Dangote Refinery Won’t Guarantee Nigeria Cheaper Petrol, Says Renowned Economist Rewane

The Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has advised Nigerians not to entertain the illusion that the Dangote Refinery would guarantee them cheaper supply of refined petroleum products.
Rewane said the most the Dangote refinery would guarantee was improved supply of petrol in Nigeria’s domestic market, but would not affect the foreign exchange position of Nigeria significantly.

He said this on Monday, during the 2022 virtual economic outlook organised by the Stanbic IBTC Group, where he projected that the refinery would become operational in the Q1 2023.

Rewane said: “Nobody should expect that the Dangote Refinery is going to make petrol cheaper (in Nigeria). It is going to make it more available at any point in time. I doubt it whether he is going to collect his money in Naira because Dangote has costs.

“Dangote Refinery technically and theoretically is outside Nigeria as it is situated at the export processing zone. We have a deep sea ports where the ships will take the refined products. But rather than buying from Amsterdam we will buy from Dangote and ship to Atlas Cove, Bonny and Port Harcourt.

“The saving (to Nigeria economy) is that rather than shipping a tanker from Amsterdam to Nigeria, we will be shipping it from Lekki. Another savings is because Dangote refinery is 45 percent more efficient than other refineries because of its cutting edge technology. This will further reduce the cost.”

He said what would happen was that Nigeria would take 450,000 barrels and make it available to Dangote under a swap arrangement instead of giving it to refineries in Europe.

The CEO of the FDC said taking the crude to Dangote Refinery would be quicker than shipping it to, and bringing the refined products from Europe.

“I think that it is quite clear that it will not solve all our foreign exchange problems because it does not change things much. So, it is wrong notion to say that we spend all our money (FX) importing fuel.

“No, it is our own fuel that is being refined for us abroad, which will now reside with Dangote. Apart from that I do not think that there is any much difference. The reason is that the price differential will probably be on transportation cost. It is not going to change dramatically our foreign exchange situation,” he said.

Rewane also pointed out that that the Nigerian government was in a precarious financial position because, “we have a situation now where the government is desperate. There is a shortfall in government financing cannot be fixed through subsidy removal.”

He said the unsung economic reality in 2022, was that Nigeria would be the poverty capital of the world as ordinary Nigerians on the bottom of economic ladder would spend 101 per cent (sic) of their official income on foods alone.

Rewane said food inflation could force many Nigerians to switch to substitutes to actually reducing the amount of food they are consuming.

“A study last year said that 25 per cent of Nigerians are consuming less in quantity than what they were consuming earlier while 50 per cent are consuming less quality than they are consuming previously. This will compromise their immune system and render them more fragile for other reasons.

“In 2015, 63 million Nigerians were gainfully employed in Nigeria. In 2020 it dropped to 31 million people that were fully employed. That is why we are having kidnapping,” he said.

The CEO of StanbicIBTC Holdings, Mr. Demola Sogunle, said that the event was to discuss investment and planning as election period draws near.

Dike Onwuamaeze

Follow us on: