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The Nigerian Nationwide Petroleum Firm Restricted (NNPC) is winding down crude oil swap contracts with merchants and can pay money for petrol imports as non-public corporations may start importing petrol as quickly as this month, based on a Reuters report.
Which means NNPC is within the means of ending crude swap contracts with merchants. As a substitute of exchanging crude oil for refined petroleum merchandise, the state-oil firm will now make money funds for petrol imports.
The transfer is a part of President Bola Tinubu’s plans to decontrol the petrol market and scale back the burden on authorities funds, the assertion mentioned.
President Bola Tinubu on Monday throughout his inauguration introduced that “subsidy is gone” sending the market right into a tailspin as those that had the merchandise shortly shut their pumps and lengthy queues emerged throughout the nation.
NNPC has been importing petrol from consortiums of overseas and native buying and selling corporations and repaying them with crude oil by way of what is named Direct Sale Direct Buy (DSDP) contracts since 2016 as a result of it doesn’t have sufficient money to pay for the purchases, the assertion mentioned.
“Within the final 4 months, we virtually terminated all DSDP contracts. And we now have an arm’s-length course of the place we will pay money for the imports,” Mele Kyari, group chief govt officer, NNPC informed Reuters in an interview late on Saturday.
“That is the primary time NNPC has mentioned it’s terminating crude swap contracts. By importing much less gasoline as non-public corporations import the majority, NNPC will be capable to pay for its purchases in money.”
Nigeria is Africa’s greatest crude producer however imports most of its refined merchandise after working down its refineries. Nigeria’s petrol import invoice hit N5.2 trillion in 2022, the very best in six years, as the hunt by the nation to wean itself off imported gasoline drags.
Learn additionally: Nigerians groan as NNPC, entrepreneurs increase petrol value
A big drop in oil manufacturing final yr coupled with excessive international gasoline costs as a result of conflict in Ukraine pushed NNPC’s debt to merchants increased. It owed the consortiums about $2 billion, a September 2022 NNPC report back to the Federation Account Allocation Committee reveals, the assertion mentioned.
“An business supply with direct information of the matter mentioned NNPC was nonetheless allocating crude for gasoline swaps for July loading, although lower than in earlier months. In its report detailing March crude oil loadings, NNPC additionally allotted crude to the swap contracts held by the consortiums,” Reuters mentioned.
Kyari informed Reuters that NNPC’s monopoly on petrol provides was ending and personal corporations may begin importing as early as this month.
“Nigeria’s complete crude and condensate output was at 1.56 million barrels a day (bpd) as of Friday. Nigeria has struggled to fulfill its Group of Petroleum Exporting Nations (OPEC) oil quota of 1.742 million bpd on account of grand oil theft and unlawful refining,” Kyari mentioned.
That has raised doubts on whether or not Nigeria can meet provides for the 650,000-bpd newly commissioned Dangote Refinery. NNPC has a contract to produce 300,000 bpd to the refinery.
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