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| Fig. 1: Fig.1 Gas Flare, Nembe Creek. (Source: Wikimedia Commons) |
Petroleum products influence the Nigerian energy industry, seeing as petroleum is the largest mineral resource deposit found in the country. These energy resources of Nigeria provide revenue for the country in the form of exports. Nigeria is energy resource-rich and the twelfth- largest exporter of crude oil on the planet. [1] Despite this fact, the country remains burdened with an epileptic shortage of fuel. Nigeria's persistent energy crisis has crippled its industrialization cycle. The energy industry in Nigeria is probably one of the most inefficient in attending to the prerequisites of its citizens generally; this is commonly evident in the productive disequilibrium in the business areas for oil-based wares, especially petrol, kerosene, and diesel. The terrible energy organization game plan has exacerbated energy destitution through exorbitant prices of petroleum products in an economy where a majority of people live on under $2 every day. [2] The Niger Delta region of Nigeria contains the largest deposit of raw petroleum found in the country. However, Nigeria's most intractable problem is evident in the Niger Delta, as it has been the source of political destabilization.
The Niger Delta has been in crisis with multinational oil companies and the government for a period spanning 20 years. [3] This crisis has reduced the seamless expenditure of the countrys energy production. Indigenes of the Niger Delta are in a fight with the government. Most notable amongst the activist of the Delta is the Movement for the Emancipation of the Niger Delta (M.E.N.D). The group fights for oil- resources and the sanctity of their land. [4] The source of the problem is not far-fetched, as is evident in the massive distillation plants in the Delta region built by multinationals. Those individuals living around the riverine areas, where there are large deposits of oil, are left to contend for their lives, following the hazards of the energy production technique in the Delta. [5]
The NNPC acts as both a corporation and a regulator of the oil in Nigeria. This has caused a lack of transparency in the energy sector of Nigeria, as in a sporting event, a player cannot also be a referee. [6] This has caused the disappearance of billions of dollars, which are usually found through audits. [7] In 2016, the federal government announced a total of $16 billion missing during its auditing. This mirky accounting and lack of transparency has plagued the entire country and the indigenes of the Delta usually have to bear the crux of this crisis.
As shown in Fig.1, Gas flaring is one of the cheapest ways to dispose of excess gas. It is curtailed elsewhere in the world, but it is not the case in the Delta. [8] Gas flares can usually be seen as the brightest thing at night due to the epileptic power situation in the country. These gases which are flared daily, can be recycled to produce energy. Plans for recycling these gases has been in the pipeline for many years, but its realization has not been seen in the Delta. The reason for these failed plans on the part of the government is the lack of revenue. The Federal Government of Nigeria, through the NNPC, regulates bodies that extract oil from the Delta, sells them and then the revenue goes to the national treasury. Taxes that these companies make on their profit are also taken to generate revenue, however, due to the lack of working refineries, the country imports the finished petroleum products. After considering the costs of importation, the Federal government pays salaries to lawmakers, civil servants, and has to settle debts incurred yearly by the continuous deficit in the budget. This leaves little revenue for infrastructural plans. On the part of the multinationals, the cost of recycling these gases would take a toll on their finances as it is no small project. Since, they are not eager to spend such amount of money because there is no infrastructure for these companies to benefit from the revenue of these recycled energies. Thus, they do not count it as a worthy investment. Furthermore, rebel groups and hoodlums especially in the Delta play their part in the aggravation of the energy situation through the vandalization of pipelines. [9] A sum of 16,083 pipeline breaks was recorded between 2003 2013; while 398 pipeline damages speaking to 2.4% were expected due to natural forces, the exercises of hoodlums represented 15, 685 break which meant about 97.5 percent of the complete number of cases. [10] Consequently, the issue of illegal bunkering is still one that has been prevalent in the Nigerian sector. Rebel groups like the Delta Avengers take up crude-oil and locally refine it under hazardous conditions. [11,12] The Nigerian National Petroleum Corporation (NNPC) expressed that pipeline defacement expanded by half in January 2020. [10] This has resulted in companies losing trust in investing in natural gas.
The Niger Delta is rich in oil; however, due to the poor organization structure of the country, it still has yet to get it right concerning its energy problems.
© Temiloluwa Bolodeoku. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] M. S. Gupta et al., "Issues in Domestic Petroleum Pricing in Oil-Producing Countries," International Monetary Fund, WP/02/140, August 2002.
[2] A. Iwayemi, "Nigeria's Dual Energy Problems: Policy Issues and Challenges," in Bridging Energy Supply and Demand: Logistics, Competition and Environment, Proc. 31st IAEE International Conference, Istanbul, Turkey, 18 Jun 08 (International Association of Energy Economics, 2008), p. 17.
[3] C. Obi et al., eds, Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petro-Violence (Zed Books, 2011).
[4] E. Courson, "MEND: Political Marginalization, Repression, and Petro-Insurgency in the Niger Delta," African Security 4, 20 (2011)
[5] M. Watts, "Blood Oil: The Anatomy of a Petro-Insurgency in the Niger Delta, Nigeria," Focaal 2008, No. 52, 18 (2008).
[6] A. Sayne et al., "The Petroleum Industry Bill and the Future of NNPC," Revenue Watch Institute, October 2012.
[7] A. Sayne, A. Gillies, and C. Katsouris, "Inside NNPC Oil Sales: A Case For Reform in Nigeria," Natural Resource Governance Institute, August 2015.
[8] M. O. Edino at al., "Perceptions and Attitudes Towards Gas Flaring in the Niger Delta, Nigeria," The Environmentalist 30, 67 (2010).
[9] O. C. Okpo and R. C. Eze, "Vandalization of Oil Pipelines in the Niger Delta Region of Nigeria and Poverty: An Overview," Studies Sociol. Sci. 3, No. 2, 13 (2012).
[10] A. C. Okoli and S. Orinya, "Oil Oipeline Vandalism and Nigeria's National Security," Global J. Human Soc. Sci. 13, No. 5, 67 (2013).
[11] E. Adishi and M. O. Hunga, "Oil Theft, Illegal Bunkering and Pipeline Vandalism: Its Impact on Nigeria Economy, 2015-2016," International Institute of Academic Research and Development, IIARD Int. J. Econom. Bus. Manage. 3, No. 2, 47 (2017).
[12] U. Edem-Adah and C. O. Daniel, "Effect of Industrial Relations on Employees Commitment in Nigerian National Petroleum Corporation (NNPC), Nigeria," J. Resource. Devel. Manage. 67, 2020.