Loss of N3.7tr to illegal bunkering
31 May 2011
Country: Nigeria

ILLEGAL bunkering, the act or process of unlawfully supplying a ship with fuel, has become an endemic problem in Nigeria. The Nigerian National Petroleum Corporation (NNPC) usually issues bunkering licence to oil servicing companies to bunker vessels on Nigerian waters after fulfilling specific operating conditions and payment of requisite annual fees. The licensed operators receive payment for their services in foreign currency and pay requisite taxes, levies and dues to the Federal Government.
Illegal bunkering has assumed a very wide dimension in Nigeria . Any activity that involves sale of refined or crude oil to ships without NNPC licence, authourisation or without payment of taxes, levies, and dues to government can be classified as illegal bunkering. According to a report prepared by the Maritime Industry Advocacy Initiative, Nigeria currently loses 600,000 barrels of crude oil daily to illegal bunkering . At the current price of N112.52 per barrel, N3.7 trillion or $24.64 billion is lost annually in revenue to illegal bunkering.
We recall that in 2009, the NNPC disclosed that 1.7 million barrels of crude oil were lost between May and June. Official statistics showed that in 2001 alone, illegal bunkering accounted for a revenue loss of about $30 million and by 2003, the figure had soared to about $1billion.
The colossal loss of revenue accruable to government which has been on the upward trend over the years, is indeed, worrisome. While illegal bunkering brings huge profit to Nigerian syndicates and their unscrupulous foreign trading partners, a large number of Nigerians wallow in abject poverty and misery. Late President Umaru Musa Yar’Adua described illegal bunkering as “blood oil’ akin to the trade in “blood diamonds” that fueled the bloody civil war in Liberia and Sierra Leone. He called on the international community to help Nigeria to bring the illegal trade to an end.
The call on the international community for help is still valid today due to the complex “modus operandi” of the trade that turns illegally stolen crude oil from Nigeria with forged or no title documents to legal commodity in the international market. Stealing and illegal sale of Nigeria's crude oil are perpetrated by powerful Nigerians with the connivance of officials of international oil companies, government officials, security agencies , and ship captains while officially selling crude oil to legitimate buyers. That is why it is extremely difficult to track down perpetrators of the dastardly crime against the government and people of Nigeria.
The syndicate consists of powerful and well connected Nigerians many of whom are capable of destabilising the country if serious attempt is made to stop the trade. That is why it appears the federal government tends to be very careful in tackling the delicate matter in spite of billions of US Dollars that are lost annually by Nigeria.
However , many of the Niger Delta natives that engage in illegal bunkering do not see it as stealing . They claim that they are taking crude oil resources which according to them, are legitimately theirs but are inequitably distributed by some characters in the country while they suffer environmental degradation with no meaningful development in their areas.
It seems that illegal bunkering in Nigeria has become a problem that continues to defy lasting solution due to the fact that the international community seems to give a stamp of legitimacy to the sale and purchase of stolen crude oil once the commodity is traded on international waters, especially at the Togo Triangle. And because of the legitimate classification of the transaction, proceeds of illegal bunkering are freely transferred back to Nigeria by foreign banks without being classified as proceeds of illegal business.
The only way to tackle the problem of illegal bunkering is to address corruption in the oil sector through tough regulatory framework. Also, indigenes from the oil producing areas should be appeased by giving them greater stake in the ownership and control of the mineral resources in their respective areas through Constitutional means. This seems to be a more realistic way of ensuring equity in the distribution of national wealth in order to curb illegal oil bunkering and mining activities that go on indiscriminately across the country.
Finally, the Federal Government cannot allow illegal bunkering to continue without finding lasting solution to the problem which is affecting the economy of the nation. More decisive steps should henceforth be taken to combat the illicit business while those found guilty in this regard, no matter how highly placed, should be prosecuted to serve as a deterrent to others.


Copyright: 2011 Author



http://www.legaloil.com/NewsItem.asp?DocumentIDX=1307016947&Category=news