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Nigeria’s foreign debt has breached a 15-year trigger

Nigeria’s external debt hits a 16 year high of $27 billion in December 2019 just higher than the $20.8 billion in external debt level as at 2005.

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dollar foreign debt, Foreign investors trapped in the debt market as dollar scarcity persists, U.S dollar gains, America sanctions Chinese Airlines from flying into the U.S. , U.S dollar gains, America sanctions Chinese Airlines from flying into the U.S., U.S Dollar Remains Firm, Global Investors Rush Into Safe Haven Assets

It’s been so long now since Nigeria celebrated the repayment of the Paris Club debt. The narrative back then was that paying the debt will free up cash that will be channeled towards capital expenditure and then usher in the economic boom we have craved for decades.

Instead what we got was a higher spending on recurrent expenditure, limited capital expenditure and a lot of stolen wealth. We are somewhat back full circle.

Nigeria’s external debt hits a 16 year high of $27 billion in December 2019 just higher than the $20.8 billion in external debt level as at 2005.

By December 2006, after we had paid off Paris Club, Nigeria’s external debt was $3.5 billion. Years of lower oil prices, disproportionate spending and defense of the exchange rate has seen the external debt creep back up.

READ ALSO: CBN raises alarm over Nigeria’s rising debts profile

GTBank 728 x 90

Between the start of 2015 and December 2020, Nigeria’s external debt profile has risen from $9.7 billion to $27 billion.

Most of these debts were borrowed in the first 4 years of the President Muhammadu Buhari’s administration via multilateral, development, bilateral and commercial loans (Eurobonds and Diaspora bonds).

The government claims, it had no choice, seeing its oil revenues fail to meet up with target and thus unable to fund Nigeria’s huge infrastructural deficit required to propel economic growth.

While Nigeria’s external debt to GDP remains under 10% and well below global benchmarks, critics of the government have worried about the debt service commitment of about $1.5 billion at the current debt levels.

Another important metric to ponder on is the relationship between the external debts and the external reserves.

READ MORE: Finance Minister, Zainab Ahmed says Nigeria’s VAT collection rate is low

Available data shows Nigeria’s external debt levels of $27 billion is now about 75% of external reserves of $35 billion. This is the highest we have seen since 2005. An inverse of the data means Nigeria’s external reserves can now only cover 133% of its external debts and 23x its debt service.

The rising foreign debt profile and the sliding external reserves once again highlights how vulnerable Nigeria’s economy is to external shock. Should the oil price war persist and global crude oil demand fail to pick up, things could go deep south for the country’s finances.

Why this matter: Unlike in previous economic crisis in 2009 and 2016, Nigeria’s external reserves may not provide the buffer it requires in 2020. CBN is committed to billions of dollars in forex forward sales and has seen foreign demand for its bills dwindle of late. Without an uptick in crude oil prices and sales, reserves may fall below $30 billion reducing the cover to external debt to below 100%.

GTBank 728 x 90
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READ ALSO: Bulls boost global financial markets as gold hits 7-year high

This could trigger another round of devaluation and set the stage for a final float of the exchange rate. Various policy recommendations following the COVID-19 pandemic have called for a more flexible exchange rate to relieve the pressure on the external reserves. If this happens, the exchange rate could take a plunge before finding its level.

The government has an option of going to the IMF and has made known its plans to borrow $6.5 billion. IMF also promised to make $3.5 billion available. That money won’t come without stings such as economic reforms with subsidy removal and market driven exchange rate on the cards.

What’s in it for investors: Investors in Nigerian Eurobonds will want to be sure that government will be able to pay down its principal when the loans start to mature.

A 2021 bond is expected to mature in January. Nigeria’s ability to fulfil its loan obligations will rely on some of the narratives outlined above.

READ MORE: States may owe salaries in coming months, as Governor laments fiscal woes

Local portfolio investors may have to continue picking up stocks and waiting on the long term to offload. Foreign portfolio investors are still selling and remain apprehensive about returning to the equities market.

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The recent crude oil price war and the coronavirus pandemic has demonstrated just far the world can change in just one month. Between an IMF loan, OPEC+ agreeing to a deal and the impact of coronavirus ebbing, the world could be a different place in a couple of months and Nigeria could manage to sojourn on. Until then, follow the numbers that matter.

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Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

1 Comment

1 Comment

  1. Ebuka

    April 20, 2020 at 1:02 pm

    Keep up the good work Nairametrics

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Currencies

Daily Parallel Market Exchange Rate – ₦460/$1

The US dollar closed at ₦460/US$1 in the parallel market

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Forex, NIGERIA: Daily Parallel Market, Exchange Rate

The exchange rate between the naira and the US dollar for today (Wednesday, September 23rd 2020), closed at 460/US$1 in the parallel market. The rate had also closed at 460/US$1 on Tuesday, September 22nd 2020.

  • Naira:460
  • Dollar: $1
  • Date: September 23rd, 2020

The exchange rate between the naira and the British pound sterling closed at ₦585/₤1 on Wednesday, 23rd September, as against ₦580/₤1 recorded on Tuesday, September 22nd 2020.

  • Naira: ₦585
  • Pounds Sterling: ₤1
  • Date: September 23rd, 2020

Explore Economic Research Data From Nairametrics on Nairalytics

The exchange rate between the naira and the European euro closed at ₦540/€1 on Wednesday, 23rd September 2020. The exchange rate had closed at ₦535/€1 on Tuesday, September 22nd 2020.

  • Naira: ₦540
  • Euro: €1
  • Date: September 23rd, 2020

Activity: US Dollar closed at 460/US$1 in the parallel market

GTBank 728 x 90

READ ALSO: The risk of buying Forex at black market rate of N460/$1 

DateCurrencyBuy(AM)Sell(AM)Buy(PM)Sell(PM)Volatility
9/23/2020Dollar455460455460Low
9/23/2020Pounds580585580585Low
9/23/2020Euro535540535540Low
9/22/2020Dollar455460455460Low
9/22/2020Pounds575585575580Low
9/22/2020Euro530535530535Low
9/21/2020Dollar453455450455Low
9/21/2020Pounds565570565570Low
9/21/2020Euro525530525530Low
9/18/2020Dollar450460450460Low
9/18/2020Pounds575595575595Low
9/18/2020Euro535540535540Low
9/17/2020Dollar455460455460Low
9/17/2020Pounds570580570580Low
9/17/2020Euro530535530535Low
9/16/2020Dollar450460450460Low
9/16/2020Pounds565570565570Low
9/16/2020Euro525530525530Low
9/15/2020Dollar450460450460Low
9/15/2020Pounds565570565570Low
9/15/2020Euro525530525530Low
9/14/2020Dollar445455445455Low
9/14/2020Pounds560575560575Low
9/14/2020Euro515525515525Low
9/11/2020Dollar450455450455Low
9/11/2020Pounds555565555565Low
9/11/2020Euro525530525530Low
9/10/2020Dollar455460455460Low
9/10/2020Pounds545560545560Low
9/10/2020Euro525530525530Low
9/9/2020Dollar430440430440Low
9/9/2020Pounds540555540555Low
9/9/2020Euro500510500510Low
9/8/2020Dollar435440435440Low
9/8/2020Pounds540550540550Low
9/8/2020Euro505515505515Low
9/7/2020Dollar435440435440Low
9/7/2020Pounds525530525530Low
9/7/2020Euro505515505515Low
9/4/2020Dollar425440425440Low
9/4/2020Pounds560580560580Low
9/4/2020Euro505515505515Low
9/3/2020Dollar425440425440Low
9/3/2020Pounds560580560580Low
9/3/2020Euro520535505515High
9/2/2020Dollar425440425440Low
9/2/2020Pounds570580560580Low
9/2/2020Euro535540520535Low
9/1/2020Dollar462465435440High
9/1/2020Pounds565575570580Low
9/1/2020Euro535540535540Low
8/31/2020Dollar463470460465High
8/31/2020Pounds585595580590Low
8/31/2020Euro540545540545Low
8/28/2020Dollar472477472477Low
8/28/2020Pounds580595580595Low
8/28/2020Euro545552545552Low
8/27/2020Dollar472477472477Low
8/27/2020Pounds580590580590Low
8/27/2020Euro542552542552Low
8/26/2020Dollar472477472477Low
8/26/2020Pounds580590580590Low
8/26/2020Euro542552542552Low
8/25/2020Dollar472477472477Low
8/25/2020Pounds575585575585Low
8/25/2020Euro542552542552Low
8/24/2020Dollar473477473477Low
8/24/2020Pounds580590580590Low
8/24/2020Euro542550542550Low
8/21/2020Dollar474477474477Low
8/21/2020Pounds575585575585Low
8/21/2020Euro545550545550Low
8/20/2020Dollar475478473477Low
8/20/2020Pounds575585575585Low
8/20/2020Euro540550540550Low
8/19/2020Dollar475480475480Low
8/19/2020Pounds575585575585Low
8/19/2020Euro540550540550Low
8/18/2020Dollar477480477480Low
8/18/2020Pounds575580575580Low
8/18/2020Euro545550545550Low
8/17/2020Dollar470475470475Low
8/17/2020Pounds580590580590Low
8/17/2020Euro525535525535Low
8/14/2020Dollar470475470475Low
8/14/2020Pounds570580570580Low
8/14/2020Euro525535520535Low
8/13/2020Dollar470475470475Low
8/13/2020Pounds570575565575Low
8/13/2020Euro525530520530Low
8/12/2020Dollar470475470475Low
8/12/2020Pounds570575570575Low
8/12/2020Euro520530520530Low
8/11/2020Dollar477485477485Low
8/11/2020Pounds572584572584Low
8/11/2020Euro510523520535Low
8/10/2020Dollar477485477485Low
8/10/2020Pounds572584572584Low
8/10/2020Euro510523520535High
8/7/2020Dollar475486475486Low
8/7/2020Pounds578585578585Low
8/7/2020Euro536550536550Low
8/6/2020Dollar470480475486Low
8/6/2020Pounds575587578585Low
8/6/2020Euro534545536550Low
8/5/2020Dollar465475473483Low
8/5/2020Pounds570580575587Low
8/5/2020Euro525540532545Low
8/4/2020Dollar470480470480Low
8/4/2020Pounds560570560570Low
8/4/2020Euro520530520530Low
8/3/2020Dollar470480470480Low
8/3/2020Pounds560570560570Low
8/3/2020Euro520530520530Low
7/31/2020Dollar470480470485High
7/31/2020Pounds570582575585Low
7/31/2020Euro500520505520Low
7/30/2020Dollar470490470485High
7/30/2020Pounds550570550580High
7/30/2020Euro495520500525High
7/29/2020Dollar468475467475Low
7/29/2020Pounds575585580590Low
7/29/2020Euro530540530545Low
7/28/2020Dollar469475467475Low
7/28/2020Pounds575593580595Low
7/28/2020Euro550560540550Low
7/27/2020Dollar465473466473Low
7/27/2020Pounds570580575583Low
7/27/2020Euro510520515530Low
7/24/2020Dollar465472464472Low
7/24/2020Pounds570580572582Low
7/24/2020Euro510520505520Low
7/23/2020Dollar460472465472Low
7/23/2020Pounds565575565580Low
7/23/2020Euro510520505520Low
7/22/2020Dollar465472465472Low
7/22/2020Pounds565575560578Low
7/22/2020Euro510525510528Low
7/21/2020Dollar461472462472Low
7/21/2020Pounds560573560575Low
7/21/2020Euro498515500520Low
7/20/2020Dollar460473462473Low
7/20/2020Pounds550570555575Low
7/20/2020Euro495505500510Low
7/17/2020Dollar462470460470Low
7/17/2020Pounds560570558570Low
7/17/2020Euro490500490500Low
7/16/2020Dollar460470460470Low
7/16/2020Pounds558565560570Low
7/16/2020Euro485495485499Low
7/15/2020Dollar455465455470Low
7/15/2020Pounds560565558570Low
7/15/2020Euro485495488498Low
7/14/2020Dollar448462455470Low
7/14/2020Pounds540550557570Low
7/14/2020Euro485495489498Low
7/13/2020Dollar450460448462Low
7/13/2020Pounds540550540550Low
7/13/2020Euro485495485495Low
7/10/2020Dollar453460458465Low
7/10/2020Pounds520525550555High
7/10/2020Euro465467510520High
7/9/2020Dollar455461455463Low
7/9/2020Pounds550558550562Low
7/9/2020Euro495504498505Low
7/8/2020Dollar455461455461Low
7/8/2020Pounds550558550558Low
7/8/2020Euro495504495504Low
7/7/2020Dollar455461455461Low
7/7/2020Pounds550558550558Low
7/7/2020Euro495502495502Low
7/6/2020Dollar455462455461Low
7/6/2020Pounds550562547555Low
7/6/2020Euro495502496502Low
7/3/2020Dollar455462454461Low
7/3/2020Pounds548560550560Low
7/3/2020Euro495505495502Low
7/2/2020Dollar455462454461Low
7/2/2020Pounds548560550560Low
7/2/2020Euro495505495502Low
7/1/2020Dollar455462455462Low
7/1/2020Pounds548560548560Low
7/1/2020Euro495505495505Low
6/30/2020Dollar452460452460Low
6/30/2020Pounds547560547560Low
6/30/2020Euro495505495505Low
6/29/2020Dollar450460450460Low
6/29/2020Pounds547560547560Low
6/29/2020Euro495505495505Low
6/26/2020Dollar452457452460Low
6/26/2020Pounds547557547560Low
6/26/2020Euro490498490502Low
6/25/2020Dollar452457450455Low
6/25/2020Pounds547557547560Low
6/25/2020Euro490498490499Low
6/24/2020Dollar450460450455Low
6/24/2020Pounds545555545555Low
6/24/2020Euro490495488498Low
6/23/2020Dollar450460445455Low
6/23/2020Pounds545555545555Low
6/23/2020Euro490495490495Low
6/22/2020Dollar450455450455Low
6/22/2020Pounds545555545555Low
6/22/2020Euro488498488498Low
6/19/2020Dollar445455445455Low
6/19/2020Pounds540553540553Low
6/19/2020Euro480490480490Low
6/18/2020Dollar445452445452Low
6/18/2020Pounds537550537550Low
6/18/2020Euro475490475490Low
6/17/2020Dollar445452445452Low
6/17/2020Pounds540553537550Low
6/17/2020Euro475490475490Low
6/16/2020Dollar440450445452Low
6/16/2020Pounds540550540553Low
6/16/2020Euro475485475490Low
6/15/2020Dollar440450440450Low
6/15/2020Pounds540550540550Low
6/15/2020Euro475485475485Low
6/12/2020Dollar440450440450Low
6/12/2020Pounds538550538550Low
6/12/2020Euro470485470485Low
6/11/2020Pounds538550538550Low
6/11/2020Dollar440450440450Low
6/11/2020Euro470485470485Low
6/10/2020Pounds538550540553Low
6/10/2020Dollar440450445452Low
6/10/2020Euro470485475490Low
6/9/2020Pounds538550540550Low
6/9/2020Dollar440450440450Low
6/9/2020Euro470485475485Low
6/8/2020Pounds540550540550Low
6/8/2020Dollar440450440450Low
6/8/2020Euro475485475485Low
6/5/2020Pounds535545535545Low
6/5/2020Dollar440450440450Low
6/5/2020Euro460472460472Low
6/4/2020Pounds530543530543Low
6/4/2020Dollar440447440447Low
6/4/2020Euro460470460470Low
6/3/2020Pounds530540530540Low
6/3/2020Dollar440445440445Low
6/3/2020Euro460470460470Low
6/2/2020Pounds535545535545Low
6/2/2020Dollar440450440450Low
6/2/2020Euro460472460472Low
6/1/2020Pounds530543530543Low
6/1/2020Dollar440447440447Low
6/1/2020Euro460470460470Low
5/29/2020Pounds530540530540Low
5/29/2020Dollar440445440445Low
5/29/2020Euro460470460470Low
5/28/2020Pounds535545535545Low
5/28/2020Dollar440450440450Low
5/28/2020Euro460472460472Low
5/27/2020Pounds530543530543Low
5/27/2020Dollar440447440447Low
5/27/2020Euro460470460470Low
5/26/2020Pounds530540530540Low
5/26/2020Dollar440445440445Low
5/26/2020Euro460470460470Low
5/25/2020Pounds535545535545Low
5/25/2020Dollar440450440450Low
5/25/2020Euro460472460472Low
5/22/2020Pounds530543530543Low
5/22/2020Dollar440447440447Low
5/22/2020Euro460470460470Low
5/21/2020Pounds530545530545Low
5/21/2020Dollar450460450460Low
5/21/2020Euro460470460470Low
5/20/2020Pounds530550530550Low
5/20/2020Dollar445460445460Low
5/20/2020Euro450470450470Low
5/19/2020Pounds528540528540Low
5/19/2020Dollar445460445460Low
5/19/2020Euro450465450465Low
5/18/2020Pounds528540528540Low
5/18/2020Dollar445460445460Low
5/18/2020Euro450465450465Low
5/15/2020Pounds530540525535Low
5/15/2020Dollar435450440455Low
5/15/2020Euro450460450465Low
5/14/2020Pounds530540530540Low
5/14/2020Dollar435450435450Low
5/14/2020Euro450460450460Low
5/13/2020Pounds525535525535Low
5/13/2020Dollar430450430450Low
5/13/2020Euro440455440455Low
5/12/2020Pounds525535525535Low
5/12/2020Dollar435450435450Low
5/12/2020Euro445455445455Low
5/11/2020Pounds510530525535Low
5/11/2020Dollar430445435445Low
5/11/2020Euro440450445455Low
5/8/2020Pounds510530510530Low
5/8/2020Dollar425437430445Low
5/8/2020Euro425440440450Low
5/7/2020Pounds510530510530Low
5/7/2020Dollar425437425437Low
5/7/2020Euro425440425440Low
5/6/2020Pounds510520510520Low
5/6/2020Dollar425437425437Low
5/6/2020Euro430450430450Low
5/5/2020Pounds510525510525Low
5/5/2020Dollar410430420430Low
5/5/2020Euro425435425435Low
5/4/2020Pounds500510510525Low
5/4/2020Dollar435450410430Low
5/4/2020Euro430440425435Low
5/1/2020Pounds500510500510Low
5/1/2020Dollar435450435450Low
5/1/2020Euro430445430445Low
4/30/2020Pounds500510500510Low
4/30/2020Dollar435450435450Low
4/30/2020Euro430445430445Low
4/29/2020Pounds500520500520Low
4/29/2020Dollar440460440460Low
4/29/2020Euro450465450465Low
4/28/2020Pounds495510500520Low
4/28/2020Dollar430450440460Low
4/28/2020Euro435450435450Low
4/27/2020Pounds495510495510Low
4/27/2020Dollar430450430450Low
4/27/2020Euro435450435450Low
4/24/2020Pounds490500490500Low
4/24/2020Dollar428450428450Low
4/24/2020Euro430440430440Low
4/23/2020Pounds490500490500Low
4/23/2020Dollar420430420430Low
4/23/2020Euro425435425435Low
4/22/2020Pounds490500490500Low
4/22/2020Dollar420425420430Low
4/22/2020Euro425435425435Low
4/21/2020Pounds490500490500Low
4/21/2020Dollar420430420430Low
4/21/2020Euro425435425435Low
4/20/2020Pounds490500490500Low
4/20/2020Dollar420430420430Low
4/20/2020Euro425435425435Low
4/17/2020Pounds490500490500Low
4/17/2020Dollar420430420430Low
4/17/2020Euro425435425435Low
4/16/2020Pounds490500490500Low
4/16/2020Dollar420430420430Low
4/16/2020Euro425435425435Low
4/15/2020Pounds490500490500Low
4/15/2020Dollar420430420430Low
4/15/2020Euro425435425435Low
4/14/2020Pounds490500490500Low
4/14/2020Dollar420430420430Low
4/14/2020Euro425435425435Low
4/13/2020Pounds490500490500Low
4/13/2020Dollar420430420430Low
4/13/2020Euro425435425435Low
4/10/2020Pounds490505490505Low
4/10/2020Dollar420430420430Low
4/10/2020Euro425435425435Low
4/9/2020Pounds490505490505Low
4/9/2020Dollar420430420430Low
4/9/2020Euro425435425435Low
4/8/2020Pounds490500490500Low
4/8/2020Dollar420430420430Low
4/8/2020Euro425435425435Low
4/7/2020Pounds490500490500Low
4/7/2020Dollar420430420430Low
4/7/2020Euro425435425435Low
4/6/2020Pounds492497492497Low
4/6/2020Dollar402412402412Low
4/6/2020Euro410415410415Low
4/3/2020Pounds485490492497Low
4/3/2020Dollar400410402412Low
4/3/2020Euro410415410415Low
4/2/2020Pounds485490485490Low
4/2/2020Dollar400410400410Low
4/2/2020Euro410415410415Low
4/1/2020Pounds480485480485Low
4/1/2020Dollar395400395400Low
4/1/2020Euro407412407412Low
3/31/2020Pounds480485480485Low
3/31/2020Dollar395400395400Low
3/31/2020Euro407412407412Low
3/30/2020Pounds480485480485Low
3/30/2020Dollar390395395400Low
3/30/2020Euro407412407412Low
3/27/2020Pounds480485480485Low
3/27/2020Dollar385390390395Low
3/27/2020Euro405410407412Low
3/26/2020Pounds480485480485Low
3/26/2020Dollar385390385390Low
3/26/2020Euro405410405410Low
3/25/2020Pounds475480480485Low
3/25/2020Dollar380385385390Low
3/25/2020Euro400405405410Low
3/24/2020Pounds475480475480Low
3/24/2020Dollar380385380385Low
3/24/2020Euro400405400405Low
3/23/2020Pounds474478474478Low
3/23/2020Dollar380385380385Low
3/23/2020Euro400403400403Low
3/20/2020Pounds475480475480Low
3/20/2020Dollar370375365367Low
3/20/2020Euro395400395400Low
3/19/2020Pounds475480475480Low
3/19/2020Dollar370375370375Low
3/19/2020Euro395400395400Low
3/18/2020Pounds471475471475Low
3/18/2020Dollar370375370375Low
3/18/2020Euro390395390395Low
3/17/2020Pounds470475470475Low
3/17/2020Dollar375380375380Low
3/17/2020Euro400403400403Low
3/16/2020Pounds470475470475Low
3/16/2020Dollar370375370375Low
3/16/2020Euro400403400403Low
3/13/2020Pounds470475470475Low
3/13/2020Dollar372377372377Low
3/13/2020Euro400403400403Low
3/12/2020Pounds475485490495High
3/12/2020Dollar365380375404High
3/12/2020Euro405412410420Low
3/11/2020Pounds470475475485Low
3/11/2020Dollar360366365375Low
3/11/2020Euro387403405412Low
3/10/2020Pounds468472470475Low
3/10/2020Dollar358360360362Low
3/10/2020Euro390398387403Low
3/9/2020Pounds468472468472Low
3/9/2020Dollar358360358360Low
3/9/2020Euro392398392398Low
3/6/2020Pounds468472468472Low
3/6/2020Dollar358360358360Low
3/6/2020Euro390398390398Low
3/5/2020Pounds468472468472Low
3/5/2020Dollar358360358360Low
3/5/2020Euro390397390397Low
3/4/2020Pounds468473468473Low
3/4/2020Dollar358360358360Low
3/4/2020Euro387392387392Low
3/3/2020Pounds468472468472Low
3/3/2020Dollar358360358360Low
3/3/2020Euro387392387392Low
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3/6/2019Pounds468472468472Low
3/6/2019Dollar358360358361Low
3/6/2019Euro398402398402Low
31/05/2019Pounds465470470474Low
31/05/2019Dollar358360358360Low
31/05/2019Euro397402400403Low
30/05/2019Pounds470474470474Low
30/05/2019Dollar358360358360Low
30/05/2019Euro400403400403Low
28/05/2019Pounds470474470474Low
28/05/2019Dollar358360358360Low
28/05/2019Euro400403400403Low
27/05/2019Pounds470474470474Low
27/05/2019Dollar358360358360Low
27/05/2019Euro400403400404Low
24/05/2019Pounds470474470474Low
24/05/2019Dollar358360358360Low
24/05/2019Euro400405400405Low
23/05/2019Pounds470474472475Low
23/05/2019Dollar358360358360Low
23/05/2019Euro400405400405Low
22/05/2019Pounds472475472475Low
22/05/2019Dollar358350358360Low
22/05/2019Euro400405400405Low
21/05/2019Pounds472475472473Low
21/05/2019Dollar358360358360Low
21/05/2019Euro400405400405Low
20/05/2019Pounds472475472475Low
20/05/2019Dollar358360358360Low
20/05/2019Euro400405400405Low
17/05/2019Pounds472475472475Low
17/05/2019Dollar358360358360Low
17/05/2019Euro400405400404Low
16/05/2019Pounds472475472475Low
16/05/2019Dollar358360358360Low
16/05/2018Euro400404400404Low
15/05/2019Pounds470475470475Low
15/05/2019Dollar358360358360Low
15/05/2019Euro400404400404Low
13/05/2019Pounds470475470475Low
13/05/2019Dollar358360358360Low
13/05/2019Euro400404400405Low
10/5/2019Pounds470475470475Low
10/5/2019Dollar358360358360Low
10/5/2019Euro400405400405Low
9/5/2019Pounds470475470475Low
9/5/2019Dollar358360358360Low
9/5/2019Euro400405400405Low
29/04/2019Pounds470475470475Low
29/04/2019Dollar358360358360Low
29/04/2019Euro400405400405Low
26/04/2019Pounds470475470475Low
26/04/2019Dollar358360358360Low
26/04/2019Euro400405400405Low
25/04/2019Pounds470475470475Low
25/04/2019Dollar358360358360Low
25/04/2019Euro400405400405Low
24/04/2019Pounds470475472476Low
24/04/2019Dollar358360358360Low
24/04/2019Euro400405400405Low
23/04/2019Pounds474478472476Low
23/04/2019Dollar355360358360Low
23/04/2019Euro390402400405Low
22/04/2019Pounds472476472476Low
22/04/2019Dollar357360358360Low
22/04/2019Euro400405400405Low
19/04/2019Pounds467471470475Low
19/04/2019Dollar355360357360Low
19/04/2019Euro395400402406Low
18/04/2019Pounds470475470475Low
18/04/2019Dollar357360357360Low
18/04/2019Euro402406402406Low
17/04/2019Pounds470475470475Low
17/04/2019Dollar357360357360Low
17/04/2019Euro402406402406Low
16/04/2019Pounds465470470475Low
16/04/2019Dollar360365357360Low
16/04/2019Euro400405402405Low

Data is collated from various black market dealers on the mainland and island parts of Lagos State where forex is sold. The price quoted daily on this page represents the average price obtained by our Research Team. Our prices are a guide and could be slightly different from the price you get when you eventually decide to buy or sell. This is a daily tracker and updated close of business. See table below for parallel market exchange rate dating to 2019.

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Energy

Experts pick holes in pump pricing of petrol, proffer solutions 

Experts give their views as Nigerians grapple with the effects of an increase in petrol pump price.

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Subsidy and PIB, petrol price, PPPRA, We have sufficient PMS stock for 38 days- DPR 

The recent sharp increase in the pump price of petrol has been greeted with shock and condemnations from  Nigerians, as it is coming at a time the global price of crude oil dropped or been static at best. 

This is also happening at a time, where Nigerians are grappling with the devastating impact of the coronavirus pandemic on the economy, leading to a significant drop in the income of Nigerians. 

READ: Labour sets September 30th as deadline to go on strike

This price increment is the resultant effect of subsidy removal, and full deregulation of the downstream oil sector by the Federal Government, which has been on the policy agenda of past governments, starting with Olusegun Obasanjo’s administration to the present administration of Muhammadu Buhari. This is further exacerbated by the fact that, the country imports over 90% of its refined petroleum product, athe refineries have not been working optimally. 

While announcing the implementation of the full deregulation of the downstream oil sector, with the removal of the existing cap on fuel prices, the Petroleum Products Pricing Regulatory Agency (PPPRA), noted that henceforth the pump price would be fully determined by market forces. 

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In response to some comments and innuendos, the Minister of State for Petroleum, Timipre Sylva, said the deregulation policy, was to ensure economic growth and development of the country. He insisted that it was unrealistic for government to continue to subsidize petrol, as it had no economic value.

READ: Despite COVID-19, top Nigerian Banks declare N36.7 billion dividends 

Sylva explained that subsidy was benefitting mostly the richrather than the poor and ordinary Nigerians. He said the policy is in line with the global best practiceas the government will continue to play its traditional role of regulation, to ensure that this strategic commodity is not priced arbitrarily by private oil marketing firms. 

The importance and critical nature of petrol seems to be what is driving the condemnation and protests amongst many Nigerians. This is because the demand for petrol is not price elasticwhich means, an increase in the price of petrol, does not necessarily produce a decrease in demand, due to the importance of the product in driving different sectors of the economy. 

Explore the Nairametrics Research Website for Economic and Financial Data

One of the most critical issues that is generating intense debate on the deregulation policy of the downstream oil sector, visavis the sharp increase in the pump price of petrol is, why the increase?  

Especially, when you consider that there has not been any major increase in the global price of crude oil, which is the main component in determining the pump price of petrol. In fact, the price of crude oil has been on a decline recently.   

Recall that, Pipelines and Product Marketing Company (PPMC), a subsidiary of NNPC, in an internal memo, to oil marketers and stakeholders, increased the ex-depot price of fuel from N138. 62 per litre to N151.56 per litre. Some analysts have suggested that the increase could be attributed to the high exchange rate, following the devaluation of the naira against the dollar, and rising costs in the value chain. But the very critical question is, is the devaluation of the naira enough to drive such increase? 

READ: Nigeria will keep taking infrastructure loans to attract investments – Buhari

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The Managing Director of 11 Plc (formerly Mobil Oil Plc), Adetunji Oyebanji, who also doubles as the Chairman of the Major Oil Marketers Association of Nigeria (MOMAN, had about a fortnight ago, said the retail pump price of petrol should be around N155 per litre 

In his analysis of the development, Professor Adeola Adenikinju, Director, Centre for Petroleum Energy Economics and LawUniversity of Ibadan said, The major drivers of PMS price in a deregulated environment are the price of crude oil and the exchange rate. However, in many countries, governments also levy indirect taxes on petroleum products, to fund government road and other developmental projects, because of their inelastic demand.

“In Nigeria, NNPC gets the exchange rate at the official rate of about N386/$1. At that exchange rate, and given the current crude oil price of about $42.60 per barrel for Bonny Light, the current pump price of PMS of around N151.56 per litre is not justified by this analyst’s calculations, even if other cost components like distribution and marketing margins are included, except if BDC exchange rate or other charges are included. 

READ: NNPC reduces fuel price to N108 per litre

He expressed his support for the liberalization of the petroleum downstream sector, that will encompass opening up the sector to all players, not just NNPC. He said we need real competition in the market place, as that is the only way to bring effective competition and allow retail price to reflect marginal opportunity costs of PMS. 

Going further he said, We found ourselves in an embarrassing position as a major oil exporting country, that is also a major importer of refined products. A substantial part of what constitutes the costs of refined products now, including taxes in importing countries, shipping, finance costs, ports charges, lightering charges etc., are all avoidable costs, if we have a thriving and efficient domestic refinery sector. 

“There is currently some opaqueness in the activities of the NNPC in the current subsidy system. The government is losing out on how much the NNPC transfers to the federation accounts for handling the government share of crude oil. NNPC is charging the government and Nigerians, not just the under-recovery amount, but also nebulous charges like costs of pipeline repairs, and estimates of crude oil losses.’’ 

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On his own part, an Oil and Gas Expert, Olumide Ibikunle, disclosed that the global crude oil prices are majorly linked to the price of the final product, which are refined products like petrol, diesel, kerosene, and then foreign exchange. However, he admitted that there are other elements in the pricing template.  

He said, You need to realize thatthere are other elements of the pricing template. I just mentioned 2 of the most important ones, which are the exchange rate and the crude oil prices. There are other items like international shipping cost, which is also a key part of itlithering costs; freight costs, also depending on the availability of tankers for instance, if tankers are not available in the international market to ship refined productsthe cost of moving refined products also increases. 

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He said that at best, what we have is partial deregulation, as government is trying to guard against the volatility of the global crude oil priceswhich changes on a daily basis. He pointed out that, it is not good to have prices of petrol fluctuate every day at the retail stations. Hence, the introduction of price modulation mechanism by government, to manage those volatilities. 

Olumide also said, These products are ordered in advance. I don’t need PMS today and place the order today. I place the order 2 or 3 months in advance. You must realize the dynamics at that time versus what it is now, might be different. so that consideration is also something that fits into the price consideration, and we must also factor that in.”

“So, if prices are N160 today, perhaps it is reflective of the $46 or $45 per barrel, that we saw 2 months ago. Hence, what you see in October or November, will be reflective of what you see in September,he concluded. 

It does seem the recent increase is driven mostly by the exchange rate, but inability to get our refineries working at optimal capacity, government taxes, and the inefficiencies in the system, which is superintended by the Federal Government. 

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