NNPC Abandons Crude Oil Swap, to Spend N843 Billion Monthly Importing Petrol
- The Nigerian National Petroleum Company Limited (NNPC) will spend about N843 billion monthly on petrol imports
- The development is due to the halt of the initial crude oil swap arrangement by the company recently
- NNPC says it now pays cash for petrol, meaning monthly petrol import will gulp N28.1 billion daily
The Nigerian National Petroleum Company Limited (NNPC) may be spending about N843 billion monthly on petrol imports following the halt in oil swaps by the company.
The company is currently the only petrol importer in Nigeria and recently began buying petrol with cash tenders rather than oil swaps.
Source: Getty Images
Daily petrol consumption falls as marketers move to begin import
The crude oil swap, known as Direct Sale, Direct Purchase, which has existed for almost a decade, allows NNPC to sell crude to refiners, supplying the company with the equivalent of refined petroleum products.
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Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) show that between June 1 and June 28, 2023, described as the post-deregulation period, total petrol consumption across Nigeria was 1.36 billion litres, while the average ex-depot price of the product was about N580 per litre.
Oil marketers stopped petrol import due to constraints in accessing Forex.
An earlier report by Legit.ng, however, showed there are plans to provide them with a unique window to access Forex to begin petrol import.
Marketers to begin petrol imports under special arrangement
The marketers revealed that marketers agreed in a meeting with NMDPRA that the federal government would allow them to access Forex in the official market with a unique arrangement so they can begin petrol import.
According to a punch report, with petrol consumption averaging about 48.43 million litres daily and the average ex-depot price of N580/litre, NNPC would spend about N28.1 billion on petrol imports.
The development means that the national oil company will spend about N843 billion importing petrol in 30 days, given that it now pays cash for petrol imports.
Reuters reports that NNPC’s latest tender to buy purchase petrol in November closed last week.
NNPC owes $3 billion in oil swap deals
The report said NNPC would pay the last debts owed under the oil swaps by the end of November.
The move was due to President Bola Tinubu’s reforms in the petroleum downstream sector to eradicate the expensive petrol subsidy.
According to Reuters News Agency, NNPC had begun terminating oil swap contracts, implying cash payment for petrol imports.
“In the last four months, we practically terminated all Direct Sale Direct Purchase contracts. And we now have an arm’s-length process where we can pay cash for the imports,” the Group Chief Executive Officer, NNPCL, Mele Kyari, had said.
Nigeria reportedly owes about $3bn to trading houses and oil majors for crude oil swap arrangements.
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Earlier, a Legit.ng report says that petrol marketers have hinted at the possibility of a hike in petrol prices in the coming weeks following the depreciation of the naira.
Legit.ng reported that the naira crashed from N930 to a dollar on Thursday, August 10, 2023, prompting the marketers to mull an increase in the pump price of the product.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) said there will be changes in the pump price of fuel in the country.
Source: Legit.ng
