Companies jostle for NNPC’s DSDP contract

About 132 companies have submitted bids for about 14 billion litres of product as the Nigerian National Petroleum Corporation officially opened bids for the 2019 Direct Sale of Crude Oil and Direct Purchase (DSDP) contract.

Under the DSDP scheme, selected overseas refiners, trading companies and indigenous companies are allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products to the NNPC.

In his address at the bid opening ceremony in Abuja, the Group Managing Director of NNPC, Dr Maikanti Baru, disclosed that the essence of the bids was to ensure reputable qualified companies were engaged.

The NNPC Director further explained that the process was to ensure that the selection of off-takers aligned with transparent and accountable procedures in compliance with the Public Procurement and Nigerian Content Acts.

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“It is in demonstration of President Muhammadu Buhari’s transparency and anti-corruption initiatives which the NNPC has imbibed and championed relentlessly. The DSDP scheme was introduced in 2016 with efficient and cost-effective systems and processes to plug the value-eroding loopholes of the January 2015 OPC contracts,” he said.

Baru stated that since the inception of the DSDP scheme in 2016, about 29.5 million metric tons (39.6 billion litres) of petroleum products have been supplied under the scheme, representing over 90 per cent of the national requirement.

The NNPC Boss further stated that the DSDP scheme has over the years ensured a significant reduction in product demurrage cost in the range of 84 per cent and cost savings of about $2.2 billion.

On the gas processing company, the NNPC stated that the project, which it described as an integral part of its seven critical gas development project, was designed to bridge the estimated 3.4 billion scfd shortfall that could arise.

Duration of DSDP Contract and deliveries: For the duration of the contract, it was stated that the 2019 DSDP contract which is expected to last for one year, will overall consume around 14 cargoes of crude oil per month. Also, about 14 billion litres of petroleum products supplies are expected from the 2019/20 round.

“We believe that a private sector driven project should deliver much faster, hence we came up with a structure outside the existing joint venture with the intent of getting the appropriate entities to participate in the project.’’