The Nigerian National Petroleum Company Ltd (NNPCL) is gradually concluding its crude oil swap contracts with marketers as petroleum import transactions will now be in cash, the company says.
The Group Chief Executive Officer of NNPCL, Mele Kyari, disclosed this in an interview with Reuters made public on Saturday, where he added that private companies could begin importing petrol before the month of June runs out.
It will be recalled that the NNPCL had been operating under the Direct Sale Direct Purchase (DSDP) contracts since 2016 that allows the petroleum company to deliver monthly crude oil lifting on a Free on Board (FOB) basis to suppliers who shall, in return, deliver petroleum products of Nigerian standard specification to NNPC on Delivered at Place (DAP) basis, at designated safe port(s) in Nigeria.
However, after the President Bola Tinubu’s inauguration speech in which he announced that fuel subsidy will cease to exist, the House of Representatives would mandate the Federal Government to forthwith suspend all DSDP contracts.
“In the last four months, we practically terminated all DSDP contracts. And we now have an arm’s length process where we can pay cash for the imports,” Kyari said.
This is the first time NNPC has said it is terminating crude swap contracts. By importing less gasoline as private companies import the bulk, NNPC will be able to pay for its purchases in cash.
Kyari further added that there would be healthy competition from private firms in the supply of petroleum products with the seeming end to the NNPCL’s monopoly on petrol distribution supplies.
On the failure of Nigeria to meet its Organisation of the Petroleum Exporting Countries (OPEC) oil quota of 1.742 million barrels per day due to grand oil theft and illegal refining.
The NNPCL boss indicated that plans were in place to alleviate the groaning issue and had done 1.56 million barrels a day.