As the Nigerian National Petroleum Company Limited (NNPCL) prepares to discontinue crude oil exchange contracts and transition to cash payments for fuel imports, private businesses in Nigeria will have the option to purchase fuel beginning in June 2023.
The news was made on June 3 during an interview with Reuters by NNPCL’s group chief executive officer, Mele Kyari. This action is consistent with President Bola Tinubu’s initiatives to liberalize the gasoline market and lessen the financial burden on the federal government.
He said; “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.
“This is the first time NNPC has said it is terminating crude swap contracts. By importing less gasoline as private companies import the bulk, NNPC will be able to pay for its purchases in cash.”
Even though it was less than in prior months, NNPC was nevertheless allocating crude for fuel swaps for July loading, according to Reuters. The NNPC also allocated crude to the swap contracts held by the consortiums in its report on March’s crude oil loadings.
Mele Kyari reportedly informed Nigerians that new players would enter the market after the recent decision to raise petrol pump rates. He stated in a recent interview with Arise TV:
“Investors’ reluctance to come into the market all along was the subsidy regime and that regime does not guarantee repayments back to those who provided the product at subsidized prices. Now that the market regulates itself, oil marketing companies can actually import products or produce locally. They can take the product into the market, sell it and get their money back.”
According to Kyari, NNPCL is only permitted to hold a maximum of 30% of the market going ahead, according to the Arise TV interview. He emphasized the fact that oil marketing corporations will be able to enter as soon as the market stabilizes.
Following the withdrawal of gasoline subsidies by the Tinubu administration, Nigeria’s House of Representatives has ordered the Federal Government to halt all Direct Sales Direct Purchase (DSDP) contracts.