For the first time in nearly a decade, the Nigerian National Petroleum Company (NNPC) Limited has discontinued the crude oil swap agreement for petrol and began purchasing fuel through cash tenders.
This adjustment, which is in line with President Bola Tinubu’s reform proposals introduced in May, aims to eliminate costly fuel subsidies and strengthen the financial stability of Africa’s largest oil-exporting nation.
According to Reuters, the state-owned oil corporation made this significant change in its most recent tender for obtaining gasoline for delivery in November.
Furthermore, according to two of these sources, NNPC intends to settle outstanding obligations connected to long-standing oil swaps by the end of the month.
President Bola Tinubu’s efforts to remove costly gasoline subsidies as part of bigger steps aimed at improving Africa’s largest oil exporter’s flagging finances have resulted in the change.
Despite soaring oil prices, NNPC paid no taxes last year because oil-for-petrol swaps gobbled all the crude oil it had to sell – and more; NNPC owed merchants up to $3 billion in oil this year, according to two sources, and the debts would be refunded in November.
Tinubu’s May changes roughly doubled petrol prices and essentially eliminated cross-border smuggling, which was draining millions of gallons per day from Nigeria to neighboring countries with higher pump rates.
Despite producing more oil than any other African country, Nigeria refines little and relies almost solely on petroleum imports to keep its 200 million people moving.
The most recent round of swaps involved more than a dozen consortia, including major oil dealers such as Vitol, TotalEnergies, and Mercuria, as well as local enterprises such as Sahara.
Despite the reforms, insiders claim the NNPC remains the sole importer of gasoline due to chronic foreign exchange shortages and an effective pump price cap, which means private importers cannot profit from bringing in fuel.