April 16, 2024

Oredola Adeola


Professor Ndubuisi Ekekwe, Lead Faculty of Tekedia Institute, has made projections that the Nigerian government will make significant policy changes including a potential return to payment of subsidy on Premium Motor Spirit (PMS) and a reversion to the dual exchange rate policy in the next five months.



Prof. Ekekwe who doubles as the Chairman of FASMICRO Group made this known in a statement obtained by EnergyDay on Monday, suggesting that the policy reversals will address the foreign reserve crisis caused by the over $7.5 billion loans obtained by the Central Bank of Nigeria (CBN) from JPMorgan and Goldman Sachs, which were collaterized with the country’s foreign exchange reserve.



The CBN in the publication of its audited financial statement revealed that the apex bank under the administration of the former Governor of CBN, Godwin Emefiele, entered into a security lending agreement with Goldman Sachs and J.P. Morgan.



As part of the agreement, the group received cash in exchange for its securities to be held as collateral for the loan. J.P. Morgan being the global custodian of the securities of the CBN holds an equivalent in securities, of the value of loan given in cash.



The report showed that the cash received from Goldman Sachs is N0.23 trillion ($500 million), 2021: N0.22 trillion ($500 million), and JP Morgan N3.23 trillion ($7 billion), 2021: N3.05 trillion ($7 billion) is recognised in other foreign securities.



EnergyDay gathered that the securities lending formed part of the country’s total external reserves of about N14.3 trillion or $29 billion (N494/$1 as of 2022). The loan and securing/collateralizing the loans with the national foreign reserves or other asset classes were carried out without the knowledge of the Nigerian people and the National Assembly.



 Professor Ekekwe, in his statement revealed that the Nigerian government is likely to restore subsidy on petrol as a temporary solution to stabilize the economy and manage the impact of the loans.


He said that the return to fuel subsidies and the dual exchange rate policy would provide some relief and allow the government to address the challenges posed by the foreign reserve mess.


He said, “The collateralization of some national financial assets and securities with US big banks, are big problems that have to be addressed by President Bola Tinubu’s administration.


Prof Ekewe emphasised that the President Tinubu’s administration may be overwhelmed with the attempt to keep trying to get out of this new challenge imposed by the Naira and fuel subsidy experiment.


He said, “Of course, reversing either or both policies will not deliver the long-term economic redesign Nigeria expects.


Professor Ekekwe, however, emphasised the subsidy on Premium Motor Spirit (PMS) should be reintroduced with at least 20 to 30%.  He urged the Government to show some level of seriousness by making the four local refineries start working so as to be net positive on the oil trades.


He revealed that the total removal of fuel subsidy is not good for the masses and the country’s economy in general.



Professor Ekekwe further stated that it is odd for the country to be promoting petroleum products, especially petrol.


According to him, I expect that a right-thinking economy will be built around non-fossil clean energy for adoption in transportation and power generation, emphasizing the full-scale adoption of gas and other renewable energy sources.



Professor Ekekwe said, “This is 2023, we are supposed to outgrow this era into something juicier and environment friendly but am sure this hypothesis does not go down well with some strongholds or perhaps cartels that does not want oil to lose its power for a long time.