Contrary to reports published in some section of the media (Not THE WHISTLER), that the Federal Government directed the Nigerian National Petroleum Company Limited to move its accounts to the Central Bank of Nigeria it was the National Oil Company that actually offered to move its account to the apex bank to support the liquidity management objective of the CBN....CONTINUE READING
Sources in the Presidency confirmed the development to THE WHISTLER on Tuesday in Abuja.
There had been reports that the CBN had taken over the responsibility for crude oil sales from the NNPCL.
The report had claimed that under the arrangement, the NNPC will submit receipts for crude oil sales to CBN for vetting and documentation
But sources with knowledge of the arrangement told THE WHISTLER that the move was necessitated by the decision of the management of the NNPC Limited to assist the apex bank with the issues of boosting liquidity in naira and dollar component.
In recent months, the CBN had been battling with how to stabilize the value of the naira in the foreign exchange market.
On Monday, the apex bank announced the release of $500m to clear foreign exchange backlogs to businesses.
The $500m brings the total amount of backlogs settled by the apex bank to $2.5bn.
Ironically, the pressure on the naira intensified on that same day, despite the CBN’s promise to deal decisively with the backlog.
The naira hit a fresh low of N1348.63 to a dollar on the Nigerian Autonomous Foreign Exchange Market and is now pushing above N1,500/$ at the parallel market.
The backlog has made Africa’s biggest oil producer unattractive to foreign investors, as it makes it difficult to repatriate earnings due to the acute dollar shortage.
Earlier this month, foreign airlines in Nigeria threatened to go on strike unless the government allowed them to repatriate their funds.
In a bid to assist the apex bank meets its obligations, sources confided in THE WHISTLER that the NNPCL offered to move some of its accounts domiciled in commercial banks to the CBN.
The source said that since the implementation of the Petroluem Industry Act of 2021, the NNPCL in line with its limited liability company status, has its accounts with commercial banks.
He added that the NNPC Limited was not under any obligation to domicile its accounts with the Central Bank, adding that the latest move is just an assistance from the National Oil Company to assist in boosting foreign exchange inflows and liquidity for fhe nation.
He said the offer by the NNPCL to assist the CBN with the account opening was made last Monday during a meeting held at the headquarters of the Ministry of Finance which was attended by officials of the NNPCL, CBN, Office of Accountant General of the Federation and the finance ministry.
The source said, “Some parts of the NNPC accounts were moved to the CBN. The movement was not an obligation, it was just a part of NNPC’S effort to boost liquidity in naira and dollar components.
The meeting where this decision was taken was held at the Ministry of Finance between officials of CBN, NNPC, and Ministry of Finance.
“Before the implementation of the Petroluem Industry Act 2021, the NNPC maintained its accounts with CBN. But after the signing of the PIA into law, which eventually turned the NNPC into a limited liabilitily company, the NNPC now has the freedom to have its accounts with commercial banks.
“However, with the liquidity challenges facing the country, the NNPC felt there were needs to assist the CBN in boosting liquidity by domiciling some of its accounts with the apex bank
“This was what necessitated the latest move by the NNPC to open this account.”
The move is expected to improve the inflow of foreign exchange into the CBN vault and boost the value of the naira in the exchange rate market.
