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CBN stop oil firms from buying dollars

By on October 7, 2011

Central Bank of Nigeria, CBN, yesterday, said it will stop the sale of US dollars to companies in the oil and gas sector. This is part of efforts aimed at reducing the demand for the dollar, stemming the free fall in the naira and ensuring stability in the value of the currency.

The CBN in a circular obtained from its website, addressed to all authorised dealers, Nigerian National Petroleum Corporation, Pipeline Products Monitoring Company, PPMC and the general public, stated that oil and gas firms in certain arrangements with the NNPC and PPMC are restricted from accessing the foreign exchange market and should use foreign exchange earned from their exportation and sale of crude oil to fund their importation.

The circular signed by W.D Gotring, Deputy Director, Trade and Exchange Department, CBN on behalf of the Director of the Department, said: “It has been observed that Oil companies that have swap arrangements with NNPC and or PPMC, for which Letters of credit have been established to lift crude oil for delivery of refined products, still access the Wholesale Dutch Auction System, WDAS, to fund the importation of the refined petroleum products, rather than utilize the foreign exchange proceeds from their exports.”

The CBN said further that, “companies engaged in product swap arrangements with NNPC/PPMC are not allowed to access WDAS funds for negotiating refined petroleum products import transactions, whether through standby Letters of Credit or Bills for Collection.”

It further directed authorized foreign exchange dealers to, henceforth, ensure that oil firms seeking purchase of US dollars, show documentary evidence of the payment of Nigerian Export Supervision Scheme, NESS fee of 0.2 per cent of the Free on Board, FOB, value of the crude oil export and copy of the Notice to Exporter, NXP, form registered with a bank for the firm’s export of the crude oil among other documents.