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Fresh facts have emerged on how inefficiency at the Nigerian National Petroleum Company Limited (NNPCL) has contributed to the growing crash of the naira at the forex market.
Currently trading at over N700 to a dollar at the parallel market, the naira has been on a free fall in recent and it is all on account of zero remittance of forex to the Federation account by NNPC, now a private equity.
Nigeria spent N1.59 trillion naira ($3.83 billion at official dollar-naira rate) on fuel subsidies in the first half of the year and accrued a $1.2 billion funding shortfall for oil and natural gas projects, according to a report by Nigeria National Petroleum Company Limited, NNPCL.
Many have blamed the Central Bank of Nigeria (CBN) for the dwindling value of the naira, but the apex bank has fired back, blaming the fall of naira on the non-remittance of forex by NNPC to the Federation Account.
A report presented to the Federation Accounts Allocation Committee (FAAC) last Tuesday showed that NNPCL had not remitted any money to the federation accounts since the beginning of this year.
Recall that President Muhammadu Buhari and his party, the All Progressives Congress, APC, had in 2014 dismissed insinuation by the then ruling party that the government was subsidizing fuel on behalf of Nigerians. The APC said there was nothing like subsidy and dismissed it as a conduit through which the PDP government was stealing the nation’s money. Then subsidy was in billions of naira yearly, now under Buhari, it runs in trillions on naira.
Last year, Nigeria was spending an average of N100 billion per month on fuel subsidies.
Nigeria has four refineries but none of them is producing even a litre of fuel, meaning that all the fuel consumed in the Nigeria is imported, with some also smuggled out of the country through the porous borders and aided by an efficiently corrupt system.
CBN has blamed the naira crash on the NNPC. Naira had firmed up over the years not because Nigeria was producing much for export but because NNPC had always remitted petro-dollar to the CBN vault from where the apex bank takes millions of dollars to defend the naira by servicing several forex channels including banks and Bureaux de change.
But subsidy has gulped all that forex. President Muhammadu Buhari in April requested an additional N4 trillion to cover subsidies due to higher fuel prices.
