When I assumed duty as the GMD of NNPC, I met the Offshore Processing Arrangement (OPA) and like you know there is always room for improvement.
Dr Ibe Kachikwu, Minister of State for Petroleum Resources has said that the Federal Government will save one billion dollars from its new initiative on fuel supply called "Direct Sales Direct Purchase’’ (DSDP).
This is contained in a statement signed by Mr Ohi Alegbe, Group General Manager, Group Public Affairs Division NNPC, issued on Tuesday in Abuja.
The statement said that the new initiative would replace the crude-for-products exchange arrangement popularly referred to as crude swap.
According to the statement, the federal government will save one billion dollars from the initiative.
"When I assumed duty as the GMD of NNPC, I met the Offshore Processing Arrangement (OPA) and like you know there is always room for improvement.
"My team and I came up with the DSDP initiative with the aim of throwing open, the bidding process.
"This initiative has brought transparency into the crude-for-product exchange matrix and it is in tandem with global best practice,” the statement quoted Kachikwu as saying.
It stated that under the old order, crude oil was exchanged for petroleum products through third party traders at a pre-determined yield pattern .
It said the DSDP option would eliminate all the cost elements of middlemen and gave NNPC the latitude to take control of sale and purchase of crude oil transaction with its partners.
According to the statement, the DSDP initiative whittles down the influence of the minister in the selection of bid winners.
"It would allow all the bidders to be assessed transparently based on their global and national track records of performance,'' the statement said.
Kachikwu said in the statement that the policy was aimed at reducing the gaps inherent in the OPA and the losses incurred by the NNPC in the past.
The statement said the new arrangement would help the NNPC to grow indigenous capacity in the international crude oil business.
"It will generate employment opportunities for indigenous companies that are selected.
"The DSDP initiative gives other government agencies such as Bureau of Public Procurement (BPP) and Nigeria Extractive Industry and Transparency Initiative (NEITI) the opportunity to be a part of the bidding process.
"This is aimed at engendering adherence to the due process," the statement said.
On the alleged non-transparent nature of past crude-for-products exchange arrangements, the statement quoted the minister as saying that the reconciliation process was ongoing.
It said the NNPC would deploy technology to track cargoes and trans shipment at the reception depots in order to forestall any incidence of round tripping.
The price modulation policy of the NNPC had rid the Federal Government of the burden of subsidy on imported petroleum products in January 2016.