, if at all, or if they’ll stay organic to the Delta.

      • Ingrid,

        As long as Jonathan is in power, the problem in the Niger Delta will be contained or minimised. He is “their man”. When he goes and if he is replaced by a Northerner, all hell will break lose.

        And yes, I don’t blame them for bunkering. I say let bunkering continue ad infinitum, let all the oil be wasted and squandered. We did nothing to put the oil on our soil and it has caused us nothing but pain and sorrow. The Nigerian government is one vast criminal enterprise, so who exactly are we supposed to be protecting the oil for?

    • If twenty years of strife didn’t destroy Somalia, crude oil will surely do the job.

      A Somalia with oil is a Somalia with at least thirty more years of strife.

  2. Singapore and Israel had two things going for them: visionary leaders for the Singapore at the right time and the right place and and resourceful and well -entrenched diaspora for the Israel.

     Somalia and most African nations failed the vision test. However, just like Israel, we Somalis have Israeli-like diaspora. Hundreds of thousands of us are now citizens of Europe, Australia, USA and Canada. In my view they are or will in future play the role the Israelis played during its crucial stages. Both diasporas exhibit the same resourcefulness, creativity, business acumen, education, etc…even though ours are here a mere twenty years.   

     Combine that with the predicted oil bonanza. Add that to the huge potential trade market with our 80 million land-locked neighbor hungry for ports ( we got over twenty such existing or future ports capable of accommodating 90% of their exports, including their OGADEN oil).  Consider also that we sit just close to middle eastern trade routes. Take into account our long, mostly man-made suffering ( somali and non-Somali) and you have, come year 2020 an African miracle story: Israel in Africa.

    It all depends which route we will choose. If it is blindly swallowing western democratic practices ( which works perfectly  in the west), then we are doomed. Maybe we should opt for development ( think Ethiopia and Rwanda)  over just going the the routine African exercises called multi-party elections ( think Mali and Nigeria). 

    Chavuka, the reason oil may not destroy us is because first came our suffering to be followed, hopefully,  with redemption.

    http://eprints.soas.ac.uk/13076/

    http://www.biyokulule.com/view_content.php?articleid=4710

  3. Listen to Chavuka: Somaliland alone is sitting on 110 billion barrels of oil. Source: an article from World Politics Review. For the mess coming in Eastern Africa, read the latest posting of crossed crocodiles. I see some 50 years of trouble. Hope China and the West can sit together and agree. Why we have to die for some dirty oil.

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