Doyin Okupe, former aide of ex-President Goodluck Jonathan, has advised Acting President Yemi Osinbajo to wholly adopt a crude-oil-swap arrangement to conserve foreign exchange.
Crude-oil-swap was an arrangement in which the government exchange crude oil for refined petroleum products through third party traders.
The arrangement, which was adopted by the Jonathan government, was allegedly replete with corruption.
The Buhari government then replaced it with a direct-sale-direct-purchase of crude oil initiative which removed the cost elements of middlemen.
In an open letter to the acting president on Thursday, Okupe urged the government to fully adopt the crude-swap arrangement even though the previous leadership of the Nigeria National Petroleum Corporation (NNPC) abused it.
“Nigeria is nearly totally an import dependent economy, we earned about N4.6 trillion from export of crude oil in 2015, while our total import bill was in the region of about N6 trillion; 30 percent of which was dedicated to the import of petroleum products. Actual figure was about N1.8 trillion or $5bn,” he wrote.
“It is obvious that if we can remove or substantially decrease this demand of $5bn from our forex pull, the value of naira will significantly appreciate further.
“Your Excellency, I want to submit that this is achievable through a responsibly and transparently organised crude swap scheme.
“I am not unaware that this administration has undertaken a limited crude oil swap arrangement, but this will 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.
“No doubt this option was also tried and to a large extent poorly executed and abused by the previous NNPC leadership. The errors in its manner of implementation can be corrected to give a major relief to the demand for dollar in our economy.
“The statutory allocation of 450,000 barrels of crude oil daily for domestic consumption which has been on for several decades needs to be readdressed for better productivity.
“In this dispensation, the government can start by committing the seven oil majors to the new scheme and after a period of about one year of successful implementation, qualified indigenous companies can be brought in, to join and participate.”
Okupe said the crude-oil-swap arrangement was a sustainable alternative to the current intervention of the Central Bank of Nigeria (CBN) in the forex market because it would conserve foreign exchange.
“The current intervention of the CBN, though highly successful, which is based on injecting hard earned forex (to the tune of over $1bn a month) into the forex market through the banks, also grossly reduces the amount of forex inflow from sales of crude oil to the federation account; for sharing by the state and federal govt. The crude oil swap is a better sustainable alternative as it does not affect in any way our revenues from crude oil sales,” he said.
“Your Excellency, with all humility, I submit that while the above may not exactly represent the actual details in the suggested transactions, I strongly believe that this proposition of mine, if fine tuned by experts, will give results with much commendation to your administration and more importantly, improve the strength of our national currency further and relieve some of the current hardship in the nation.”