A recently released report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has shed light on the exchange of crude oil valued at N2.6 trillion by the Nigerian National Petroleum Company Limited (NNPCL) for refined petroleum products during the year 2021.
According to the findings presented in the 2021 Oil and Gas Report by NEITI, the oil sales receipt for the same period amounted to N2.23 trillion. Also Read:
The report further disclosed that the NNPCL was responsible for the lifting and exportation of a total of 24.84 million barrels of crude oil, with a market value of $1.70 billion on behalf of the Federation in 2021.
Out of this, $1.58 billion was successfully traced to respective bank accounts as the actual sales receipt for 2021. Within this sum, $1.55 billion represented the sales receipts for 2021, while $24.32 million was attributed to the settlement of prior year receivables. This exchange transpired under the Direct Sale Direct Purchase (DSDP) program.
The DSDP initiative, introduced in 2016, involves allocating crude supplies to selected overseas refiners, trading companies, and indigenous firms. In return, these entities deliver an equivalent value of petrol and other refined products to the NNPCL.
The NEITI report also underscored that during the review period, the NNPCL did not supply any crude oil to Nigeria’s domestic refineries due to their inoperability.
According to NEITI, “NNPC allocated a total of 98.92 million barrels of crude oil valued at $7.11 billion (N2.73 trillion) for the local market in 2021. However, no crude was delivered to any of the local refineries in 2021. Instead, NNPC used 95.25 per cent of this crude for crude exchange for products at the international market under the DSDP arrangement, while 4.75 per cent was sold at the international market. This may be due to the fact that none of the refineries were operational in 2021. The sum of N2.23 trillion ($5.85 billion) was the actual domestic crude sales receipts in 2021, out of which the sum of N1.64 trillion ($4.30 billion) represents 2021 sales receipts, while the sum of N588.68 billion ($1.55 billion) relates to settlement of prior year receivables.”
NEITI Report Reveals N2.6 Trillion Crude Oil Exchange for Refined Products in 2021
In response to the NEITI report, Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), emphasized the urgent need for the government to revamp the nation’s refineries. He asserted that functional refineries would reduce the demand for dollars, positively impacting the exchange rate and eliminating the need for programs like DSDP.
Ukadike also advocated for the development of modular refineries, suggesting that the government should provide support to operators in this sector to reduce the country’s dependence on imported petroleum products. He noted that subsidies had previously hindered the emergence of modular refineries, but with their reduction, it was time to provide the necessary support for their development.
The NEITI report highlights the complex landscape of Nigeria’s oil industry, calling for continued efforts to address structural challenges and enhance the country’s self-sufficiency in petroleum production.
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