Forex: Former presidential aide advocates return to crude oil swap era

*Dr. Doyin Okupe.

Oscarline Onwuemenyi

11 March 2017, Sweetcrude, Abuja – A former Senior Special Assistant on Public Affairs to ex-President Goodluck Jonathan, Dr. Doyin Okupe, has called on Acting President Yemi Osinbajo to adopt a transparent crude oil swap arrangement to solve the country’s foreign exchange problems.

The Jonathan administration had relied on crude oil swap arrangement, but the NNPC had, in September 2015, decided to dump the programme, which it said was corrupt, in favour of a direct-sale-direct-purchase arrangement.

In an open letter to Osinbajo, Okupe argued that the swap deal would help decrease the demand for dollars by up to $14m daily.

“It is obvious that if we can remove or substantially decrease this demand of $5bn from our forex pull, the value of the Naira will significantly appreciate further,” he wrote.

“Your excellency, I want to submit that this is achievable through a responsibly and transparently organised crude swap scheme.”

He said although the Muhammadu Buhari administration “has undertaken a limited crude oil swap arrangement,” it would not suffice.

“We need to carry it to the level at which we will not commit any significant amount of forex to import of petroleum products anymore,” Okupe said.

The former presidential aide, whose analysis in the letter put daily dollar demand for the importation of petrol, added, “Under this (crude oil swap) scheme, we will therefore remove a demand of $14m per day or $420m per month from the aggregate import demand for Forex by the petroleum and oil marketers.”

He explained although the current intervention of the Central Bank of Nigeria was “highly successful”, it “is based on injecting hard earned Forex (to the tune of over $1bn a month) into the forex market through the banks”, and also “grossly reduces the amount of Forex inflow from sales of crude oil to the federation account; for sharing by the state and federal governments”.

“The crude oil swap is a better sustainable alternative as it does not affect in any way our revenues from crude oil sales,” Okupe said.

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