Yemisi Izuora/Agency Report
The Central Bank of Nigeria, CBN, has directed banks to submit bids for a “special currency auction” to support marketers meet the demand for matured letters of credit on petrol import.
Oil marketers confirmed that the CBN has issued directive to commercial banks to submit a backlog of dollar demands from fuel importers for a special intervention.
Nigeria consumes 45 million litres of gasoline a day, or roughly 280,000 barrels, which would require the market to provide some $18 million a day. Importers cover about 30 per cent of this, with the state oil firm, Nigerian National Petroleum Corporation (NNPC), covering the rest, which is a big strain on the market for dollars.
According to the Reuters news agency, traders also said the government wanted to ensure that fuel retailers had enough products, so it was channelling dollars to them and also to avoid shortages which, in May this year, crippled banking, airline and telecom services.
The dollar shortage has caused many companies to halt operations and lay off workers, compounding Nigeria’s economic crisis.
It was, however, not clear at what rate the CBN would sell the dollars.
In May, the government agreed to a deal with oil firms in Nigeria to sell their dollars directly to fuel importers, to end months of scarcity partly caused by a currency shortage after it hiked fuel prices by 67 per cent, using an exchange rate of N285 per dollar.
The naira, which has been stuck at around N305 per dollar on the official market for more than two months since the Central Bank in June, abandoned its dollar peg of N197 against the currency, eased to N314.90 late morning yesterday. It was quoted at N484 on the black market.
Meanwhile, hopes of Nigeria’s economy revamping further brightened with the price of Brent crude rising above $55 a barrel, trading at a 16-month high.
The gain is a continuation of the rally since members of the Organisation of Petroleum Exporting Countries (OPEC) struck a deal last Wednesday to cut crude supply by 1.2 million barrel per day (mbpd), leading to 19 per cent rise for Brent, the biggest jump in almost eight years, and 16 per cent for U.S. crude, according to Reuters.