53 Views

How $15b Nigeria-India Deal Will Tackle Forex Crisis

The Nigeria-India upfront oil payment deal will help the Federal Government to tackle the foreign exchange (forex) crisis in the country.The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, initiated the deal during a three-day working visit to India.

In an exclusive interview with The Guardian in August, the minister had disclosed his intention to search for a market, particularly in Asia and other oil-consuming nations, with a view to shoring up the naira, while guaranteeing revenue to the government.

The success of the deal would also be a huge help for the Central Bank of Nigeria (CBN), which has made efforts to attract foreign inflows to support foreign exchange market, including the pursuit Ibe Kachikwuof a naira-yuan swap.

Nigeria’s external reserves, currently at $23.9 billion, will not only be shored up with a $15 billion upfront payment for crude purchase, but will also provide dollar earnings for the federal and state governments to stabilise domestic fiscal conditions and current account deficits.

At the weekend, analysts at Afrinvest Securities told The Guardian that the deal would support the monetary policy and particularly the foreign exchange market, as it would guarantee additional three months’ import cover and reduce speculative tendencies in the market.

Meanwhile, India imported about 23.7 million metric tonnes (169.2m barrels) between 2015 and 2016, accounting for about 12 per cent of the country’s total import.

According to a recent export data from the Nigerian National Petroleum Corporation, India was ranked a top export destination of Nigerian crude, with 17.6 per cent of total crude exports sold to India in 2014.

The deal would be due for signing by December, according to reports. Besides the upfront payment for crude oil, investments in the upstream and midstream sectors, particularly refining, by Indian public sector companies, it will also help to reduce Nigeria’s oil import dollar bills.

“This upfront payment provides the Indian government an opportunity to hedge against commodity price risks peradventure the proposed production cut/cap agreement by the OPEC holdsup; which may result in a rally in oil prices.

“Furthermore, the proposed investments in the midstream sector by the Indian public sector companies (if harnessed properly), coupled with the coming on board of Dangote refineries has the potential to end the supply/demand gap for petroleum products in the country,” the analysts said.

But a top government official told The Guardian that the challenge to the policy adoption would be the fear of under-production, given the unending militancy and “greed” – the tendency for some to oppose it based on future price rise.

“For me, something must give. Where we find ourselves as a country is compelling enough to give off something in order to achieve our goals. The idea is good and should be devoid of the usual politics,” the source said.

The Managing Director of Cowry Asset Management Limited, Johnson Chukwu, expressed optimism that government would pursue this initiative, which he also described as “noble”, to logical point.

According to a finance analyst, Femi Ademola, it means that the country, besides getting the money, has sold its oil output, whether there is volatility in price or not. That means sustained earnings and guaranteed market.

Meanwhile, the United States (U.S) crude oil imports from Nigeria rose by 504,000 barrels per day (bpd) during the first half of 2016, according to the U.S. Energy Information Administration (EIA).

Also, the Nigerian National Petroleum Corporation (NNPC) said that the country’s crude oil exports to South America increased from the 854,048 barrels in April to 2.5 million barrels in June.

NNPC added that Nigeria’s crude oil export to North America increased from 9.5 million in the month of May to 12.8 million in June. Besides, the World Bank has raised its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel as members of the Organisation of Petroleum Exporting Countries (OPEC) prepare to limit production after a long period of unrestrained output.

As at yesterday, Brent crude oil prices gained by 0.77 per cent at $51.78 per barrel, while West Texas Intermediate (WTI) increased by 0.43 per cent to reach $50.85 a barrel.

-guardian.ng

Get the best viral stories straight into your inbox!

Don't worry, we don't spam

Leave a Comment

Your email address will not be published.

Latest Posts

How Ex-PDP chairman’s Son Muhammed Bello Was Stabbed To Death By Wife
Shocking
589 views
Shocking
589 views

How Ex-PDP chairman’s Son Muhammed Bello Was Stabbed To Death By Wife

PH - November 20, 2017

Habib Gaiam, a family friend to the son of former PDP chairman, Haliru Bello, has revealed what Bilyamin Muhammed Bello told him before he was stabbeed to…

Nigerian Who Helped Diezani Buy Properties In London ‘Revealed’
Politics
924 views
Politics
924 views

Nigerian Who Helped Diezani Buy Properties In London ‘Revealed’

PH - November 20, 2017

A London estate agent who appeared on the BBC’s Homes under the Hammer has been named in an investigation into alleged corruption by a former Nigerian oil…

Meet The Die-hard Fan Of Davido Who Recreated Virtually All Of His Photos (PHOTOS)
Entertainment
715 views
Entertainment
715 views

Meet The Die-hard Fan Of Davido Who Recreated Virtually All Of His Photos (PHOTOS)

MT - November 20, 2017

This die-hard fan of Nigerian singer, Davido, proved himself to be his number 1 fanatic as he recreated most of his photos on social media. Its funny…

Nigeria’s Economy Records Positive Growth of 1.4% in GDP in Q3
Business
160 views
Business
160 views

Nigeria’s Economy Records Positive Growth of 1.4% in GDP in Q3

PH - November 20, 2017

Nigeria’s economy continued its recovery from recession, rising 1.4 percent in the third quarter of this year on increased oil production, official data showed Monday. The National…

7 Reasons Technology Cannot Fix Nigeria
Technology
144 views
Technology
144 views

7 Reasons Technology Cannot Fix Nigeria

PH - November 20, 2017

The list below is from a must-read article written by Frank Owusu for BBN Times: Why Technology Cannot Fix Nigeria (Part 1). There is a link to the…

Ekwueme`s Death, Big Loss To The Nation – Nigerians in Dispora
Best of Nigeria
180 views
Best of Nigeria
180 views

Ekwueme`s Death, Big Loss To The Nation – Nigerians in Dispora

PH - November 20, 2017

The Nigerian community in South Africa says the passing away of Dr. Alex Ekwueme, former Vice President, is a big loss to the nation. Ekwueme died in…

How Jonathan Averted Blood-spilling in 2015 – Atiku
Politics
441 views
Politics
441 views

How Jonathan Averted Blood-spilling in 2015 – Atiku

PH - November 20, 2017

Former vice president, Atiku Abubakar, has described former President Goodluck Jonathan, as a patriotic man who saved the lives of Nigerians during the 2015 elections. He said…

REVEALED: Jonathan’s Wife called Adoke ‘Useless Man’ For Not Disqualifying Buhari in 2015
Politics
181 views
Politics
181 views

REVEALED: Jonathan’s Wife called Adoke ‘Useless Man’ For Not Disqualifying Buhari in 2015

PH - November 20, 2017

Snippets of what transpired after the defeat of President Goodluck Jonathan in the March 28, 2015 presidential election are now coming to the open, with his wife…

N-Power: How To Check Pre-selection Status
Job & Career
149 views
Job & Career
149 views

N-Power: How To Check Pre-selection Status

PH - November 20, 2017

N-Power, ​the ​Federal Government empowerment scheme, on Monday explained how applicants can check their pre-selection status. The information was contained in a statement on its official Twitter…

Late Alex Ekwueme Believed In The Unity Of Nigeria – South-East Governors
Politics
221 views
Politics
221 views

Late Alex Ekwueme Believed In The Unity Of Nigeria – South-East Governors

PH - November 20, 2017

The South-East Governors’ forum on Monday, joined millions of Nigerians to mourn the death of former Nigeria’s Vice-President, Dr Alex Ekwueme. Governor David Umahi of Ebonyi and…

Actress Regina Daniels Caught On Camera Crying After Injection (Video)
Entertainment
460 views
Entertainment
460 views

Actress Regina Daniels Caught On Camera Crying After Injection (Video)

MT - November 20, 2017

Before now, we never knew that Nollywood actress, Regina Daniels had aichmophobia (morbid fear of sharp things), and she displayed that after taken to the hospital for…

VIDEO: Why Nigerians Won’t Stop Calling Me A Fraudster – Dammy Krane
Entertainment
56 views
Entertainment
56 views

VIDEO: Why Nigerians Won’t Stop Calling Me A Fraudster – Dammy Krane

MT - November 20, 2017

Singer, Dammy Krane has revealed his disappointment at Nigerians for stigmatizing and treating him as a fraudster even after the US justice system has vindicated him.  …

Anambra Defeat: How Makarfi Brought Ill-luck To PDP – Kashamu
Politics
459 views
Politics
459 views

Anambra Defeat: How Makarfi Brought Ill-luck To PDP – Kashamu

MT - November 20, 2017

The senator representing Ogun East Senatorial District in the National Assembly, Buruji Kashamu, has described the tenure of the Chairman of the National Caretaker Committee, Senator Ahmed…

Drama As Wizkid Reportedly Welcomes Third Child With His Manager [Photo]
Entertainment
1209 views
Entertainment
1209 views

Drama As Wizkid Reportedly Welcomes Third Child With His Manager [Photo]

MT - November 20, 2017

Father of 2 and Nigerian singer, Wizkid, reportedly welcomed another baby boy with his manager Jada Pollock, according to industry rumours.   According to sources, Wizkid and…

108million Nigerians Lack Toilet Facilities – United Nations
Food and Health
201 views
Food and Health
201 views

108million Nigerians Lack Toilet Facilities – United Nations

MT - November 20, 2017

Despite huge technological, scientific and industrial advances, an estimated 108 million Nigerians still lack access to toilets, the United Nations stated yesterday on this year’s World Toilet…

Daddy Freeze: “Pastor Said I Will Die In 24 Months Over Tithe, Free The Sheeple”
Entertainment
1018 views
Entertainment
1018 views

Daddy Freeze: “Pastor Said I Will Die In 24 Months Over Tithe, Free The Sheeple”

MT - November 20, 2017

Popular OAP Daddyfreeze has cried out after popular pastor whom he claimed that he attended his church for over 11years and contributed to the building of his…

Super Eagles Player Leon Balogun Breaks His Hand, Undergoes Surgery
Sports
219 views
Sports
219 views

Super Eagles Player Leon Balogun Breaks His Hand, Undergoes Surgery

MT - November 20, 2017

Leon Balogun, Nigerian Super Eagles powerful defender has returned to the treatment room days after helping the Super Eagles beat South American giants Argentina 4-2 in Krasnodar…

Entertainment
239 views

Nigerians Dig Up Banky W’s 2016 Posts Where He Promised To Do Lowkey Marriage, After His Elaborated 2017 Wedding

MT - November 20, 2017

Nigerians have come for singer, Banky W who had a multi-million naira traditional wedding yesterday after digging up a 2016 Snapchat post where he vowed not to…

Loading...