The Federal government lost $7bn revenue due to the insecurity of oil facilities in 2016.This figure represents 60 per cent of the Federal Government’s equity of 60 per cent in the nation’s joint venture ( JV) operation of the NNPC with International Oil Companies ( IOCs).
This was disclosed in a presentation made by the Chief Operating Officer ( Downstream) Nigerian National Petroleum Corporation (NNPC) Mr Henry Ikemefuna Obih duringthe 20th anniversary lecture of Rainoil Limited at Civic Centre in Lagos.
The COO said in his presentation made at the lecture tagged “Nigerian Oil and Gas Industry: Opportunities, Challenges and Prospect of the downstream sector” that vandalism in Niger Delta has put the country economy dive straits, submerging the country further down the road to a financial crisis. He identified pipeline vandalism as a major challenge and oil theft remain a major challenge to activities in Nigeria’s oil and gas industry.
“A bulk of the loses are from Joint Venture assets which implies that 60% (420,000 barrels per day) of production loss is NNPC/FGN equity,” he noted.
Obih called for the support of the Federal Government for the NNPC to raise resources needed in tackling obstacles and more engagement of the communities so as to receive support needed to end vandalism. He explained that improvement in the engagement of communities during the administration of President Muhammadu Buhari has helped to raise production output to 1.9million barrels per day ( mbpd).
Mr. Obih while addressing the challenges faced by the downstream sector pointed at some key factors like withdrawal of other marketers from products importation thereby making only NNPC alone bearing the burden of being responsible for the supply of over 90% of petroleum products. Others include funding, insecurity, distribution, infrastructure and pricing framework. He said government should encourage private sector participation in the downstream sector and introduce a tax holiday for investment in the sector above a certain amount.
“Several years of extreme regulation and the current recession in the country have hindered growth of the sector. However, we are confident of the future because there are indications that the economy would grow and with increasing population, demand for petroleum products is expected to grow,”Obih assured stakeholders at the lecture.