Minister – How swap deal drained Nigeria’s Federation Account

We’ve put Boko Haram on the run – Lai Mohammed

Minister of Information, Lai Mohammed, has said that Federal Government’s continued exchange of 445,000 barrels of crude oil daily for local refining will affect the federation account allocation to the three tiers of government. The Sun reports.

Speaking during a stakeholders meeting with the leadership of the All Progressives Congress in Abuja, Lai Mohammed lamented on the increasing rate of vandalism on oil pipelines, noting that government was losing 800,000 barrels of crude oil daily.
Making clear of government’s decision to hike fuel price, Alhaji Mohammed said that the 445,000 barrel of crude exchanged for local refining product called DSDP-Direct Sale Direct Purchase has its own disadvantages.
“Why we do not have an option is because the fuel regime before now was based on a process where some licensed oil marketers would go to the central bank and open letters of credit to bring in the fuel but unfortunately the price of crude which accounted for over 70 per cent of our fuel exchange crashed from over $100 to under $30. As a matter of fact for some part of this year we sold crude for $28.
“It’s just like somebody who had been earning N100,000 a month and suddenly his salary is reduced to N30,000 must needs to make some very painful adjustments. So, the truth of the matter is that we have to do this because there is shortage of foreign exchange. We don’t have sufficient foreign exchange to open letter of credit for anybody that wants to bring in fuel.
“Last month, I was informed that the total amount of foreign exchange available to Nigeria was $550 million and NNPC needed $500 million out of it. So, you can see why it’s not working.
“Since October last year, NNPC brought in 90 per cent of the petrol brought in till date because all the major and independent marketers have refused to bring in petrol. They said they had no access to foreign exchange and we can’t expect them to buy foreign exchange on the open market and sell 86.50.
“So NNPC had to step in not because it also had foreign exchange. What NNPC had been doing was to exchange the 445,000 barrel of crude allocated daily for local refining and it had engaged in a transparent process called DSDP-Direct Sale Direct Purchase. It now gives this 445,000 of crude a day and changes it for petrol to come to Nigeria but even that has its own disadvantages.

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