NNPC finally ends ‘dubious’ oil swap deals

The Nigerian National Petroleum Corporation (NNPC) has ended its highly controversial offshore processing arrangement (OPA) in favour of direct sale-direct purchase (DSDP).

The OPA deals, which involved middlemen in the crude-oil-exchange-for-product matrix, had been widely criticised as opaque, dubious and corrupt by industry experts.

With Nigerian refineries not producing enough to meet local demand, the NNPC trades part of its daily 440,000bpd allocation in exchange for products such as petrol, diesel and kerosene under OPA.

Announcing the new arrangement on Tuesday afternoon, Ohi Alegbe, the corporation’s spokesman, said it is a “major steer designed to enshrine transparency and eliminate the activities of middlemen in the crude oil exchange for product matrix”.

The DSDP allows for the direct sale of crude oil by NNPC as well as direct purchase of petroleum products from “credible international refineries”, he said.

Alegbe said the NNPC came to this “informed” position after the evaluation exercise of pre-qualified bidders revealed that most of the 44 companies earlier shortlisted for the next stage of the tender process only had affiliations to refineries abroad, “a situation which introduces toll on the value chain”.

If allowed to subsist, the development would in turn constitute a significant value loss to the federation by way of accruals, he said.

“In this regard, only bona fide owners of Refineries identified in the ongoing OPA Tender Evaluation process will be further engaged. The identified Refineries will be subjected to due diligence and analysis by NNPC appointed consultants to confirm suitability in line with International best practice,” Alegbe said.

The NNPC said the call for commercial bids issued to the 44 shortlisted bidders made up of 34 international firms and 10 indigenous companies have been withdrawn.