FG to save N200bn from direct sale of crude oil

FG to save N200bn from direct sale of crude oil
February 03 09:47 2016

The Federal Government has disclosed plans to save $1 billion (N200 billion) from the Direct-Sale-Direct-Purchase (DSDP) initiative in the oil sector.

The Minister of State for Petroleum/Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, said this when he appeared before the House of Representatives’ Ad-Hoc Committee which is investigating the NNPC’s offshore processing and crude swap arrangement for the period from 2010 to date.

He said the Direct-Sale-Direct-Purchase was adopted to replace the Crude Oil Swap initiative and the Offshore Processing Arrangement so as to introduce and entrench transparency in the crude oil for product transaction by the corporation in line with global best practices.

Kachikwu said the DSDP option eliminated all the cost elements of middlemen and gave the NNPC the latitude to take control of sale and purchase of crude oil transaction with its partners.

“When I assumed duty as the Group Managing Director 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,” he said.

He said the DSDP initiative has whittled down the influence of the minister in the selection of bid winners as it allowed all the bidders to be assessed transparently, based on their global and national track records of performance before the best companies with the requisite capacities are selected.

He said the policy was aimed at reducing the gaps inherent in the OPA and the losses incurred by the NNPC in the past.

It would be recalled that the NNPC had in November, said it had discontinued the Offshore Processing Arrangement (OPA) and had replaced it with Direct Sale-Direct-Purchase (DSDP) programme.

The minister also spoke on the issue of subsidy, saying the Federal Government did not pay any subsidy on petroleum products in January 2016.

The NNPC had also said that the replacement of the OPA with the more efficient DSDP was aimed at enshrining transparency and eliminating the activities of middlemen in the crude oil exchange for product matrix.

To this end, the NNPC withdrew the call for commercial bids issued to 44 bidders, made up of 34 international firms and 10 indigenous companies, earlier shortlisted.