CORRUPTION AND NATIONAL DEVELOPMENT: THE CHALLENGES AND PROSPECTS OF OIL THEFT AND BUNKERING IN NIGERIA

CORRUPTION AND NATIONAL DEVELOPMENT: THE CHALLENGES AND PROSPECTS OF OIL THEFT AND BUNKERING IN NIGERIA

CHAPTER ONE

INTRODUCTION

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 al, 2008).

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 (Adegoke, 2004).

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.

CORRUPTION AND NATIONAL DEVELOPMENT: THE CHALLENGES AND PROSPECTS OF OIL THEFT AND BUNKERING IN NIGERIA