The NNPC Ltd is winding down crude swap contracts with traders and will pay cash for gasoline imports.
NNPC boss, Mele Kyari said in an interview that NNPC 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.
“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,” Kyari told Reuters in an interview late on Saturday.
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, Kyari said.
Nigeria is Africa’s biggest crude producer but imports most of its refined products after running down its refineries.
A significant drop in oil production last year coupled with high global fuel prices due to the war in Ukraine pushed NNPC’s debt to traders higher. It owed the consortiums about $2 billion, a September 2022 NNPC report to the Federation Account Allocation Committee shows.
In its report detailing March crude oil loadings, NNPC also allocated crude to the swap contracts held by the consortiums.
Kyari said NNPC’s monopoly on gasoline supplies was ending and private firms could start importing as early as this month.
Kyari said Nigeria’s total crude and condensate output was at 1.56 million barrels a day (bpd) as of Friday. Nigeria has struggled to meet its OPEC oil quota of 1.742 million bpd due to grand oil theft and illegal refining.