By Babajide Komolafe
Monday, April 30, 2007
The Nigerian National Petroleum Corporation (NNPC) and Shell Development Petroleum Comapny are on a collision path with the Central Bank of Nigeria (CBN) over foreign exchange transactions rules.
The two companies, it was gathered, have been flouting the directives of the apex bank that firms selling foreign exchange in the interbank foreign exchange market disclose the volume of forex been offered to the market.
Forex dealers had complained that the two firms particularly Shell are found of not disclosing the volume of forex been offered. This practice they say is anti market as it does discourages transparency in foreign exchange transactions.
Shell, however, said there was nothing wrong about not disclosing the volume of forex it offers to the market. Shell spokesman, Mr Bisi Ojediran told Vanguard that it was an industry practice that other oil firms do not disclose the volume of forex they offer to the market, adding that the practice is not an offence.
A top official of the CBN, however, said it was an offence not to disclose the volume of forex offered for sale in the market. According to the official, the apex bank had written to all the oil firms of the need to disclose what they are bringing to the market as this would enhance management of liquidity and monetary policy. “We were disturbed for the past few weeks when we noticed that, NNPC and Shell came to the market with undisclosed amount of forex”.
Vanguard investigations, however, revealed that the practice of not disclosing the volume of forex offered for sale is a deliberate attempt on the part of Shell and NNPC to create anxiety in the market hence compelling banks to quote higher bid rate hence maximizing the Naira value of the forex been sold.
According to a bank treasurer, “ when people don’t know hoe much forex is been offered for sale they would think that the amount been offered might not be sufficient for the market hence they quote higher bid rates to ensure that their bid succeed. But when people know the volume of forex been offered scarcity perception will not be there and they will not panick with their bid rate.
Meanwhile the CBN sold $80.840 million at the twice a week forex auction session of the Wholesale Dutch Auction System (WDAS) last week. This represents an 82 per cent decrease when compared with $146.85 million sold in the previous week. On Tuesday the apex bank offered $50 million and sold $43.837 million. On Thursday it offered $80 million and sold $51.350 million.
On the other hand the Naira recorded slight appreciation as the exchange rate of the dollar decreased by 12 kobo to N126.6 per dollar from N126.72 per dollar in the previous week.