The Nigerian government spent N12.43 billion to protect its oil pipelines from January 2022 to June 2022

  • The Nigerian government spent N12.43 billion on protecting its oil pipelines 
  • Oil theft is at an all-time high in Nigeria
  • The contract for surveillance of pipelines was awarded to a private contractor 

The year so far for the Nigerian oil sector has been turbulent. Nigeria’s most profitable industry recently recorded some of its lowest net profits owing to pipeline vandalism and oil theft.

The federal government of Nigeria has spent N12.43bn this year on pipeline protection and maintenance. It has also paid $4.04bn to five international oil companies as cash call arrears repayment.

According to a report by the Nigerian National Petroleum Company Limited, the amount the government has spent on pipeline security/maintenance from January 2022 to June is N12.43bn. This was done through the Nigerian National Petroleum Company Limited.

The report revealed that N1.1bn, N368m, and N2.61bn were spent in January, February, and March 2022 respectively. N464m in April, N498m in May, and N8.35bn in June.

These expenses procured by the government result from the heightening rate of insecurity in the country. Pipeline vandalism and oil theft of massive volumes of crude oil have constituted a major crisis in the Nigerian oil sector. As a result, the production of crude oil has dipped.

The government’s high cost of security expenditure is due to the NNPC contracting the surveillance of its pipelines to a private contractor. The NNPC noted that hiring private contractors to protect its pipelines would help curb the tremendous rate of oil theft.

CEO of the NNPC, Mele Kyari said; “The security agencies are doing their part. End-to-end pipeline surveillance would require the involvement of private entities and community stakeholders. We need private contractors to man the right of way to these pipelines. So, we put up a framework for contractors to come and bid, selecting them through a tender process. And we believe we made the right decision.”

The multi-billion naira pipeline surveillance contract was awarded to the former leader of the Movement for the Emancipation of Niger Delta, Government Ekpemupolo, popularly known as Tompolo. The contract is supposedly worth N48bn per year (N4bn per month).

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