The Group Chief Executive of Nigerian National Oil Company Limited (NNPCL), Mr. Mele Kyari, has hinted that the company is winding down crude swap contracts with traders and will pay cash for gasoline imports.
Kyari, who made this disclosure during a chat with Reuters at the weekend, explained that private companies could begin importing petrol as soon as this month as part of the new administration’s current plans to fully deregulate the nation’s downstream market in order to reduce the fiscal burden associated with a regulated regime on public finance in the country.
Over the past years, the NNPC has been importing gasoline from consortia of foreign and local trading companies and repaying them with crude oil through what are known as Direct Sale Direct Purchase (DSDP) contracts since 2016 because it lacked the cash to pay for the purchases.
He clarified: “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.”
According to the NNPCL CEO, by importing less gasoline as private companies import the bulk, the company will be able to pay for its purchases in cash.
Kyari, who confirmed that NNPCL’s monopoly on gasoline supplies was ending early this month and that private firms could start importing based on their financial clouts, disclosed that Nigeria’s total crude and condensate output was at 1.56 million barrels a day (bpd) as of last Friday.
With Nigeria’s inability to meet its OPEC oil quota of 1.742 million bpd due to grand oil theft and illegal refining over the past months, industry experts aredoubting if Nigeria will be able to meet supplies for the 650,000 bpd newly commissioned Dangote Refinery in which the NNPCL has a contract to supply 300,000 bpd to the refinery.
Reuters quoted industry source with knowledge of the claim by Kyari that the company was winding down crude swap contracts as saying that NNPCL was still allocating crude for fuel swaps for July loading but in lower volume than in previous months.
