As the scarcity of the United States dollar continues to hamper the importation of petroleum products by marketers, the Central Bank of Nigeria has asked banks to submit bids for a “special currency auction.”
The auction is targeting fuel importers to meet demand for matured letters of credit, Reutersquoted traders as saying.
Traders said the CBN sent a message to the banks on Monday to submit backlog dollar demands from fuel importers by 3.00pm for a special intervention.
Fuel shortages often occur in the country during festive periods such as Christmas and Muslim holidays.
Traders said the government wanted to ensure that fuel retailers had enough products, so it was channelling dollars to them and also to avoid shortages, which in May crippled banking, airline and telecom services.
The country consumes 45 million litres of petrol a day, or roughly 280,000 barrels, which will require the market to provide some $18m a day.
Importers cover about 30 per cent of this, with the Nigerian National Petroleum Corporation covering the rest, which is a big strain on the market for dollars.
A top official of one of the marketers’ associations told our correspondent that many of the traders had continued to depend on the supply from the NNPC as they could not access dollars to import.
“I know a few of the marketers are still importing directly, but not as much as we would have loved to see. A good number of them are still depending on the NNPC cargoes. We are definitely not importing as much as we should,” he said.
It was not clear at what rate the central bank would sell the dollars. In May, the government agreed a deal with international oil companies in the country to sell their dollars directly to fuel importers to end months of scarcity partly caused by a currency shortage after it hiked fuel prices by 67 per cent, using an exchange rate of N285 per dollar.
The naira, which has been stuck at around 305 per dollar on the official market for more than two months since the CBN in June abandoned its dollar peg of 197 against the currency, eased to 314.90 at 11:15am on Monday. It was quoted at 484 on the black market.
Nigeria is in its deepest recession in 25 years, worsened by falling crude output as militants attacked oil and gas facilities in the Niger Delta, and global prices remain low, choking off dollars needed to fund imports.
The dollar shortage has caused many companies to halt operations and lay off workers, compounding an economic crisis.
The country has four refineries but decades of neglect mean it needs to import petroleum products.