NNPC’s Direct Sale-Direct Purchase initiative takes off March

Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu, has disclosed that

the crudefor- products exchange arrangement popularly referred to as crude swap will be replaced by a Direct- Sale–Direct-Purchase, DSDP, arrangement that will take off next month. Kachikwu spoke while appearing before House of Representatives Ad-Hoc Committee set up to investigate the corporation’s offshore processing and crude swap arrangement for between 2010 till date, at the National Assembly Complex, Abuja.

According to a statement by the Group Managing Director, Group Public Affairs Division of NNPC, Ohi Alegbe, the minister of state also noted that the DSDP was adopted to replace the crude oil swap initiative and the Offshore Processing Arrangement to introduce and entrench transparency into the crude oil for product transaction by the corporation in line with global best practices. Under the old order, crude oil was exchanged for petroleum products through third party traders at a pre-determined yield pattern. The Minister stated that the DSDP option eliminates all the cost elements of middlemen and gives the NNPC the latitude to take control of sale and purchase of the crude oil transaction with its partners, adding that the initiative would save $1 billion for the Federal Government.

“When I assumed duty as GMD of NNPC, I met the Offshore Processing Arrangement (OPA); and 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-forproduct exchange matrix and it is in tandem with global best practices,” Kachikwu stated. According to him, the DSDP initiative whittles down the influence of the Minister in the selection of bid winners as it allows all the bidders to be assessed transparently based on their global and national track record of performance before the best companies with the requisite capacities are selected. Shedding more light on the need to introduce DSDP, Kachikwu noted that the policy is aimed at reducing the gaps inherent in the OPA and the losses incurred by NNPC in the past. He stated that the new arrangement would help the corporation to grow indigenous capacity in the international crude oil business and generate employment opportunities for indigenous companies that are selected