NNPCL terminates crude oil swap deals, adopts cash payments

By Ibiyemi Mathew

The Nigerian National Petroleum Company Limited (NNPCL) has revealed that it has terminated all crude oil swap deals.

The NNPCL disclosed this in an interview with Reuters monitored by Nigerian NewsDirect.

According to the Group Chief Executive Officer (GCEO) of the NNPCL, Mr Mele Kolo Kyari, “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.”

Earlier in 2021, Kyari speaking during a virtual panel at the African Refiners and Distributors Association annual conference held in Abidjan revealed the country’s plan to end the country’s oil-for-fuel swaps system as soon as local refining capacity improves by 2023.

He said with all the government refineries, the Dangote refinery as well as the modular facilities expected to be fully functional latest by 2023, the corporation will end the swap deal, which has been in operation since 2016.

Prior to now, the NNPCL has been importing gasoline from consortiums of foreign and local trading firms and repaying them with crude oil via what are known as Direct Sale Direct Purchase (DSDP) contracts since 2016 because it does not have enough cash to pay for the purchases, data and trading sources said.

“By importing less gasoline as private companies import the bulk, NNPC will be able to pay for its purchases in cash,” Kyari said in his interview on Saturday.