The Nigerian National Petroleum Company (NNPC) Limited disclosed at the weekend that it has commenced the termination of crude oil swap contracts and will pay cash for petrol imports.
According to NNPC’s Group Chief Executive Officer (GCEO), Mele Kyari, private companies would begin importing petrol in June.
Kyari who said the national oil company will now pay for its purchases in cash by terminating the crude swap contracts, added that less petrol will be imported by NNPC while private companies will import the bulk.
“In the last four months, we practically terminated all Direct Sale Direct Purchase (DSDP) contracts. And we now have an arm’s-length process where we can pay cash for the imports,” Kyari told Reuters.
Information Nigeria reports that DSDP is an agreement that allows sales of crude oil to refiners, who will in turn supply NNPC with an equivalent worth of petroleum products.
Meanwhile, the House of Representatives on Thursday, asked the Federal Government to suspend all DSDP contracts sequel to the removal of the petrol subsidy by President Bola Ahmed Tinubu’s administration.
The GCEO however noted it is the first time NNPC has said it is terminating crude swap contracts.
Speaking on the country’s production capacity, the of 1.742 million bpd.
However, Nigeria’s oil production fell below the one million mark in April 2023, as output tumbled to 998,602 bpd.
The figure was a 21.26 per cent decline compared to March when output was 1,268,202 bpd.
It was also the lowest volume of production in the last seven months.
Ololade Olatimehin | Information NG
Addressing the Impact of Oil Subsidy Removal in Nigeria: Short and Long-Term Solutions
In response to the removal of oil subsidies in Nigeria, it is crucial to consider a range of measures that can effectively mitigate the impact on the economy and society. This article presents a set of short and long-term solutions aimed at fostering economic stability and ensuring the well-being of the Nigerian population, while acknowledging the need for prudent management of public resources.
1. Minimum Wage Increase (Short-term and Immediate)
One immediate step that can alleviate the effects of subsidy removal is to enhance the minimum wage. By providing fair and livable wages to workers, particularly those in vulnerable sectors, the government can help mitigate the potential hardships faced by individuals and their families. This measure aims to maintain purchasing power and ensure a decent standard of living.
2. Accessible Credit for SMEs, Corporations, and Individuals (Short-term and Immediate)
To stimulate economic activity and support businesses during the transition, it is vital to facilitate easier access to affordable credit. By implementing measures that promote favorable lending conditions and reduce bureaucratic hurdles, small and medium-sized enterprises (SMEs), corporations, and individuals can receive the financial support necessary to sustain and grow their operations.
3. Affordable Public Transportation (Short-term)
To mitigate the potential increase in transportation costs resulting from subsidy removal, improving and expanding affordable public transportation services is essential. Enhancing the availability and efficiency of public transportation systems, such as buses and trains, can help reduce the financial burden on individuals and ensure convenient mobility options.
4. Transitioning to Monthly Rent Payments (Long-term)
In the long term, transitioning from annual or biennial rent payments to monthly installments can assist individuals and families in managing their housing expenses. This measure promotes greater flexibility and affordability, particularly for low-income households, and reduces the financial strain associated with upfront rental payments.
5. Enhancing Public School Infrastructure (Long-term)
Investing in the improvement of public school infrastructure across the 36 states and the Federal Capital Territory is crucial for reducing dependence on private schools and ensuring accessible and quality education. By upgrading facilities, providing necessary resources, and expanding educational opportunities, the government can work towards achieving free education for all Nigerians up to the secondary school level.
6. Establishing Credible Health Insurance Systems (Long-term)
Implementing robust health insurance programs can contribute to reducing healthcare costs for citizens over the long term. By establishing credible and inclusive health insurance schemes, the government can provide financial protection and access to quality healthcare services, ensuring the well-being of the population while managing healthcare expenses effectively.
By implementing these measures, Nigeria can navigate the transition and foster an inclusive and resilient economy that benefits all its citizens.