The Nigeria-India upfront oil payment deal will help the Federal Government to tackle the foreign exchange (forex) crisis in the country.The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, initiated the deal during a three-day working visit to India.
The success of the deal would also be a huge help for the Central Bank of Nigeria (CBN), which has made efforts to attract foreign inflows to support foreign exchange market, including the pursuit of a naira-yuan swap.
Nigeria’s external reserves, currently at $23.9 billion, will not only be shored up with a $15 billion upfront payment for crude purchase, but will also provide dollar earnings for the federal and state governments to stabilise domestic fiscal conditions and current account deficits.
Meanwhile, India imported about 23.7 million metric tonnes (169.2m barrels) between 2015 and 2016, accounting for about 12 per cent of the country’s total import.
According to a recent export data from the Nigerian National Petroleum Corporation, India was ranked a top export destination of Nigerian crude, with 17.6 per cent of total crude exports sold to India in 2014.
The deal would be due for signing by December, according to reports. Besides the upfront payment for crude oil, investments in the upstream and midstream sectors, particularly refining, by Indian public sector companies, it will also help to reduce Nigeria’s oil import dollar bills. Read the full story here.