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#Nigeria Naira Stable on Forex Inflow

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Naira notes


By Obinna Chima

The naira was stable on both the Central Bank of Nigeria’s (CBN)-regulated Wholesale Dutch Auction System (WDAS) and interbank market Wednesday due to inflow of the greenback into the system.

Similarly, the behaviour exhibited by the local currency yesterday was also attributed to an increase in the supply of the dollar by the CBN at the bi-weekly auction.

In fact, at the first WDAS session for May held yesterday, the naira closed at N155.69 to a dollar, the same amount it was at the end of Monday’s auction.

The CBN offered a total of $150 million to the 15 banks that participated in the auction. This represented an increase by 25 per cent, over the $120 million it had offered to 19 banks on Monday.

On the other hand, the local currency maintained its position at the interbank as it closed at N157.40 to a dollar, the same value it was on Monday.

The market did not open on Tuesday, due to the public holiday that was declared to commemorate the workers’ day.

Dealers said the liquidity position of the market was influenced by the sale of about $194 million to banks by two multinational oil companies. The companies were identified as Mobil and Agip.

Meanwhile, the CBN yesterday disclosed plans to auction treasury bills worth N145.05 billion next week Thursday. The bills would range between 3-month to 1-year maturities at its bi-monthly auction. Specifically, the apex bank said it would issue N32.05 billion in 91-day bills, N53 billion in 182-day bills and N60 billion in 364-day bills.

The CBN issues treasury bills regularly to tame inflationary pressure, to ensure that it reduces the volume of money supply in the economy, amongst others.

The CBN had auctioned treasury bills worth about N141 billion at the previous auction. It had sold 91-day paper, 182-day bills and 364-day bills. Yields at the previous auction fell across various tenors. This was then, driven by strong demand from offshore and local institutional investors.
“We expect the CBN to maintain tight monetary conditions and mop up excess liquidity. This means the CBN will not reduce treasury bills or Open Market Operation (OMO) rates as long as there is no turnaround in the fiscal path,” a source said.

#Nigeria CBN denies paying N844b to NNPC

Sanusi Lamido Sanusi Lamido


The row over an N844.9billion fuel subsidy has deepened with the Central Bank of Nigeria (CBN) denying payment of the cash to the Nigerian National Petroleum Corporation (NNPC).

The apex bank also alleged that the Petroleum Products Pricing and Regulatory Agency (PPPRA) made N999million suspicious 128 payments (totalling N127.872billion) to marketers between January 12 and 13, 2009.

It insisted that by its records, the PPPRA paid N1.73trillion to other marketers – as at December 2011.

The CBN made the clarifications in a four-page letter to the Speaker of the House of Representatives, Alhaji Aminu Tambuwal, and the Chairman of the House Ad Hoc Committee on the Monitoring of Subsidy Regime, Mallam Farouk Lawan.

The letter, dated April 27, 2012 and exclusively obtained by our correspondent, is the CBN’s response to some observations and recommendations of the Ad Hoc Committee.

The letter indicated that neither the CBN nor the NNPC is accepting the N844.944b liability, which the House Ad Hoc Committee asked NNPC to refund.

As at yesterday, it was unclear who drew the ‘strange’ N844.9b fuel subsidy uncovered by the committee.

The Farouk Lawan Committee in its report alleged that the NNPC might have been drawing fuel subsidy from two sources.

The committee said: “Contrary to the earlier official figure of subsidy payment of N1.3 trillion, the Accountant-General of the Federation put forward a figure of N1.6trillion, the CBN N1.7trillion while the committee established subsidy payment of N2.587.087trillion as at December 31, 2011 amounting to more than 900per cent over the appropriated sum of N245billion.

“The figure of N2.587.087trillion is based on the CBN figure of N844.944b paid to NNPC in addition to another figure of N847.942billion reflected as withdrawals by NNPC from the Excess Crude Naira Account as well as the sum of N894.201billion paid as subsidy to marketers.

“The figure of N847.942billion quoted above strongly suggests that NNPC might have been withdrawing from two sources especially when the double withdrawals were also reflected both in 2009 and in 2010.”

The CBN letter reads: “Please be informed that following the submission of the ad-hoc committee’s report on the above subject to the House, the CBN hereby responds to some of the observations and recommendations contained in the Report, as it affects the Bank

“The CBN in its submission to the Committee on January 25, 2012 gave a figure of N1.73trillion comprising direct deductions and Sovereign Debt Notes(SDNs), issued by the Petroleum Products Pricing and Regulatory Agency (PPPRA) to other marketers as at  December 2011.

“According to the Nigerian National Petroleum Corporation (NNPC) such subsidy approvals are credits due to the Corporation towards the cost of its domestic crude allocation.

“There was no time CBN paid any money to NNPC in respect of subsidy claim. It is pertinent to note that NNPC started advising CBN of subsidy deductions from October 2009 after the states had complained at various Federation Account Allocation Committee (FAAC) meetings of lack of transparency in the management of the subsidy regime.

“Our figure presented to the Committee was therefore from October 2009 to December 2011.

“Direct deductions by NNPC as per CBN records between October 2009 and December 2011, shows a total figure of N844, 944,448,471.72 before transfers to Federation Accounts were made.

“CBN does not make any payment to the NNPC on fuel subsidy. The Corporation deducts at source before remitting to the Federation Account.”

Regarding N999million suspicious 128 payments of totaling N127.872billion between January 12 and 13, 2009, the CBN said it was done by the PPPRA which has accepted blame for it.

It added: “A review of the statements of the account operated as PPPRA/PSF Account showed that these were instruments issued by the PPPRA and drawn on the account at CBN Abuja branch.

“The PPPRA has already issued an official statement taking ownership of the payments which has already been acknowledged by the House Committee.”

On the recommendation of warped budget management by the Federal Ministry of Finance which led to the N2.587trillion incurred on fuel subsidy in 2011, the CBN said it might not be in a position to talk on that.

It added: “This recommendation falls within the purview of the Fiscal authorities and NNPC. CBN is not in a position to comment on extra budgetary spending.”

Regarding the allegation that the CBN created avenue for easy falsification of records by marketers through its forex policy, the apex bank said: “The CBN under the leadership of Governor Sanusi Lamido Sanusi was commended for discharging its responsibility well under the scheme.”

A top source in NNPC said: “We hope the House will look at the records very well, this corporation did not receive double payments for fuel subsidy at all.

“The NNPC cannot refund what it did not receive. We have also sent a note to the House leadership and the Ad Hoc Committee on this controversial fuel subsidy fund.”

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