ABUJA - Nigeria's oil workers union has asked President Bola Tinubu to deploy more troops, including military chiefs, to combat oil theft and boost output to help Africa's largest economy tackle dollar shortages, an official said on Friday.

Large-scale oil theft from pipelines and wells has been one of Tinubu's biggest challenges in recent years, damaging government finances and limiting the country's output and exports.

Nigeria, Africa's top oil producer, relies on the commodity for more than two-thirds of its earnings and about 90% of foreign exchange income. It has struggled to raise output as theft and sabotage have forced oil majors including Shell and Exxon Mobil to exit all their onshore assets. Oil output hit 1.48 million barrels per day (bpd) in February, according to data from the Organization of the Petroleum Exporting Countries (OPEC). While oil production is gradually recovering, it is still below a budget target of 1.78 million bpd.

"The easiest and earliest way to get out of this foreign exchange problem is to increase oil production," said Festus Osifo, president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN). "We appeal to government of President Tinubu to relocate the military commanders to the Niger delta region (where Nigeria's oil is produced) to ensure that this menace of oil theft is put to a halt, and we will be able to generate more revenues at the end of the day," Osifo said in statement on Friday.

Though refined fuels from the newly operational Dangote Refinery have started flowing into the domestic market, the prices could have been lower if the exchange rate was lower, Osifo added.

The naira closed at 1,255 to the dollar on the official market on Thursday, FMDQ Exchange data showed. In the last week, troops tackling oil theft arrested 25 suspected oil thieves and recovered 565,200 litres of stolen crude, 22,500 litres of illegally refined diesel, and 8,000 litres of petrol.

Defence spokesperson Major-General Edward Buba said on Thursday troops discovered 16 illegal oil refining sites and destroyed six dugout pits, 33 boats and 18 storage tanks.

(Reporting by Camillus Eboh; Editing by Devika Syamnath)