According to a media report from sources, the affected oil companies renegotiated the price agreement due to changes that were made in the prices of petrol in the country.
The initial 1-year oil swap contracts to exchange over 300,000 barrels of crude oil per day with 15 company groupings were due to expire in October 2020. The swap deal with these companies supplies a huge portion of Nigeria’s petroleum products which include fuel, diesel and jet fuel, as it has not been profitable for private oil companies to import fuel into the country.
As a result of this, the state oil giant, NNPC, has been the sole importer of fuel for quite a while.
Over a year ago, it was reported that NNPC had contracted about 34 companies under a total of 15 groupings to carry out a swap deal for the supply of refined fuel in exchange of crude oil. This scheme was introduced in 2016 to replace the programme at that time which gulped trillions of naira in subsidy payments to importers and supplied about 90% of the fuel import requirements.
The Federal Government recently started the implementation of its deregulation policy with its stoppage of fixing prices and allowing market forces to determine the price of petrol. This decision will eliminate the subsidy payment by the Federal Government and allow private oil companies to invest in the downstream oil sector and restart the importation of fuel again.