Just a day before the central bank of Nigeria was set to decide on interest and exchange rates, Nigeria’s currency, the naira, spiraled to a record 6 year-low. This dip has occurred in the wake of financial powerhouses – Morgan Stanley and Renaissance Capital – forecasting a decline for the currency. Aggravating the situation further was dangerously low oil prices.
In 2012, customs sources say that Nigeria lost nearly $200 million in potential tax revenues to rice smuggling. Added to the annual losses from oil and other forms of commodity smuggling, Nigeria may be losing billions each year through its borders. But while the government is spending millions in order to secure its borders, perhaps it should look at its own trade policies, which may have encouraged the rampant smuggling in the first place.
If you follow business and policy in Nigeria you have probably heard this story before:
Fifty three years after independence, Nigeria has emerged as a country undermined by the scourge of corruption, so much so that many have come to see it as in invincible institution.
Nigeria’s oil companies are battling a surge in crude oil theft, with estimates suggesting that the oil-rich country loses some $6 billion annually in revenues due to bunkering. Oil theft is a lucrative black market in Nigeria, Africa’s top oil exporter, as well as neighbouring countries.
Bunkering, as oil theft is commonly known in Nigeria, involves siphoning crude from pipelines into makeshift vessels and has turned into huge a business that is damaging the country’s investment profile as well as international oil companies operating in Nigeria.
Royal Dutch Shell’s Nigerian division has warned that it may permanently shut down a 150,000 barrels per day pipeline along the Niger Delta, after complaining that it was losing billions of dollars a year from rampant thefts and vandalism, which have climbed to “unprecedented” levels in the last weeks, reported Reuters.
International ratings agency Standard & Poor’s has upgraded Nigeria’s credit rating from “B+” to “BB-“, citing improved financial stability and government reforms on fuel subsidies for their improved outlook on sub-Saharan Africa’s second-largest economy.
Oil giant Royal Dutch Shell plc spent nearly $383 million, between 2007 and 2009, to protect its oil installations and staff in Nigeria, revealed London-based oil watchdog Platform on Sunday, with part of the money alleged to have gone into a 1,200-member private security force, which has been accused of human rights violations in the past.
Royal Dutch Shell PLC have been slapped with a record $5 billion fine for environmental damaged caused by an oil spill in Nigeria’s Bonga field last year, reported the Wall Street Journal on Tuesday, though company representatives now insist that there was no legal basis for the fine.
Criminal networks in Nigeria have been siphoning nearly 150,000 barrels of oil per day (bpd) from state and oil companies, said the Managing Director of Shell Petroleum Development Company Nigeria on Tuesday, as the government prepares to set up a taskforce that will look into mismanagement and fraud in the energy sector.
According to Mr Mutiu Sumonu, Nigeria was losing 5 billion dollars annually to oil theft and the time had come for “every tier of government” to “be involved in the fight against illegal oil bunkering.”
Nigeria lost $6.8 billion from 2009 to 2011 due to corrupt and mismanaged practices of its fuel subsidy programme, said a report presented to the Nigerian parliament on Tuesday, with numerous officials from the nation’s state-controlled oil company and other government agencies said to be implicated in the scandal.
“Government officials made nonsense of … guidelines due mainly to sleaze and, in some other cases, incompetence…”
