Nigeria’s External Reserves Drop By $922m

Nigeria’s external reserves have continued on the downward swing, posting a drop from the November data, of $922.194million, thereby leaving the Federal Government with barely $43.628billion as at last Monday.

This was contained in a release issued by the Central Bank of Nigeria (CBN), last Tuesday, in Abuja.

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 $549.512million or 1.24 per cent from $44.178billion 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 provide a buffer against external economic shocks.

CBN Governor, Lamido Sanusi Lamido had expressed such sentiments in his December 10 letter to President Goodluck Jonathan, where he accused the Nigerian National Petroleum Corporation (NNPC) of short-changing the Federation Account 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 per cent of this to the Federation Account while and $49.8billion 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 spokesman of the CBN, Ugochukwu Okoroafor, 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 the Petroleum Industry Bill (PIB) that 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.

It expressed support for all efforts at strengthening Nigeria’s economy and reducing its vulnerability to shocks from the external sector.