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NNPC saves $2.2bn from DSDP scheme

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…begins selection for 14bn litres 2019/2020 scheme
By Michael Eboh
The Nigerian National Petroleum Corporation, NNPC, Thursday, disclosed that it has saved $2.2 billion since the introduction of the Direct Sales, Direct Purchase scheme, DSDP.

President Muhammadu Buhari, Minister of Petroleum Resources, Ibe Kachikwu, Ministe of State, Petroleum Resources and Maikanti Baru, Group MD, NNPC

The DSDP scheme involves the NNPC allocating certain volume of crude oil to the successful companies, while the companies are required to bring in equivalent value of different petroleum products to the country.

Speaking at the 2019/2020 DSDP bid opening ceremony in Abuja, Group Managing Director of the NNPC, Dr. Maikanti Baru, also disclosed that the agreement the NNPC was looking to enter into with the successful companies would involve about 14 billion litres of petroleum products per annum.

He stated that over the years, through a transparent competitive bidding and evaluation process, the DSDP scheme had enlisted a robust supplier mix, comprising big international players and strong Nigerian downstream companies for supply flexibility and local capacity development.

Baru said, “The scheme prides itself with a competitive pricing framework, that is lower than the Petroleum Products Pricing Regulatory Agency, PPPRA, benchmark, which over the years has ensured significant reduction in product demurrage cost in the range of 84 per cent and cost savings of about $2.2 billion.”

He added that 132 bids were received for the 2019/2020 programme, noting that the DSDP marks a milestone that aimed to maximise Nigeria’s crude oil for the benefit of all Nigerians.

He stated that the programme was designed to plug loopholes recorded in previous Offshore Processing Arrangement deals, explaining that reputable and qualified companies would be engaged for the scheme.

According to Baru, credible, tested and compliant offtakers would be engaged for the scheme, as well as strong Nigerian downstream companies to ensure steady supply of petroleum products and also develop their capacity.

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Also speaking, Group General Manager, Crude Oil Marketing Division of the NNPC, Mallam Mele Kyari, disclosed that the key objective was to eliminate corruption, adding that corruption cannot be eliminated without putting in place measured to eliminate opacity.

He said, “We are trying to ensure that out processes are open to all the DSDP is an intervention 6to ensure unfettered supply of petroleum products.”

He said the scheme would ensure optimal value for Nigeria’s crude oil, ensure cost saving and also guarantee that it’s processes can be validated.

He noted that each of the partners must be able to demonstrate financial capacity to a minimum of $72 million as well as cognate experience in crude oil marketing and petroleum products import.

He added that the NNPC, “would do its best efforts to conduct its own internal estimates, setting up minimum price levels. This is not a highest or lowest bidder tender, because we know some prices are not realistic.

“We want to ensure best value, secure products supply, encourage local participation and grow capacity of indigenous companies. These are the aims of the programme. The companies are expected to pay taxes to government, while we would get best and fair prices.”

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