Nigerian National Petroleum Corporation (NNPC) has said it will continue to swap crude oil for refined petroleum products till June.
“The DSDP was extended till June 2021 to enable us to conclude the ongoing process of putting new contact in place,” NNPC spokesman Kennie Obateru said on Monday.
Nigeria exchanges more than 300,000 barrels per day (bpd) with 15 company pairings.
The swap deal with these companies supplies a huge portion of Nigeria’s petroleum products which include fuel, diesel and jet fuel, as it has not been profitable for private oil companies to import fuel into the country.
NNPC in 2019 contracted about 34 companies under a total of 15 groupings to carry out a swap deal for the supply of refined fuel in exchange of crude oil.
The scheme was introduced in 2016 to replace the programme at that time which gulped trillions of naira in subsidy payments to importers and supplied about 90 percent of the fuel import requirements.
Nigeria became increasingly reliant on NNPC for fuel imports via swaps after a currency devaluation and recession in the last few years, which priced independent importers out of the spot market.
NNPC issued a tender for new contracts, known as direct sale, direct purchase (DSDP), in December 2020.
The coveted swaps supply nearly all of Nigeria’s gasoline, and some of its diesel and jet fuel, in exchange for cargoes of crude oil.
Nigeria eliminated pump price caps for gasoline in 2020, but NNPC controls over ex-depot pricing have made it tough for private companies to make money importing the fuel, leaving the government as the sole supplier.
