President Bola Tinubu has declared an oil sector shake-up to improve transparency in the wake of declining oil revenue and questionable activities at the NNPC.
The President has requested the Central Bank of Nigeria (CBN) to take over crude oil sales from the Nigerian National Petroleum Company Limited (NNPCL).
Previously, the NNPC was alone in charge of crude oil sales, reporting directly to the federal government. Critics have long argued that this arrangement lacks transparency, allowing the NNPC to underreport earnings.
The new instruction requires the NNPC to report all crude oil sales proceeds to the CBN for verification and documentation. This tries to close any potential reporting gaps and keep accurate records of oil revenue.
Mr. Olayemi Cardoso, CBN Governor, stated last week that the collaboration with the Ministry of Finance and the NNPCL aims to ensure that all foreign inflows are remitted to the Central Bank.
“This coordinated effort will greatly enhance the Bank’s foreign exchange flows and contribute to the accretion of reserves,” he said.
Cardoso, who was delivering a keynote address at the launch of the Nigerian Economic Summit Group (NESG) “2024 Macroeconomic Outlook Report”, said,
“The expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN.
“This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage.
“The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors.”
“We are implementing a comprehensive strategy to improve liquidity in our FX markets in the short, medium, and long term. Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years.
“Upholding the integrity of financial markets is crucial for building confidence. With the completion of an independent forensic review, we are addressing the backlog of valid FX transactions and we remain steadfast in our commitment to decisively address any infractions and abuses,” he added.