As the Nigerian National Petroleum Company Limited 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.
According to Reuters, on June 3, NNPCL’s group chief executive officer, Mele Kyari, made the statement which is consistent with President Bola Tinubu’s initiatives to deregulate the petroleum industry and lessen the financial burden on the government.
“We essentially terminated all Direct Sale Direct Purchase contracts during the past four months. Additionally, we now have an arm’s-length process where we can pay cash for the imports.
“NNPC has never before announced that it is ending crude swap contracts. NNPC will be able to pay for its purchases in cash if it imports less petrol, as private corporations now import the majority of it.
Even though it was less than in prior months, NNPC was nevertheless allocating crude for fuel swaps for July loading. 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.
“The subsidy regime, which does not guarantee returns back to those who delivered the product at subsidized prices, has always been the reason why investors have been reluctant to enter the market.
“Oil marketing companies can genuinely import goods or create them locally now that the market has self-regulated. They can sell the item on the market and recoup their investment.”
According to Kyari, NNPCL is only permitted to hold a maximum of 30% of the market going ahead. He emphasized the fact that oil marketing corporations will be able to enter as soon as the market stabilizes.
Following the removal of fuel subsidy, the Nigerian House of Representatives has ordered the Federal Government to halt all Direct Sales Direct Purchase contracts.
