The quantity of foreign exchange used for oil imports in 2020 was $1.32bn, compared to $2.10bn in 2019, the latest data from the Central Bank of Nigeria have shown.
The CBN’s data on sectoral utilisation for transactions valid for forex revealed that $148.32m was utilised in January for oil imports; $145.23m in February, and $139.55m in March.
Forex for oil import transactions fell to $113.80m in April and $109.11m in May but rose to $114.57m in June.
It stood at $77.36m in July; $82.37m in August; $72.63m in September; $78.86m in October; $92.91m in November and $146.95m in December.
Although the CBN did not specify the oil imported into the country, Nigeria’s oil imports consist mainly of petrol, diesel and kerosene.
Fuel consumption and imports plunged to record low in the second quarter of 2020 amid the lockdown imposed by the Federal Government to contain the spread of COVID-19 pandemic in the country.
The Nigerian National Petroleum Corporation has been the major importer of petroleum products and sole importer of petrol into the country in recent years amid a lack of full deregulation in the downstream oil sector and scarcity of forex.
The nation’s forex reserves have been fluctuating in recent months, rising from a low of $34.42bn on March 18 to $35.25bn on April 16. The reserves dropped to $35.09bn on April 23, according to the Central Bank of Nigeria.
The Lagos Chamber of Commerce and Industry said earlier this month that the difficulties faced by many investors in Nigeria in accessing forex for importation of raw materials, equipment and some critical inputs for production and processing was putting investments and jobs at risk.
“For the purpose of establishing Letters of Credit and Bills for Collection for the importation of petroleum products, authorised dealers shall forward to the Director, Trade and Exchange Department (of the CBN), all relevant supporting documents for consideration prior to commencement of the transaction,” the central bank said last year in its monetary, credit, foreign trade and exchange policy guidelines.
It added, “Furthermore, the CBN shall be notified within 48 hours by the authorised dealers before bidding for funds to pay for such transactions.”
Nigeria, Africa’s largest oil producer, relies largely on importation for petrol and other refined products as its refineries have remained in a state of disrepair for many years.