The Federal Government yesterday declared end to crudefor- products exchange arrangement popularly referred to as crude swap, stating that this initiative would fetch the country $1 billion. Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, maintained that the crude-for-product exchange arrangement would be replaced by a Direct- Sale-Direct-Purchase (DSDP) arrangement, which will take off next month.
Kachikwu disclosed this when he appeared before the House of Representatives’ Ad Hoc Committee set up to investigate the corporation’s offshore processing and crude swap arrangement for the period between 2010 to date at the National Assembly Complex, Abuja.
A statement by the NNPC quoted the minister as announcing that the price modulation policy had rid the Federal Government of the burden of subsidy on imported petroleum products in January 2016.
He noted that the DSDP was adopted to replace the Crude Oil Swap initiative and the Offshore Processing Arrangement so as to introduce and entrench transparency into the crude oil for product transaction by the corporation in line with global best practices.
Under the old order, crude oil was exchanged for petroleum products through third party traders at a pre-determined yield pattern.
The minister stated that the DSDP option eliminated all the cost elements of middlemen and gave the NNPC the latitude to take control of sale and purchase of the crude oil transaction with its partners.
“When I assumed duty as the GMD of NNPC, I met the Offshore Processing Arrangement (OPA) and, like you know, there is always room for improvement. I and my team came up with the DSDP initiative with the aim of throwing open the bidding process.
“This initiative has brought transparency into the crude-for-product exchange matrix and it is in tandem with global best practices,” Kachikwu said. Kachikwu announced that the price modulation policy had taken from the Federal Government the burden of subsidy on imported petroleum products in January 2016.
