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External reserves drops $1.0b in December

By BusinessNews Staff on January 2, 2014

There was no respite for the nation’s external reserves pool on Tuesday, going by data released by the Central Bank of Nigeria (CBN), showing that it fell further to $43.628 billion as at Monday December 30, representing a decline of about $922.194 million from the November end level.

The month-to-date figure represented a decline of about 2.06 per cent.

On a year-to-date basis, the reserves level dropped by $549.512 million or 1.24 per cent from $44.178 billion reported on December 28, 2012.

The continued decline in the level is coming at a time when expectations had been that the nation’s reserves should be growing to ensure provide a buffer against external economic shocks.

CBN Governor, Lamido Sanusi had expressed such sentiments in his December 10 letter to President Goodluck Jonathan, where he accused the Nigerian National Petroleum Corporation (NNPC) of shortchanging the federal treasury by as much as 76 per cent of total crude oil revenues between January 2012 and July 2013.

NNPC, he explained, earned $65.3 billion from crude oil sales within the period, but only remitted 24 percent of this to the federation account and $49.8 billion was still outstanding.

“I am constrained to formally write your excellency, documenting serious concerns of the CBN on the continued failure of the NNPC to repatriate significant proportions of the proceeds of crude oil shipments it made in gross violation of the law,” the letter read.

In a presentation before the upper chamber of the National Assembly days later, the CBN Governor admitted that he sent a letter to the president, after realising that the volume of crude oil exports was not in tandem with the value of remittances into the Federation Account.

A statement by the CBN had also clarified further that the letter was the product of genuine concerns and not mischief.

The statement by Ugochukwu Okoroafor, spokesman of the CBN said it was natural to be “concerned at the low level of accretion to reserves and the Excess Crude Account, in spite of strong international oil prices, especially as Nigeria’s performance is compared with other oil producing economies.”

The CBN, he said, recongises the urgent need to review fiscal terms of revenue sharing between the Federal Government and oil companies, “and to improve governance and transparency in the official oil sector.

“This underscores the need to urgently pass a Petroleum Industry Bill at addresses fiscal terms and the structure of the NNPC. We therefore support the effort of the Federal Government to pass a new PIB,” the CBN said, expressing support for all efforts at strengthening Nigeria’s economy and reducing its vulnerability to shocks from the external sector.

[Daily Independent]

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