Oil price fall: Foreign reserve dips by $9.13b in 2014

Nigeria’s gross foreign reserve has slumped by $9.13 billion (N1.5 trillion) last year, 2014.

The reserves movement analysis made by the Central Bank of Nigeria (CBN) has indicated that the nation’s foreign reserve stood at $43.63 billion (N7.19 trillion) as at December 30, 2013 but it came down to $34.5 billion (N5.69 trillion) as at 30, December 2014.

The drop occurred when Nigeria recently devalued the Naira and a chunk of the nation’s foreign reserves was spent in defending the Naira from further dropping in value.

The country’s external reserves derived mainly from the proceeds of crude oil production and sales.
Nigeria produces approximately 2,200,000 barrels per day of crude oil in joint venture with some international oil companies, notably Shell, Mobil and Chevron.

Out of this, Nigeria sells a predetermined proportion directly, while the joint venture partners sell the rest.
The joint venture partners pay Petroleum Profit Tax to the federal government through the Federal Board of Inland Revenue.

The fall in the price of crude oil at the international market, last year, by about 50% was regarded as the main reason for the sharp drop of the reserves.

CBN has at several occasions within the year intervened through the reserves to save the embattled naira at the forex market. The naira slide by about N22/dollar or 13 percent on year to year basis as at the end of the year yesterday.