Delta region crisis to leave hole in Nigeria's budget

By Rafiu Ajakaye

LAGOS

Fresh hostilities in Nigeria’s oil-rich Delta region could deprive the country of resources amounting to 20 percent of the 2016 budget, a report warned on Monday, urging Abuja to take steps to de-escalate the crisis.

Nigeria faces a new threat from an emergent Niger Delta Avengers, an amalgam of militants who have claimed responsibilities for the recent attacks in the southern region.

In a report titled “A different type of militant”, a private intelligence-gathering outfit SBM Intelligence, said attacks by the new militant group had, along with pipeline vandalism, brought oil production to around 1.4 million barrels per day (bpd), down from the 2.2 million bpd estimates in the country's annual budget.

“This new attack is a blow on the government’s revenues and will potentially increase the budget deficit. With the impact on the gas supply lines, the already dire power situation is sure to become even worse as gencos [electricity generation companies] will be unable to receive gas required for power generation,” said the report.

The report said the Feb. 13 attack on a Shell gas pipeline at Forcados, in the Niger Delta in southern Nigeria, meant a daily loss of 300,000 barrels per day of oil, worsened by subsequent attacks in early May on platforms operated by Chevron in the region.

According to the report, attacks on Chevron and Shell platforms have knocked off at least five of Nigeria’s gas-powered electricity generating plants, with a combined generating capacity of 1,617 megawatts, from the national electricity grid.

“Information reaching SBM Intelligence puts the actual daily loss due to shut out production at the Forcados line [owned by Shell] at $12 million. Repairs have been scheduled for the 26th of May, but this is however subject to clearance on safety of the personnel who will carry out these repairs,” the report added.

The report urged the Nigerian government to step up its engagement of the people of the Niger Delta and to avoid actions that would heighten tension in the volatile region.

It added: “It is [...] obvious that Nigeria, at least in the short to medium term, will continue to depend on money made from the sale of crude oil, and at 1.4 million barrels a day being pumped, this leaves our budget 20% short (oil price calculation was $47 per barrel). Nigeria needs to tow another path, and that is the path of inclusiveness.”

Incidents of pipeline sabotage were rife in the Niger Delta region until former President Goodluck Jonathan - from the area - came to power in 2010.

Pipeline explosions have gradually resumed since Muhammadu Buhari, a northerner, was elected last year.

The Niger Delta Avengers claimed to be acting to protect the interest of the oil-rich region from further exploitation by the Nigerian government, which it accuses of neglect and destruction of the environment.