The Nigerian National Petroleum Corporation (NNPC) has issued award letters on Monday for highly sought-after contracts to exchange crude oil for imported fuel, oil industry sources told Reuters.
A total of 15 groupings, with at least 34 companies in total, received award letters, four sources with knowledge of the deals said.
The award letters were circulated on Monday, while the contracts have not yet been signed. That is largely a formality as the terms have been negotiated, the sources said, and the list of companies is unlikely to change.
NNPC spokesman, Ndu Ughamadu, when reached for comment, said he would seek verification of the news.
The contracts have supplied virtually all of Nigeria’s gasoline for the past two years, as capped prices mean that other would-be importers cannot make money bringing the fuel into the country. In exchange, the deals provide coveted and potentially lucrative access to Nigeria’s crude oil cargoes.
NNPC had on May 2, 2019 , announced that 132 firms had submitted bids for the 2019 crude oil-for-product swap programme, called the direct sale of crude oil and direct purchase of petroleum products scheme.
Under the DSDP scheme, selected overseas refiners, trading companies and indigenous companies are allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products to the NNPC.
The corporation said it had saved $2.2bn through the scheme since its inception.
In his address at the bid opening ceremony for the 2019 DSDP in Abuja, former NNPC Group Managing Director, Dr Maikanti Baru, had noted that the initiative was introduced in 2016.
Baru said: “The third public bid opening ceremony for the DSDP tenders is fully in line and in demonstration of President Muhammadu Buhari’s transparency and anti-corruption initiatives, which the NNPC has imbibed and championed relentlessly.
“The DSDP scheme was introduced in 2016 with efficient and cost-effective systems and processes to plug the value-eroding loopholes of the January 2015 OPA (Offshore Processing Agreement) contracts.”
He added that from the inception of the scheme in April 2016 to March 2019, 29.5 million metric tonnes (39.6 billion litres) of petroleum products had been supplied, representing over 90 per cent of the national requirement.
“The scheme prides itself as a competitive pricing framework lower than the PPPRA (Petroleum Products Pricing Regulatory Agency) benchmark, which over the years has ensured a significant reduction in product demurrage cost in the range of 84 per cent.