1.1 BACKGROUND TO THE STUDY
This chapter is looking at
challenges and prospects of oil theft and Bunkering in Nigeria from the
socio-political context focusing on corruption in the oil industry as the crime
encouraging factor which is a major threat to national development.
It is no longer news that
corruption has been existing in Nigeria since the country got her political
independence in 1960, and is still existing in all spheres of the nation’s
socio-political economy and if not challenged and eradicated, Nigerians may
continue to experience its ugly consequences in all sectors of the nation.
Corruption means the nepotism, favouritism, bribery, graft, and other unfair
means adopted by government employees and the public alike to extract some
socially and legally prohibited favours (Dwivedi, 2007).
According to Nye (2000), corruption
is a behaviour which deviates from the formal duties of public role because of
private, pecuniary or status gains; or violates rules against the exercise of
certain types of private gains. Otite (2004) defined corruption as the
pervasion of integrity or state of affairs through bribery, favour or moral
depravity. It involves the injection of additional but improper transactions
aimed at changing the moral course of events and altering judgments and
position of trust.
Nigeria discovered oil in 1956 and
began to export it in 1958. Since the oil discoveries in the early 1970s, oil
has become the dominant factor in Nigeria’s economy. Using 1970 as a benchmark,
Nigeria gained an extra $390 billion in oil-related fiscal revenue over the
period 1971-2005, or 4.5 times 2005 gross domestic product, expressed in
constant 2000 dollars. The sizable oil windfall, of course, presented net
wealth and thus additional spending room, but it also has complicated
macroeconomic management and led to an extreme dependency on oil-a highly
volatile source of income. Oil also accounts for about 90 percent of total
exports and approximately four-fifths of total government revenues (Budina et
It is unfortunate that rather than
bringing the country to a position of wealth and prosperity (increase in
socio-economic welfare of the citizens), the many years with oil money have not
brought the population an end to poverty nor have they enabled the economy to
break out of what seems like perennial stagnation in the non-oil, the reason
being corruption at all levels of the nation’s socio-political economy
According to Adegoke (2004), ten per cent (around 55 million
barrels) of Nigeria's oil is stolen and trafficked every year. In fact, it is
estimated that oil production in Nigeria runs at only two thirds of capacity
because of theft, vandalism and violence in the oil producing areas.
The new UNODC report, explores the practice of stealing and
trafficking in the oil industry, locally known as "bunkering", in the
Nigerian oil creeks. It identifies the traffickers and trafficking routes, the
value of the stolen oil and the threat posed by oil bunkering not only to
Nigeria’s national development but to West Africa as a whole.
Criminal groups with links to militant groups in the country
especially in the Niger Delta carry out much of the stealing and trafficking in
oil. Oil is stolen either by "hot tapping", where an unauthorized
secondary pipeline is attached to a company mainline in which the oil is
flowing under pressure, or by "cold tapping", which involves blowing
up a pipeline and putting it out of use, which gives criminals enough time to
attach their spare pipeline. (Varadarajan, 2006)
Fearnley Consultant (2003) reported that the stolen oil is
loaded onto barges and tankers and sold in Nigeria and the surrounding region
(in Ghana, Cameroon, Cote d'Ivoire, even South Africa). It is less clear how
much reaches the international market further afield. Proceeds from the oil
bunkering go directly to militants and corrupt officials. Oil is also stolen
through corruption. vessels are filled or over-filled through payments to
officials controlling export. Some officials from the military, private
companies and local government have also been reported to be involved.
Oil bunkering is a crime that enriches a few criminals,
insurgents and corrupt officials, while impoverishing many. It undermines the
rule of law, deepens corruption, pollutes the environment, violates human
rights and depletes natural resources posing threat to national development. It
has become a transnational criminal enterprise in its own right, and the
violent political struggle provides a convenient smokescreen for that intent on
personal enrichment (Adegoke, 2004).
The wide range of players involved in oil theft activities
and bunkering and the complex web of their alliances makes it difficult to
discern the victims from the perpetrators. The loss of oil revenues - perhaps
one third of the income on which 80 per cent of the Nigerian national budget is
based - means that, aside from a few well-placed individuals, Nigerians are net
losers. Fearnley Consultant (2003).
Nigeria is an economic powerhouse and home to half the
population of West Africa. Illegal oil trade therefore poses the greatest
threat to national development and the rule of law in the region. It directly
destabilizes the most powerful economy in the region, with implications far
beyond the oil producing areas. The bunker trade has
extensively been exposed as well as the transportation of bunker fuel. The
various types of vessels involved have also been understudied (Wood, 1994).
are awash as to amount of money which the nation loses from oil theft, pipeline
vandalisation and illegal oil bunkering. According to Akanimo (2004) Nigeria
loses $7 Billion yearly to oil theft while Ikokwu (2007) puts the figure at $14
Billion yearly. Report by Oduyela 2003 alleged that N38bn was lost in six
months in 1996. Illegal bunkering leads to the loss of billions of dollars in
public funds. These funds could have been used to build schools, hospitals,
provide electricity and improvement on other public utilities so that the
nation develops. But the practice only enriches few individuals who criminally
convert what does not belong to them. Recently, following the election of a new
President Muhamadu Buahari, oil bunkerering activities and corruption related
activities has been drastically reduced because the President frowned at the way and manner the Nigeria
National Petroleum Corporation (NNPC) was being managed, saying his
administration would check the excesses of the and also arrest the former
ministers for looting and supporting oil thieves (Vanguard, 22nd
1.2 STATEMENT OF THE PROBLEM
Nigerian crude oil is being stolen
on an industrial scale. Some of this stolen oil is exported but it is not
entirely clear how much is exported. Proceeds are then laundered through world
financial centers and used to buy assets in Nigeria and abroad. In Nigeria, politicians,
government security forces, militants, oil industry personnel, oil traders and
community members benefit to varying degrees, along with organized criminal
networks. The trade in stolen oil also supports the spread of other
transnational organized crimes (TOC) in the Gulf of Guinea (Adegoke, 2004).
This research work wills explores
how corruption intertwine with crude oil theft and the international dimensions
of Nigerian crude oil theft. It will also tackle the challenges and prospects
of oil theft and bunkering in Nigeria.
Nigeria offers a strong enabling
environment for the large-scale theft of crude oil. Corruption and fraud are
rampant in the country’s oil sector. A dynamic, overcrowded political economy
drives competition for looted resources. Poor governance has encouraged violent
opportunism around oil and opened doors for organized crime (Badejo et al,
The basic story of how Nigeria’s
crude goes missing has been told for years. To steal oil, thieves tap into
pipelines and other infrastructure in the Niger Delta. They then pump the oil
onto waiting barges and boats. Some of it is refined locally while larger
vessels carry the rest abroad. There are also allegations that oil vanishes
from at least some of the country’s roughly two dozen export terminals.
Lines between legal and illegal
supplies of Nigerian oil can be blurry. The government’s system for selling its
own oil attracts many shadowy middlemen, creating a confusing, high-risk
marketplace. Nigeria’s oil industry is also one of the world’s least
transparent in terms of hydrocarbon flows, sales and associated revenues.
Industry watchers and policy-makers often think they know more about oil theft
than they actually do. (Fearnley Consultant, 2003).
The specifics of who steals oil are
elusive, even in Nigeria. A typical large-scale theft network has facilitators,
operations and security people, local and foreign transport, buyers and
sellers, and a range of opportunists. Top Nigerian officials cut their teeth in
the oil theft business during military rule. Over time, evidence surfaced that
corrupt members of the security forces were actively involved. The country’s
return to democracy in 1999 then gave some civilian officials and political
‘godfathers’ more access to stolen oil (Maduegbunam, 2008).
This study, thus, seeks to look
into ways the problems of corruption, oil theft and bunkering has affected the
growth and development of this nation and proffering solution to this
1.3 AIM AND OBJECTIVES OF THE STUDY
The overall aim of this study is to
determine the effect of corruption, oil theft and bunkering on national
development. Specific objectives include
examine the effect of corruption on national development
determine the consequences of oil theft and bunkering on economic and national
proffer solution to the problems of corruption, oil theft and bunkering in
1.4 RESEARCH QUESTIONS
are the effects of corruption on national development?
are the consequences of oil theft and bunkering on national development?
are the solutions to the problems of corruption, oil theft and bunkering?
1.5 STATEMENT OF HYPOTHESES
In order to enable the researcher
confirm the influence of corruption, oil theft and bunkering on national
development, the following hypotheses postulated:
1. Ho: Corruption does not have a significant effect
on national development
HR: Corruption does
have a significant effect on national development
2. Ho: Oil theft and bunkering does not have
significant effect on national development.
HR: Oil theft and
bunkering do have a significant effect on national development.
1.6 ORGANIZATION OF STUDY
study is organized into five chapters. The introduction to this study was done
in the first chapter. Chapter two present the conceptual and theoretical
framework. Empirical review of previous literatures was also done in the second
chapter. Chapter three is made up of the methods used in this study including
the research design, method of data collection and analysis. The results are
presented in chapter four, hypothesis are also tested. Summary of the findings
was presented in chapter five. This study was concluded and necessary
recommendation was also made in chapter five.
1.7 SCOPE OF THE STUDY
scope of this study encompasses all the stakeholders in oil and gas and
maritime industry including the government in Nigeria. But for the purpose of this study, it will be
limited to the companies involved with refining and distribution of crude and
refined oil in Nigeria. The institutional framework saddled with maritime
security responsibility will also be involved. This is informed by the
frequency of the operations and activities of oil thieves in Nigeria.
1.8 PURPOSE OF STUDY
study will help beam the searchlight on the need to curb corruption in all
sectors of the economy in Nigeria. It
will also help to expose the problems and challenges facing the nation oil
sector as regarding the issue of oil theft and bunkering which is a serious
sabotage to the nation’s economic development.
Again, it will also serve as an impetus to other researchers who are
interested in carrying research in these areas in Nigeria.
constraint- Insufficient fund tends to impede the efficiency of the researcher
in sourcing for the relevant materials, literature or information and in the
process of data collection (internet, questionnaire and interview).
2. Time constraint- The researcher will
simultaneously engage in this study with other academic work. This consequently
will cut down on the time devoted for the research work.
dishonest or illegal behaviour by officials or people in positions of power,
especially when they accept money in exchange for doing things for someone
poverty or destitution refers to the deprivation of
basic human needs, which commonly includes food, water, sanitation, clothing,
shelter, health care and education
the wanton or deliberate destruction caused by a vandal or an instance of such
An act committed or omitted in violation of a law forbidding or commanding it
and for which punishment is imposed upon conviction.
Reaching beyond or transcending national boundaries
DELTA: A large delta region of the Niger River in southern Nigeria