Just In : NNPC Limited terminates crude swap contracts
The National Oil Company has announced the termination of all Crude Swap Contracts following the removal of fuel subsidy.
The crude swap contract also known as Direct Sale Direct Purchase (DSDP) is a contract between FG through NNPCL and Private Refiners where NNPCL allocates Crude Oil to the refiners and in turn the refiners supply NNPCL with refined petroleum products in equivalent worth.
This arrangement was to enable NNPCL take charge and keep track of all the refined products coming in to the country and make informed decision on fuel Subsidy. Now that the subsidy is removed and the market becomes free and flexible, the aim of the DSDP Contracts has been defeated.
The removal of subsidy implies that any company can import refined products in Nigeria and sell at it’s designated price. NNPC Ltd as a private company, will also pay refiners in cash for refined products just like every other company, import and sell at designated prices.
Recall that NNPC Limited is now an independent private company registered under CAMA just like every other private company. And according to the Petroleum Industry Act 2021, no single company can hold more than 30% market share of the Oil and Gas Industry. This gives room for competition amongst the industry players.
The implementation of PIA 2021 will last until 2024 when all assets and liabilities of the defunct NNPC must have been transferred to the newly incorporated NNPC Limited and shares available to public for stocking.
