A Review of the Nigerian Energy Industry

Nigeria halts foreign exchange sales to oil companies

8 October 2011, Sweetcrude, Abuja- Nigeria’s central bank Friday announced that oil companies engaged in fuel importation into the country, would no longer be permitted to purchase foreign exchange from local banks to finance the imports.

The move, according to local economic watchers, is aimed at putting a check in the rising demand for foreign exchange, especially the US dollar, by importers that had lately put pressure on the value of the local currency Naira.

“Consequently, companies engaged in product swap arrangements with the [state-owned] NNPC/PPMC are not allowed to access funds for negotiating refined petroleum products import transactions,” the central bank said in a circular to all banks and currency dealers in the country.

Nigeria imports around 80% of its petroleum products needs estimated at over 40 million liters per day.

The surge in demand for foreign exchange to finance the imports has weakened Nigeria’s naira, which fell to a record low of N164.85 to the dollar on Thursday at the open market.

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