The hydrocarbon-rich countries of West Africa are facing massive fuel trafficking and smuggling.
Parallel markets flourish thanks to porous borders, corruption, which is sometimes endemic, and shortcomings in certain systems for tracing petroleum products.
Ultimately, this smuggling undermines the socio-economic development of the countries concerned. From Ghana to Nigeria, an investigation into a West African scourge.
Driven by the globalisation of trade, the phenomenon of human trafficking and smuggling has grown exponentially in recent decades.
No part of the world is immune to this problem. But some continents or geographical areas are more affected than others because of their specific political, economic or socio-cultural characteristics. And they pay a high price, whether in terms of public finances or environmental damage.
This is the case in Africa, particularly in West Africa, where fuel smuggling is a major problem. These are regions where, as the French consultant Pierre d’Herbès points out in the French newspaper La Tribune, “the theft and falsification of hydrocarbons (illegal pipelines, drilling, etc.) and the adulteration of fuels undermine the economies of the countries concerned through loss of tax revenue, damage to infrastructure and loss of confidence in the sectors.”
Up to 25% of Nigeria’s oil production stolen
Exact figures are hard to come by. But in Nigeria, Africa’s leading oil producer, fuel theft could account for up to 25 percent of annual production, according to Professor Bertrand Monnet. According to the expert, “it was COVID-19 that caused the phenomenon to explode: at one point, the entire economy came to a standstill.
Poverty increased and the search for compensation grew. The matrix of this phenomenon is fundamentally social.”
The consequences of this trafficking are devastating for the countries and populations concerned. In Nigeria, it is estimated that illegal oil channels cost the state 1.5 billion dollars a month. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), quoted by Zonebourse, the country lost $1 billion in revenue in the first quarter of 2022 due to crude oil theft. Every day, 7 million litres of fuel are smuggled out of Nigeria to supply smuggling markets in neighbouring West African countries such as Cameroon, Ghana and Benin.
These are all poor and unstable countries where motorists buy ‘kpayo’ (not original in Goun, a local language), adulterated petrol sold in large glass bottles.
In Benin, according to the Institute for Security Studies (ISS), the illegal fuel trade accounts for 80 percent of local demand. Across the 800-kilometre border with Nigeria, where government subsidies keep prices low, oil is transported by lorry or motorbike to the hundreds of small stations that the Beninese authorities are unable to regulate. The situation is similar in Cameroon, where crude oil stolen from neighbouring Nigeria is processed in a multitude of small refineries scattered across the Niger River delta.
In Ghana, authorities try to curb fuel smuggling
Still in West Africa, Ghana is plagued by the same innovative
practices. Ghana’s oil sector is booming: with the discovery of new deposits off its coast in 2007 and 2019, Ghana could have reserves of between 5 and 7 billion barrels. With hydrocarbons already accounting for more than 10 percent of GDP growth by 2023, Ghana could become one of the leading oil-producing countries in West Africa.
But only if it manages to curb smuggling and trafficking. Alhassan Tampuli, Director General of the National Petroleum Authority (NPA), estimated in 2019 that ‘smuggling of petroleum and petroleum products causes an annual loss of $200 million in tax revenue’. This huge loss of revenue is partly due to the poor quality of Ghana’s fuel traceability system, according to some sources.
The system was awarded to Authentix, an American group, in 2012 and extended until April 2022 amid allegations of corruption and an investigation by the Office of the Special Prosecutor. The Executive Secretary of the Ghana Chamber of Petroleum Consumers (COPEC), Duncan Amoah, lamented the ineffectiveness of the system in curbing the scourge of illicit trade and its financial consequences, which run into millions of dollars in lost tax revenue.
Smuggling, a phenomenon that transcends the borders of West Africa
The smuggling of petroleum products is a phenomenon as massive as it is complex, affecting most African countries that have vast quantities of fossil hydrocarbons under their soil. The more reserves a country has the more rampant smuggling becomes.
In Libya, for example, petrol smuggling is estimated to be worth $5 billion, mainly to Russia – and, as always, to the detriment of national finances and the development of the local population.
The phenomenon is all the more alarming as some of this diverted fuel may end up in the hands of non-state armed groups, which have a strong presence in the region. In its weekly bulletins on the activities of the security forces, Niger television regularly reports on seizures of fuel destined for jihadist groups. At the end of July, more than 4,000 litres of fuel were seized from smugglers. Niger, which borders Benin and Nigeria, has been facing a jihadist insurgency for several years.
AC/lb/GIK/APA