The Nigerian National Petroleum Company Limited (NNPCL) has ended the crude oil swap deal for petrol and started using cash tenders for the purchase of fuel for the first time in a decade, according to reports from Reuters.
This transition, which is in line with President Bola Tinubu’s reform efforts initiated in May, aims to eliminate costly fuel subsidies and bolster the financial stability of Africa’s largest oil-exporting nation.
In the company’s most recent tender for purchasing gasoline scheduled for delivery in November, sources according to Reuters have reported that NNPC made this significant change.
Additionally, two of these sources have confirmed that NNPCL intends to settle the remaining debts associated with long-standing oil swaps by the end of the upcoming month.
Historically, these oil swaps involved a variety of consortia, including foreign oil traders like Vitol, TotalEnergies, and Mercuria, as well as local companies such as Sahara.
Despite the current administration’s most recent reforms, NNPCL continues to be the sole importer of fuel due to persistent foreign exchange shortages and a price cap that makes it unviable for private importers to import fuel.
President Tinubu’s subsidy removal in May saw petrol prices almost triple and a significant reduction in cross-border smuggling, which had been siphoning off millions of litres of fuel daily to neighbouring countries with higher pump prices.
A central objective of Tinubu’s administration is to bring the official naira exchange rate closer to the parallel market rate.
However, the black-market exchange rate recently reached a record low of over 1,000 naira per dollar last month.