In a significant development, Mallam Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, revealed that the company has terminated its crude-for-petrol swap deal, known as Direct Sale Direct Purchase (DSDP) contracts, with foreign refiners and consortia of traders. This decision marks a shift towards cash payments for petrol imports, allowing private oil marketing companies in Nigeria to begin importing petrol as early as this month.
The move aligns with President Bola Tinubu’s plans to deregulate the petrol market and alleviate the burden of subsidy payments on government finances. The termination of crude swap contracts is a significant step in this direction. By reducing the importation of petrol and allowing private companies to handle the bulk, NNPC can now make cash payments for its purchases.
As the fuel subsidy removal continues to stir debates across the nation, the Independent Petroleum Marketers Association of Nigeria (IPMAN) called on President Bola Tinubu to follow through on his commitment to the total deregulation of the downstream petroleum sector. IPMAN emphasized the need to break NNPC’s importation monopoly, allowing other players in the sector to participate in the importation of petrol into Nigeria. They believe that introducing competition through local refining or importation will ensure adequate production, supply, and ultimately lead to lower prices.
The nationwide strike threatened by the Nigeria Labour Congress (NLC) reflects the discontent surrounding the new pricing template. Despite the backlash, President Tinubu reaffirmed his commitment to redirect the savings from the subsidy removal towards education, health, and other sectors.
IPMAN, while acknowledging the long-awaited removal of the petroleum subsidy, urged the government to ensure that Nigerians reap the benefits of this policy through improved infrastructure, healthcare, education, and basic social amenities. They expressed their support for the removal of subsidy as a means to liberate Nigerians from perpetual indebtedness and borrowing, which have hindered the country’s progress.
The successful implementation of this policy depends on ensuring that the product is readily available for Nigerians. IPMAN emphasized the importance of the NNPC and the NMDPRA (Nigeria Midstream and Downstream Petroleum Regulatory Authority) ensuring seamless monitoring, distribution, and the removal of bottlenecks and frustrations to encourage adequate production and supply.
While some Nigerians approach the policy with skepticism, IPMAN believes that the sacrifices made in accepting this change will be compensated with tangible improvements in their lives. The group pledges to collaborate with the current administration, recognizing this policy as a milestone in repositioning Nigeria’s economy.
The termination of the crude-for-petrol swap deal signifies a notable shift in Nigeria’s petroleum sector. It presents an opportunity for market competition, increased efficiency, and the potential for better outcomes for Nigerian citizens. The government’s commitment to transparent implementation and inclusive participation will be crucial in realizing the benefits of deregulation.