Nigeria Lifts Forex Ban On Banks Failing To Remit Billions In Oil Money

The Central Bank of Nigeria (CBN) has readmitted nine banks to the interbank forex market after having suspended them last week for not paying some oil money to the government, AFP reported on Thursday, citing a central bank official.

Nigeria’s central bank had suspended the banks last week for withholding US$2.12 billion in oil money which belongs to the Nigerian National Petroleum Corporation (NNPC) and the Nigeria Liquified Natural Gas (NLNG), in a breach of regulation.

In order to tackle corruption, President Muhammadu Buhari had ordered last year all state accounts be merged into one single account at the central bank.

After last week’s ban, the forex market took a hit and the local currency, the naira, further dropped against the U.S. dollar.

Nigeria’s economy is largely dependent on revenues from sales of crude oil, so the low oil prices have battered the economy badly and reduced government revenues. In the first quarter this year, Nigeria’s earnings from crude oil and gas and its Petroleum Profit Tax and Royalties saw a decline of 34.1 percent.

More recently, Nigeria’s government launched a special fund worth US$100 million to take care of securing the credit that the its oil industry needs.

Then there are the militant attacks on oil infrastructure which have dragged the country’s oil production down by some 700,000 barrels per day to 1.56 million bpd. Just days after the notorious Niger Delta Avengers (NDA) agreed to a conditional ceasefire and a day after it said it would halt hostilities, a new militant group earlier this week that it had attacked a pipeline in the region operated by the state-run Nigerian Petroleum Development Company (NPDC).

Observers were skeptical about the success of a ceasefire. The NDA is just one of the militant groups operating in the Niger Delta, and a ceasefire with only the NDA does not guarantee a complete cessation of attacks. In addition, the NDA has been less active in recent months, while other self-proclaimed defendants of the local communities have come to the foreground with attacks on pipelines.

By Tsvetana Paraskova for Oilprice.com

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