Forex Scarcity: NNPC Sustains Petrol Supply With Oil Swap

There are strong indications that the Nigerian National Petroleum Company Limited (NNPCL)  may have bent backwards to reintroduce the recently jettisoned crude swap initiative to keep the country wet with white products.

Falling back to the option, according to a top industry source, was in response to depleting supply following the inability of the company to sustain products import as foreign exchange scarcity heightens.

Indications of looming scarcity were noticed in parts of Lagos on Monday when motorists queued longer at filling stations.

At TotalEnergies filling station along Mobolaji Bank Anthony way, Ikeja, a long queue emerged during midday, extending traffic close to Maryland.

Although some stations were open to motorists, many were not using all the pumps.

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President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Okoronkwo, however, confirmed that members of his association were still receiving products from NNPC Retail Company.

In Abuja and environs, LEADERSHIP checks indicated that many independent petrol stations were shut, with petrol largely sold by NNPC retail outlets

However, our source said that the NNPC was yet to obtain the proposed $3 billion forex facility from Afreximbank, which is affecting its importation.

Our source said that the company is presently hard hit with dollar scarcity while marketers remain adamant to import.

In June this year, the group chief executive officer of NNPC Limited, Mallam Mele Kyari, said the company had terminated its crude-for-petrol swap deal, otherwise called Direct Sale Direct Purchase (DSDP) contracts, with foreign refiners and consortia of traders.

In an interview with Reuters, Kyari said NNPCL would now pay cash for petrol imports.

He also revealed that private oil marketing companies in Nigeria could begin importing petrol, but marketers have rejected the offer as the landing cost of petrol continues to go up while the government has maintained price control measures contrary to its deregulation policy.

However, with the latest indication, it appears that the NNPC had jettisoned the earlier announcement that the crude swap initiative was no longer in operation.

All enquiries made to NNPCL to get clarification on the issues raised were abortive as of press time.

At about noon yesterday, LEADERSHIP sent SMS to Mrs Iyabode Ayobami-Ojo, the most senior officer in the Corporate Communications Department of NNPCL following the retirement of the former group corporate communications manager, Garba Deen Muhammed, but received no response.

A reminder message was sent at about 8:50pm, and she promised to send a response. However, there was no response until this report was filed.

The Nigeria Extractive Industries Transparency Initiative (NEITI), in its recent report disclosed that the NNPCL exchanged crude oil valued at N2.6 trillion for refined petroleum products in 2021.

An analysis of crude oil production figures obtained from the just released 2021 Oil and Gas Report of NEITI also indicated that the national oil company did not send any crude oil to Nigeria’s refineries during the period under review.

The NEITI, however, stated that the non-supply of crude to domestic refineries by NNPCL could be due to the fact that the facilities were not operational at the time.

Nigeria’s refineries in Port Harcourt, Kaduna and Warri have been dormant for years, though rehabilitation is ongoing at the facilities currently.

The NEITI report stated that the oil firm exchanged Nigeria’s crude oil for refined products under its Direct Sale Direct Purchase programme, adding that crude oil sales receipt during the review period was N2.23 trillion.

Under the DSDP scheme, initiated in 2016, selected overseas refiners, trading companies and indigenous companies were allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products to the NNPCL.

Commenting on this in its latest report, NEITI said, “NNPC allocated a total of 98.92 million barrels of crude oil valued at $7.11 billion (N2.73 trillion) for the local market in 2021. However, no crude was delivered to any of the local refineries in 2021.”