According to the CEO of NNPC Ltd., private enterprises may begin importing fuel this month as the national oil company winds down crude exchange contracts with merchants and pays cash for gasoline imports.
Bola Tinubu, Nigeria’s new president, wants to de-regulate the gasoline business and reduce government expenditure.
Tinubu cut a costly fuel subsidy last Tuesday, doubling gasoline prices and infuriating labor unions, who have called for a protest on Wednesday if the decision is not reversed.
Because of a paucity of finances, NNPC has been acquiring gasoline from consortiums of global and local trading companies and repaying them with crude oil through Direct Sale Direct Purchase (DSDP) contracts since 2016.
“We practically revoked all DSDP contracts in the preceding four months. “We now have an arm’s-length method where we may pay cash for imports,” Kyari said on Saturday.
This is the first time the NNPC has canceled crude swap arrangements. Kyari said that while private enterprises import the bulk of gasoline, NNPC may pay in cash by buying less of it.
Nigeria, Africa’s biggest oil producer, now imports the majority of its processed commodities after shutting its refineries.
Last year’s drop in oil production and increasing worldwide gasoline prices as a result of the Ukraine conflict boosted NNPC’s trade debt. According to a September 2022 NNPC report to the Federation Account Allocation Committee, the consortiums owed the company $2 billion.
According to an industry source, NNPC was still allocating oil for fuel swaps for July loading. In its March crude oil loadings report, NNPC allocated petroleum to consortium swap contracts.
Kyari said that the NNPC’s monopoly on petroleum was ending and that private firms may begin importing this month.
According to Kyari, Nigeria’s oil and condensate output was 1.56 million bpd on Friday. Grand oil theft and illegal refining have stopped Nigeria from fulfilling its OPEC oil quota of 1.742 million bpd.
The Dangote Refinery’s 650,000 bpd capacity has been called into doubt. NNPC supplies the refinery with 300,000 bpd.
