According to Reuters, the Nigerian National Petroleum Company (NNPC) Limited has begun terminating crude oil swap contracts and will pay cash for petrol imports.
Mele Kyari, the NNPC’s group chief executive officer (GCEO), stated that private companies could begin importing petrol as early as June.
He stated that the national oil company will now pay for its purchases in cash by terminating the crude swap contracts, and that NNPC will import less petrol while private companies will import the majority.
“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.
The House of Representatives asked the federal government on Thursday to suspend all DSDP contracts as a result of President Bola Ahmed Tinubu’s administration’s removal of the petrol subsidy.
According to Reuters, this is the first time NNPC has stated that it is terminating crude swap contracts, emphasising that by importing less petrol, which private companies import the majority of, NNPC will be able to pay for its purchases in cash.
In terms of production capacity, the NNPC CEO stated that 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 OPEC quota of 1.742 million barrels per day (bpd).
Nigeria’s oil production fell below one million barrels per day in April 2023, with output falling to 998,602 bpd.
The figure represented a 21.26 percent decrease from March, when output was 1,268,202 bpd.
It was also the lowest volume of output in the previous seven months.
Tinubu declared the end of the petrol subsidy regime in his inaugural speech on Monday.
“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 remarks, massive queues resurfaced at filling stations in some parts of Nigeria, which the Independent Petroleum Marketers Association of Nigeria (IPMAN) blamed on panic buying even as petrol prices rose.
The Nigeria Labour Congress (NLC) issued a five-day ultimatum to the federal government on Friday, demanding that the old petrol prices be reinstated or face a nationwide protest.