NNPC Opts For Direct Sale Of Crude

In a major shift, the Nigerian National Petroleum Corporation (NNPC) yesterday opted to, henforth, buy crude oil and petroleum products directly from credible international companies.
This approach, it said, would ensure more transparency and eliminate middlemen in the crude oil exchange for  product matrix.

NNPC spokesman Mr. Ohi Alegbe said the time had come for the replacement of the 11 Offshore Processing Arrangement (OPA) options with the more efficient Direct-Sale-Direct Purchase (DSDP) alternative.
Alegbe explained that the NNPC took its position after the evaluation of pre-qualified bidders showed that most of the 44 companies earlier shortlisted for the next stage of the tender process only had affiliations to refineries abroad, thereby bringing a toll on the value chain.
The NNPC said if allowed to subsist, the development would constitute a significant value loss to the federation through accruals.
“In this regard, only bona fide owners of refineries identified in the ongoing OPA Tender Evaluation process will be further engaged. The identified refineries will be subjected to due diligence and analysis by NNPC-appointed consultants to confirm suitability in line with international best practice,’’ the corporation said.
NNPC said the call for commercial bids issued to the 44 shortlisted bidders made up of 34 international firms and 10 indigenous companies have been withdrawn.
But the Nigerian Extractive Industries Transparency Initiative (NEITI) called for the reduction of crude oil allocation to NNPC.
Speaking at a valedictory ceremony at the NEITI head office, Abuja, the outgoing Executive Secretary, Mrs. Zainab Ahmed explained that of all the crude allocated to domestic refineries, not more than 28 per cent is utilised; about 35 per cent is exported.
The revenue from the exported crude, according to her, is spent on financing NNPC operations. But, she insisted that if the Federal Government prunes crude allocation to the corporation it would be compelled to seek other means of financing and become more efficient.
Mrs. Ahmed said: “My advice and what NEITI has been recommending is that we should reduce the level of crude that we allocate to the NNPC. We have said over time that this will serve as an incentive for the refineries to improve their performance capacities.