The Nigerian National Petroleum Company (NNPC) Limited says it has commenced the termination of crude oil swap contracts and will pay cash for petrol imports, Reuters is reporting.
Mele Kyari, NNPC’s group chief executive officer (GCEO), said private companies could begin importing petrol in June.
He said the national oil company will now pay for its purchases in cash by terminating the crude swap contracts, adding that less petrol will be imported by NNPC while private companies will import the bulk.
“In the last four months, we practically terminated all direct sale direct purchase (DSDP) contracts. And we now have an arm’s-length process where we can pay cash for the imports,” Kyari told Reuters on Saturday.
The DSDP is an agreement that allows sales of crude oil to refiners, who will in turn supply NNPC with an equivalent worth of petroleum products.
On Thursday, the house of representatives asked the federal government to suspend all DSDP contracts sequel to the removal of the petrol subsidy by President Bola Ahmed Tinubu’s administration.
In the Reuters report, Kyari said this is the first time NNPC has said it is terminating crude swap contracts, emphasising that by importing less petrol as private companies import the bulk, NNPC would be able to pay for its purchases in cash.
Speaking on the country’s production capacity, the NNPC boss said Nigeria’s total crude oil output was 1.56 million barrels per day (bpd) as of Friday.
Due to illegal refining and oil theft, the country has struggled to meet its Organisation of Petroleum Exporting Countries (OPEC) quota of 1.742 million bpd.
Nigeria’s oil production fell below the one million mark in April 2023, as output tumbled to 998,602 bpd.
The figure was a 21.26 percent decline compared to March, when output was 1,268,202 bpd.
It was also the lowest volume of production in the last seven months.On Monday, in his inaugural speech, Tinubu said the petrol subsidy regime was over.
“On fuel subsidy, unfortunately, the budget before I assumed office is that no provision is there for fuel subsidy. So, fuel subsidy is gone,” the president had said.
Following Tinubu’s comments, huge queues resurfaced at filling stations in some parts of Nigeria — a situation the Independent Petroleum Marketers Association of Nigeria (IPMAN) blamed on panic buying even as petrol prices also jumped.
On Friday, the Nigeria Labour Congress (NLC) issued a five-day ultimatum to the federal government to revert to the old prices of petrol or face a nationwide protest.