Partner, Bloomfield Law Practice, Dr Ayodele Oni, has said the plan to domicile crude oil sales account with Central Bank of Nigeria (CBN) will help in promoting accountability and transparency.
Oni made the observation in an interview with the News Agency of Nigeria (NAN) on Sunday in Lagos.
He said this would have positive effects on the operations of both companies and the country at large.
NAN reports that on Feb. 8 the Nigerian National Petroleum Company (NNPC) Ltd., and the Central Bank of Nigeria (CBN) reviewed the decision to domicile a significant portion of NNPC’s revenues and banking services with the CBN.
The expert said that government’s directive to the CBN to take over the responsibility for crude oil sales from NNPCL was economically justifiable.
He, however, said that the directive appeared to be taking off the powers of the board of directors of the NNPCL, which had been converted from a governmental corporation to a separate legal entity.
He said,”Consequently, only the board of directors of the NNPCL or the members, by passing a resolution at the general meeting, have the power to appoint the CBN to take responsibility for the crude oil sales from NNPCL.
“Following the recent disclosure by the Group Chief Executive Officer of the NNPCL, Mele Kyari, that the board of directors of NNPCL has approved the decision to move significant portions of the company’s revenues to the CBN, it may be inferred that the FG’s directive has been ratified by the board of directors of NNPCL.”
According to him, if the directives are properly implemented and with efficient frameworks to ensure the credibility of the process of the remittance, it will help in promoting accountability and transparency in the sales of Nigeria crude oil.
“The CBN’s involvement will ensure that each crude oil sale transactions are thoroughly reviewed and verified.
“This will help in confirming the authenticity of the sale, including the volume of crude oil sold, the selling price, the parties involved, the mode of payment and the periods in which proceeds were received in respect of the transaction.
“The CBN will also be able to monitor the flow of revenue generated from crude oil sales, including the receipt and disbursement of funds.
“Let’s hope that the collaboration will prevent revenue leakage, misappropriation, or diversion of funds,” he added.
He commended the digital platforms and efficient departments set up by the CBN to ensure that the collaboration between both parties was effectively conducted.
He added that CBN had also shown willingness to provide all necessary assistance required to ensure that there were no glitches in the seamless operation of the NNPCL.
He said that NNPCL could focus on the business of crude oil production and ensure Nigeria meets up with its crude oil target as set by OPEC, while assured that its transactions remain well sorted by the apex bank.
He reiterated that it is believed that the domiciliation of a significant portion of NNPCL’s revenue with the CBN can assist the CBN in its efforts to mitigate exchange rate volatility.
“It may also allow the CBN to influence inflation rates and overall economic stability, which may assist in regaining the Naira’s value when compared to the dollar.
“Also, due to the large revenue generated by the NNPCL through crude oil sales, the CBN may through this initiative gain more control over a significant portion of the money supply circulating within the economy.
“It also affords the NNPCL the opportunity to remain within safe obligor limits with commercial banks as reflected by its board of directors, while ensuring that its transactions are seamlessly conducted.
“It is generally believed that this move is a vote of confidence in the goal of the CBN to stabilise the Naira against the dollar as well as boost the economy.
“This may encourage other foreign exchange-generating government agencies to begin to partner with the CBN,” Oni emphasised.
He said this would have positive effect, not only the country at large, but in the operations of both companies.(NAN)