Apparently scandalized by the acute petrol scarcity, which marred the Yuletide celebrations, the federal government is set to review the $6 billion Direct Sale-Direct Purchase (DSDP) contracts of the Nigerian National Petroleum Corporation (NNPC). The objective is to blacklist some oil traders whose failure to meet their petrol supply obligations plunged the country into the fuel crisis.
There had been reports that the scarcity was caused by some of the participants in the DSDP scheme, previously referred to as offshore crude oil processing agreements (OPAs) and crude-for-products exchange arrangements, who imported diesel for NNPC in November-December instead of petrol as stipulated in their contracts.
Speaking on the fuel crisis in an exclusive interview, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, stated that some of the oil traders failed to deliver petrol to NNPC due to either lack of capacity to deliver or for profiteering reasons.
According to him, the failure of the companies to meet their contractual obligations caused the fuel crisis, which was aggravated by the high cost of crude oil in the international market. The minister stated that in order to avert future fuel crises, the federal government would explore support mechanisms, by way of tax relief to boost the capacity of marketers to import petrol on their own.
Kachikwu said the federal government would review the list of the beneficiaries of the DSDP contracts to ensure that those companies that breached their contractual agreements would not benefit from the contracts. He said: “I think the immediate cause of this (fuel crisis) is the increase in the price of crude, and then a lot of deliveries at obviously a loss that NNPC is doing just to keep the nation going – also not the fault of NNPC.”
“That is what caused it. So we need to do better planning obviously in terms of foreseeing this and trying to provide for this. And there were a lot of people who took the DSDP programme to deliver products that failed in their deadlines – some for profiteering reasons, some for just sheer lack of capacity.
“So, we need to look at that list again and see who performed this year and who breached the contracts and make sure that those who did not perform are not back on that list again as we go forward,” Kachikwu explained. Kachikwu said the long-term solution to the perennial crisis would be to encourage private marketers to import petrol on their own without relying on NNPC.
“I would like to see marketers being able to bring in their own products on their own and not NNPC bringing products for them. I would like to see NNPC bring its own products.
“If there is a support mechanism, we have to find a way – either through tax relief or whatever it is to try and address that issue so that everybody has the capacity to do business.
“That is one of the things I will be developing and try to see my principal (President Buhari) obviously in the coming days to address the long-term problems. The final one is that the refineries should work. All these will fall into insignificance if the refineries are up and running. And we are working hard to begin the refinery repairs. We are almost at the end of the recommendations that will go to Mr. President,” Kachikwu added. He stated that the federal government would develop a model that would allow NNPC and the marketers to import their own products.