Report: NNPC begins cash payments for petrol imports

The Nigerian National Petroleum Company (NNPC) Limited has started buying petrol via cash tenders, rather than oil swaps, Reuters is reporting. 

The previous swap arrangement, known as direct sale, direct purchase (DSDP), had been in place for nearly a decade.

The DSDP is an agreement that allows the sale of crude oil to refiners, who will in turn supply NNPC with an equivalent worth of petroleum products.

Sources told Reuters that the national company’s latest tender to buy petrol for delivery in November closed this week. 

Two of the sources, according to the report, said NNPC would pay the last debts owed under the oil swaps by the end of next month.

The shift comes over four months after President Bola Tinubu commenced reforms to eliminate the costly petrol subsidy. 

On June 4, 2023, NNPC Limited said it had commenced the termination of crude oil swap contracts, hinting at payment of cash for petrol imports. 

“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,” Mele Kyari, NNPC GCEO, had said. 

The country reportedly owes about $3 billion to trading houses and oil majors for crude oil swap arrangements. 

Meanwhile, the NNPC recently regained its status as the sole importer of petrol into the country, as licensed private oil firms are unable to obtain foreign currency for importation.