•Urges CBN to adopt Chinese Yuan as official FX reserve

The House of Representatives has resolved to launch an investigation into the loss of over $60 billion in revenue due to inflated cash calls by the Nigerian National Petroleum Company Limited (NNPCL) Joint Venture agreements.

The decision was sequel to the adoption of a motion moved at plenary yesterday by Hon. Chika Okafor.

The House also mandated its Committees on Banking Regulations, Banking and Other Ancillary Institutions to liaise with the Central Bank of Nigeria (CBN) to explore the appropriate mechanisms, policies, and partnerships required for the adoption of the Chinese Yuan (CNY) as an official foreign exchange reserve currency, alongside other major international currencies.

That was after the adoption of a motion on the need to use the Chinese Yuan to mitigate the effect of Naira depreciation, moved at plenary yesterday by Hon. Jafaru Leko.

Moving the motion on the investigation of revenue loss to bloated cash calls, Okafor said NNPCL, on behalf of the federal government, operated joint ventures and related agreements with private oil companies in both oil and gas sectors, with the aim of sustainable revenue generation and economic development.

He stressed that NNPCL, as the representative of the federal government and the federation, had about 60 per cent holdings, while other partners had the remaining 40 per cent.

Okafor added that the joint ventures operated under a “Joint Operating Agreement” that spelt out the responsibilities of each of the partners in the ventures.

He stated, “Concerned that due to bloated Cash Call Costs, the NNPCL Upstream Investment Management Services (NUIMS), a unit under the NNPCL in charge of negotiation of costs (both Capex and Opex), have caused huge losses in the neighbourhood of ($60,000,000,000) Sixty Billion Dollars over the years.”

The lawmaker expressed worry that the activities of NNPCL Upstream Investment Management Services (NUIMS) had resulted in huge revenue losses, fiscal deficits, and an alarming debt profile.

The House, therefore, mandated “the Committees on Finance and Petroleum Resources (Upstream) to conduct a comprehensive investigation on all the NNPCL Joint Venture Operations to determine income and Cash Call costs due to each partner, especially the Federation/FGN, and whether due process and diligence were observed in the exercise.”

Leko, while presenting the motion on the adoption of the Chinese Yuan, said the Nigerian economy had experienced substantial shifts regarding the value of the naira, triggering economic instability and uncertainty.

He said the International Monetary Fund (IMF) proposed diversification of foreign exchange reserves for central banks of developing countries, including Nigeria.

The lawmaker pointed out that the global economic landscape was evolving and international trade dynamics were shifting, with China assuming a leading role in global trade.

Leko stressed that the People’s Republic of China had a stable and globally recognised currency, CNY, which was gaining recognition in international trade. He emphasised that adopting the Chinese Yuan as an additional foreign exchange reserve currency might mitigate the adverse effects of naira depreciation, reduce the risks associated with exchange rate fluctuations, and enhance Nigeria’s economic stability.

The lawmaker said the move would enhance Nigeria’s trade and economic ties with China, a crucial trading partner.

The House mandated, “The Committees on Banking Regulations, Banking and Other Ancillary Institutions to liaise with the Central Bank of Nigeria to explore the appropriate mechanisms, policies, and partnerships required for the adoption of the CNY as an official foreign exchange reserve currency, alongside other major international currencies, and report back within four weeks for further legislative action.” (THISDAY)

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