Private oil firms to begin direct importation as NNPC terminates all crude oil swap contracts

Private oil firms to begin direct importation as NNPC terminates all crude oil swap contracts

Nigerian National Petroleum Company Limited (NNPC) says it is gradually bringing an end to crude swap contracts with oil marketers while adding that private companies might start importing fuel as soon as this month.

Since 2016, the NNPC has been acquiring petrol from consortiums of foreign and local trading companies and repaying them with crude oil via Direct Sale Direct Purchase (DSDP) contracts since it does not have enough cash to pay for the imports, according to data and trading sources.

In an interview with Reuters, Mele Kyari, the Managing Director of the Nigerian National Petroleum Corporation, said in the last four months the NNPC has practically terminated all Direct Sale Direct Purchase contracts in a move that will pave the way to pay for its purchases in cash.

“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 told Reuters in an interview.

Nigeria is Africa’s biggest crude producer but imports most of its refined products as the country’s refineries remain paralysed.

This has forced Nigeria to be paying a heavy amount of money to subsidize fuel for many Nigerians in order to bring down the price of the commodity.

The new Nigerian President, Bola Ahmed Tinubu has already eliminated the fuel subsidy which went into force last Tuesday. He said the expensive payment is no longer sustainable.

The withdrawal of subsidy on petrol sent prices of the product, transportation, food and services high and this has infuriated labor unions, who have called for a nationwide strike to begin on Wednesday if the decision is not reversed as soon as possible.

The government has since promised to review salary structure in order to cushion the effects of the already removed subsidy on fuel on Nigerians.

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