Gov Ayade urges FG to commoditise foreign reserves to save naira

Ben Ayade

As part of measures to strengthen the naira and grow the local economy, Cross River State Governor, Professor Ben Ayade has advocated for payment of contractual fees and charges to multi-national companies in local currency.

Ayade who stated this when he received the chairman and other members of Senate Committee on Petroleum Resources Upstream on a 3-day workshop in Calabar, said that it is by so doing that the emphasis on dollars will be less and the value for naira better appreciated.

His words, “The dollarization of contracts in the oil and gas sector is another crippling issue in this country. It is only in Nigeria that contracts are awarded in dollars and denominated in dollar. The international exchange rate is fast changing, a lot of people prefer to do business in their local currency, and we have countries that have made laws that stipulate a minimum irreversible exchange rate between their currency and the dollar; We should not be an exception.

 "Like every determined government, we should not allow the exchange rates of our naira to escalate based on market forces of demand and supply, that is to say that we have a vehicle without a driver.”

He further argued that the activities in the oil and gas sector in the country which allow for the sale of crude oil in dollars, with the dollar not returning to Central Bank of Nigeria, is another issue which should be tackled under the local content law.

“With our main exports, we should not have this kind of exchange rate that we are having in naira today. It may be synthetic, it may be a little artificial, it could be black market induced but we have failed to establish a framework that can give the naira its value.

 “Must we always put the naira against the dollar? Ayade asked rhetorically, noting that "in most countries like UK, some of their foreign reserves come in form of gold. Why must our foreign reserves be in our dollar, why can’t we commoditize our foreign reserves?”

 The governor who reasoned that the country was blessed with abundant mineral deposits like bitumen, gold, iron, among others, stressed the need to convert these into foreign reserves in material terms and bring the naira to shore up its value.

  Accordingly he noted, “There must be a deliberate local content policy to protect the naira as a local currency even as we need to understand the local content policy beyond the perspective of the narrow issues of the oil and gas industry."

 Ayade urged the Federal Government to take a deliberate policy as well as ensure full implementation of local content act to shore up the value and strengthen the naira while advising that all LNG shipments sales out of Nigeria be paid to CBN directly.

  Continuing, the governor said: “Only international banks that have branches in Nigeria should receive the dollar inflow of our crude oil sales and indeed from our gas sale. That way, we would be able to provide excess and accessible liquidity in dollar terms.”

 Applauding the committee for choosing Calabar as venue for their workshop, the governor opined that “the Senate Committee on Petroleum Upstream should advocate for more oil wells to be drilled in order to increase production, maintaining that, “It is strange that Nigeria, from history, has always been on 2.4 million barrels per day in terms of production. There must be a means through which government can actually measure the true amount of crude oil being produced.”

 While advocating for establishment of modular refineries to refine crude oil products, the governor averred: "If we begin to refine our crude oil and sell only refined oil within the West African sub-region, it will give us higher value for our crude. So, the local content law has to do with the local utilization of our raw materials as an avenue to create desired jobs and wealth.”

 Earlier Chairman Senate committee on Petroleum Resources Upstream, Senator Tayo Alasoadura, said the choice of Calabar for the workshop was not misplaced because Cross River has over the years distinguished itself as the preferred destination in the country because of its ambience and serenity.