New Telegraph

FG continues crude swap contracts despite deregulation

…benefiting companies get fresh 6-month extension

 

 

Despite the announcement full deregulation of the downstream sector of the Nigerian oil industry indications are that the Nigerian National Petroleum Corporation (NNPC) has extended for six months its contracts with private companies to swap crude oil for fuels.

 

Reuters reported that the initial one-year contracts to exchange more than 300,000 barrels per day (bpd) with 15 company pairings were due to expire in October.

 

The crude for refined petroleum products contracts had made it possible for only NNPC to be the sole importer of fuel which is a misnomer in a deregulated environment The sources said the companies renegotiated the price agreement due to changes to fuel prices in Nigeria.

 

The contracts supply a large portion of Nigeria’s Premium Motor Spirit (PMS), and some of its diesel and jet fuel, as it has not been profitable for private importers to bring in fuel.

Nigeria recently stopped setting a gasoline price cap at the pump, a decision it says will eliminate costly subsidies and enable the private sector to begin importing again.

 

Meanwhile, Sunday Telegraph learnt that PPMC still sets an ex depot price for fuels imported by NNPC. This, combined with dollar shortages, has thus far made it difficult for some importers to bring in fuels outside the contracts.

 

 

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