The Central Bank of Nigeria (CBN) and the National Petroleum Company (NNPC) Limited may be heading for a collision course following claims and counter claims over the real causes of the crisis in the foreign exchange market, with the attendant consequences on the local currency, naira.

This is because, while the CBN had blamed the embarrassing depreciation of the naira in recent weeks to zero remittances by the NNPCL  to the its  accounts, recent revelations NNPCL may have countered the claims.

Last week, the exchange rate of the dollar crossed the N700 mark in the black market of the foreign exchange segment, with the current exchange rate at N720/$.

On Thursday, the naira fell to N718 per $1, as the Bureau De Change operators increased their asking price in the black market for the sale of the United States currency, from N707 it traded for on Wednesday.

The increment was driven by the high demand of dollar, which has piled up pressure on naira in the black market, as the central bank refuses to sell foreign currencies to them over alleged financial infractions.

The nation’s foreign reserves were not fairing better either as despite the increasing price of crude oil, external reserves depreciated by $1.37billion or 3.37 per cent in the first six months of 2022 to $39.16billion as of June 30 from $40.52 billion it closed in 2021, data obtained from the Central Bank of Nigeria (CBN) daily reserves’ movement has revealed.

Analysis of the CBN data revealed that external reserves in January dropped by $481.4million or 1.19per cent to $40.04billion, while in February, it declined by $121.4million or 0.30 per cent to $39.86billion.

In March they were down by $317.8 million or 0.79 per cent to $39.55 billion and in April, the external reserves gained $41.5million or 0.1 per cent to $39.58 billion from $39.54 billion it commenced the month under review.

The external reserves were down by $943.07million or 2.39 per cent to $38.48billion, the highest decline in 2022, and eventually appreciated by $674.4million or 1.75 per cent to close at $39.16billion in June 2022.

However, CBN governor, Godwin Emefiele had accused the BDC operators of operating against their mandate and aiding money laundering by providing their services to illegal businesses.

Since the ban on sales of forex to Bureau De Change, naira has been on a free fall in the parallel market.

But, Aminu Gwadabe, President of the Association of Bureaux de Change Operators of Nigeria, (ABCON), had in an online response to MBN inquiry stated that it amounts to bad policy sidelining the operators who were basically licensed to trade foreign exchange.

Listing Path to bringing sanity into the FX market, Gwadabe called for the introduction of floating regime as against the fixed rate system as well as efforts at reducing the multiplicity of exchange rate system.

He also called for incorporation of BDCs in the international remittances business as well as taking into confidence, the operators rather than vilifying them and regarding them as ‘enemies’ of economic progress.

Specifically, in a recent reaction to the depreciation in naira, CBN said NNPC and its subsidiaries have not been remitting dollars to Nigeria’s foreign reserves, and this has caused shortage of forex.

In a statement titled, “The forex question in Nigeria: Fact sheet” the CBN revealed that the NNPC remittance from crude oil accounts for over 80 percent of Nigeria’s Foreign Exchange (forex) earnings.

The apex bank said the CBN can’t solely manage the naira with its monetary policies, and it doesn’t print foreign currencies, so the non-remittance by the NNPC and its subsidiaries significantly limit the availability of forex in the foreign reserves.

“Domestically, there has been zero dollar remittance to the country’s foreign reserve by the NNPC.” CBN said.

“As noted by the CBN Governor, Godwin Emefiele, monetary policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. It’s our collective duty as Nigerians to shore up the value of the naira.”

Aside from faulting the oil Corporation, the CBN also blamed the two recessions driven by global economy slowdown and COVID-19 pandemic in the last six years.

These factors have affected Nigeria’s sources of foreign currencies; oil exports, non-oil exports; diaspora remittances, as well as the Foreign Direct/Portfolio Investments inflow recorded by the country.

The statement further reads, “Considering Nigeria’s heavy dependence on oil exports for foreign exchange earnings and government revenue, the impact of the oil market crash severely affected the government’s naira revenue and other macroeconomic aggregates including economic growth. Hence, the rate of exchange between the naira and other currencies has widened over the past few years.”

But, according to punchng.com on Monday, NNPCL is claiming to have remitted a total of $2.7bn into its accounts with the CBN from January to June this year, citing a document on NNPCL remittances to CBN seen in Abuja on Sunday.

Contradicting the claims of CBN that the weakening value of the naira was caused by the non-remittance of funds into Nigeria’s foreign reverses by NNPC, the document stated that out of the $2.7bn the oil firm remitted into its CBN accounts, $645m was for dividend paid by the Nigerian Liquefied Natural Gas company Limited.

It added that $1.786bn was from the operational activities of the national oil company, which recently transited into a limited liability company.

In its reaction to the crash in the value of naira against the United States dollar, the CBN had said the non-remittance of dollars by NNPC precipitated the forex crisis.

In a report entitled, “The forex question in Nigeria: Fact sheet,” the apex bank reportedly stated that there had been “zero-dollar remittance to the country’s foreign reserve by the NNPC.”

But the document seen in Abuja on Sunday claimed otherwise, as it stated that NNPC remitted $2.7bn to CBN in the first six months of this year.

It said $645m was for dividend paid by the NLNG, while $1.786bn was from NNPC’s operations during the six-month period.

A breakdown of NNPC remittances showed that funds into the oil firm’s accounts in CBN include $18,770,418.97 in January; $194, 563, 276.49 in February; and $373, 232,875.20 in March.

Others were $247,884,295.52 remitted in April 2022: $591,565,425.41 in May; and $880,906,761.81 in June 2022.

According to punchng.com, the CBN refused to speak on the matter when contacted. Its spokesperson, Osita Nwanisobi, did not answer repeated calls to his mobile phone. He also did not respond to an SMS and a WhatsApp message sent to him on the matter.

CBN Governor, Godwin Emefiele, has been in the eye of the storm following the crash of the naira against the dollar. The local currency traded against the dollar at over N700/$ last week.

On Wednesday, the Senate decided to invite Emefiele to explain why the naira had kept losing value and to proffer the way forward.
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Following a motion sponsored by Senator Olubunmi Adetunmbi, the Senate, apart from summoning Emefiele, also mandated its Committee on Banking, Insurance and Other Financial Institutions to critically look into the intervention funds CBN earmarked to support some sectors of the economy.

In his motion seeking Emefiele’s summoning, Adetumbi said the CBN’s earlier ban of forex sales to BDC operators caused a spike in exchange rate.

He said a few persons benefited from the import-export window meant to serve the forex needs of business enterprises.