The group managing director of the Nigerian National Petroleum Company (NNPC) Ltd, Mele Kyari, has declared that widespread crude oil theft in Nigeria as the reason the international community has not effectively embraced the Petroleum Industry Act (PIA).
He described PIA Act (2021), which was recently signed into law, as one of the most audacious attempts to overhaul the petroleum sector in Nigeria. The Act seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry.
According to Kyari, if implemented diligently, the PIA will help facilitate Nigeria’s economic development by attracting and creating investment opportunities for local and international investors.
Presenting a graphic demonstration of how the country’s crude oil assets are being vandalised and the products stolen, to the House of Representatives’ Committee on Petroleum Resources (Upstream) during a parley recently in Abuja, Kyari said crude oil theft is scaring investors away.
He said, “No doubt, it is a very difficult circumstance for the industry and that is why despite the good intentions and the provisions of the PIA, no one will produce oil and recover zero, and still put money back into the business. That is why investments are very weak despite the good fiscal environment that PIA has brought.
“If I have the privilege to answer questions around our investment climate on international platforms, they ask me, ‘We will bring our money; how are you sure they will not steal the oil?’ It is very difficult to give a very straight answer.
“Of course, with what we are doing now, we will contain it and we will bring back confidence to the sector.”
While describing oil theft, illegal refining and sales as an elitist business, Kyari said the culprits are known, but the authorities lack the power and to prosecute them.
“We know that to sell crude oil in the international market, it is not the business of the ordinary people that you see in these illegal refineries. It is an elitist business and we must have the courage to set up very independent special courts to try cases related to this.
“Otherwise, the impact it has on our economic outlook – our ability to generate foreign exchange and in terms of energy security for this country – is threatened by a very few people.
“Clearly, they are a few people. It is not beyond us and I am very confident that the leadership being given by the Chief of Defence Staff alongside the service chiefs and others, will probably in another one to two months, bring some sanity. We are also working on sustainability, not just recovery but to have a sustainable framework,” Kyari said.