Kachikwu, Emefiele In Fraudulent Sale Of Forex To Conoil, Mobil, Oando, Others

Kachikwu, Emefiele In Fraudulent Sale Of Forex To Conoil, Mobil, Oando, Others
June 30 12:12 2016 Print This Article

The Central Bank of Nigeria (CBN) and the Minister of Petroleum Resources Dr. Ibe Kachikwu have perfected plans to sabotage President Muhammadu Buhari’s economic recovery policies as they have directed International Oil Companies (IOCs) to sell forex to only six importers of petroleum products from the consolidated IOCs’ forex pool put together by the Nigeria National Petroleum Corporation, (NNPC) Frontiersnews can reliably confirm.

The move is contrary to the new Flexible Inter-Bank Exchange Rate Regime released by the apex bank a fortnight ago, to free the naira from strangulation.

In a letter signed by Special Adviser/Head, Financial Markets Department of the CBN to the IOCs obtained by our correspondent a few days ago, the CBN directed the IOCs to “note that you are only permitted to sell your FX to the designated PMS importers by the NNPC or to the CBN at the ruling exchange interbank rate.”

Our correspondent gathered that the beneficiary of the CBN/NNPC directives on the sale of the  FX are: Conoil Plc; Mobil Plc; MRS Oil Nig; Oando Plc; Northwest Petroleum and Total Nig Plc.

Frontiersnews investigations revealed that the secrete directive by the CBN/NNPC contradicts the apex bank’s Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market, June 2016.

Section 2.1 of the guidelines states that: “Participants in the inter-bank FX market shall include Authorised Dealers, Authorised Buyers, Oil Companies, Oil Service Companies, Exporters, End-users and any other entity the CBN may designate from time to time.”

Section 2.4.2 iii of the guidelines states further that: “There shall be no predetermined spread on FX Spot transactions executed through CBN intervention with the PXPDs.”

A top industry sources who are aware of the underhand dealings by the apex bank and the NNPC have expressed fears that the directive to the IOCs may further compound the availability of foreign exchange for diverse businesses in the country and run contrary to the President Buhari’s economic recovery policy, thus causing further damage to the economy.

“The NNPC and CBN seems to run in opposite direction to that of President Buhari. If not, how can one explain the existing situation when they know that the IOCs contribute the second largest to the FX market? Once they make forex available to the market it strengthens the naira against the dollar and it gives balance to the economy. Now you pool all their FX and sell to only six oil majors, while Bureau De Change are left to source from where?

“So you begin to have an appreciation of why the president is bothered about this free floating of the naira. As long as the NNPC and CBN try to reguluate the availability of forex to all, the naira will keep bouncing around. The remedy is allow the IOCs to access the open market as contained in the revised guidelines and not all these restrictions,” one of the sources said.

The source who spoke to Frontiersnews, on condition of anonymity said “this directive of not allowing a level playing field makes a mockery of Buhari’s transparency drive and can ultimately put the naira under pressure since there is no level playing field.”

The whole back-room dealings was kick started with a letter from Kachikwu, who asked IOCs to contribute $400 million monthly to a common pool to be dedicated solely for the importation of petroleum products.

In the letter to the IOCs obtained by our correspondent, Kachikwu wrote: “At the heart of the liberalization is the need to reflect realities of foreign exchange pricing outside the CBN, to ensure supply continuity. Therefore, it is imperative that all sources of foreign exchange are explored to enable the importation of petroleum products. As such our expectation is for the IOCs to support this initiative by allocation into a general source pool, approximately $400 million monthly for the importation of petroleum products.

“NNPC will act as moderator of the foreign exchange pool and determine the eventual disbursement of these funds,” he wrote further in the letter.

A Presidency source who spoke to our correspondent, on the condition of anonymity lamented that the move would be counter-productive for the Buhari’s economic recovery programme and therefore advised Kachikwu and Emiefele to jettison the ideal as the favoured oil companies would not be able to handle all the petroleum needs of the country.

The source stressed further that “it was undermining the whole essence of accountability and transparency of the FX process. It will be imperative for the NNPC and CBN to explain how they settled on the six oil majors to the exclusion of other independent marketers who make up the bulk chain of petroleum imports and distribution in the country”.

Arguing further, the source said “the authorities are arm twisting the IOCs, imagine asking them to contribute $400million every month while the CBN decides who gets it. Something fishy is going on concerning this FX matter. Besides, this talk about diversification does not hold water when almost all forex is directed to just six fuel importers. Is it only petroleum marketers that need forex? What happens to those in the manufacturing and industrial sector? If the Federal Government is indeed serious on this matter of diversification, it should rescind this directive and allow a level playing field to really grow the economy.”

The industry source stressed further that the main worry “is that of market reaction with the existing directive” noting that “the naira cannot appreciate with what is on ground knowing that the IOCs contribute the largest to the FX market after CBN”.

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1 Comment

  1. Governor
    July 02, 01:21 #1 Governor

    It’ll be in the interest of all if FG eschew undue restrictions and allow level playing field for all sectors of the economy to have equal opportunity. Nigeria supposed to be an egalitarian society.

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