- Renowned economist, Bismarck Rewane has sent a clear message to the federal government that Dangote's refinery can do little in solving Nigeria's oil problem
- The FG has continuously made reference to the Dangote refinery as one of the expected solutions to Nigeria's importation
- Rewane also pointed out that the Nigerian government was in a precarious financial position and subsidy removal cant end it
Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company Limited (FDC), has cautioned Nigerians not to believe that the Dangote Refinery will ensure a 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, AriseTV reports.
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 Q1 2023.
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Nobody should expect the Dangote Refinery to reduce the price of gasoline (in Nigeria). It will make it more accessible at any point in time. "I doubt he'll receive his money in Naira since Dangote has costs."
"Dangote Refinery technically and theoretically is outside Nigeria because it's located in an export processing zone." We have deep sea ports where the refined goods will be transported by ships. Instead of purchasing from Amsterdam, we would purchase from Dangote and ship to Atlas Cove, Bonny, and Port Harcourt.
"The savings (to the Nigerian economy) are that instead of sending a tanker from Amsterdam to Nigeria, we would transport it from Lekki." Another cost-cutting measure is that the Dangote refinery is 45 percent more efficient than other refineries due to cutting-edge technology. This will lower the cost even further."
He also stated that instead of delivering it to European refineries, Nigeria will take 450,000 barrels and make it accessible to Dangote through a swap deal.
According to the FDC's CEO, sending the crude to Dangote Refinery would be faster than exporting it to Europe and bringing the refined goods back.
No added value to the foreign exchange
"I believe it is fairly evident that it will not address all of our foreign exchange concerns since it does not make a significant difference." As a result, it is incorrect to assert that we spend all of our foreign exchange (FX) on gasoline imports.
"No, it is our own gasoline that is being refined for us overseas, and it will now be housed with Dangote." Aside than that, I don't think there's much of a difference. The reason for this is because the price difference will most likely be due to shipping costs.
Rewane also pointed out 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 that 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 the economic ladder would spend 101 per cent (sic) of their official income on foods alone.
More trouble ahead
Rewane said food inflation could force many Nigerians to switch to substitutes to actually reduce the amount of food they are consuming.
“According to a research published last year, 25% of Nigerians are drinking less amount than they were previously, while 50% are consuming less quality than they were previously. This will weaken their immune system and make them more vulnerable in other ways.
"63 million Nigerians were gainfully employed in Nigeria in 2015." By 2020, the number of persons who were completely employed had fallen to 31 million. That is why we have kidnappings."
Petroleum minister reveals Buhari's position on the removal of petrol subsidy
Earlier, Legit.ng reported that the minister of state for petroleum, Sylva, reacted to reports of President Buhari's plan to remove the subsidy on petrol.
Sylva during this week’s edition of Channels Television’s Newsnight revealed that Buhari is not in support of the removal of subsidy on petrol at this time.
According to him, the complete removal of subsidy is not on the federal government's plate, saying they plan to complete consultations before coming out with a clear policy direction on the matter.