The crisis in the foreign exchange market may give way to a period of boom as the Dangote Refinery is set to begin the supply of Premium Motor Spirit, popularly known as petrol next month.
The President of Dangote Group, Aliko Dangote, made a promise during the Africa CEO Forum Annual Summit in Kigali, Rwanda last Friday, that Nigeria would no longer import a drop of fuel when his refinery begins supply f petrol in June.
As earlier reported by Iwitnesslive, Dangote, at the event, said, ““Right now, Nigeria has no cause to import anything apart from gasoline and by sometime in June, within the next four or five weeks, Nigeria shouldn’t import anything like gasoline; not one drop of a litre.
“We have enough gasoline to give to at least the entire West Africa, diesel to give to West Africa and Central Africa. We have enough aviation fuel to give to the entire continent and also export some to Brazil and Mexico.
“We have started producing jet fuel, we are producing diesel, and by next month, we’ll be producing gasoline. What that will do is it will be able to take most African crudes.”
Nigeria currently spends between $10b and $15 billion on the importation of fuel annually and that represents more than one-third of total forex spending by the government. The coming on board of the Dangote refinery means the figure will be conserved which will invariably lead to a boom in the forex market.
According to Dr. Muda Yusuf, the Director-General of the Centre for the Promotion of Public Enterprise, the commencement of petrol refining by the Dangote refinery will significantly impact the Nigerian economy. This impact will be seen in terms of its effect on the foreign exchange market and domestic energy costs. Yusuf pointed out that at present, approximately 30% of Nigeria’s import bill is spent on petroleum products.
“This has been estimated at between $10bn and $15bn annually over the decade. This would amount to a substantial easing of demand pressure on the foreign exchange market,” he stated.
Yusuf added further, “Already we have seen the impact of the domestic refining on diesel and aviation fuel importation. Even the prices have dropped. I therefore expect to see a major impact on the exchange rate.
“However, this positive outlook would depend on how much of the feedstock of crude can be sourced locally by the refinery. If the refinery has to resort to crude oil importation, the optimism about the foreign exchange impact may have to be moderated. Because that would imply some significant forex outflows for crude importation.”
He added that Nigeria is likely to see less importation of petrochemical products and other associated by-products from the refining process.
During an energy conference in Abuja recently, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, opined that Nigeria does not need to import fuel, expressing concerns that the bulk of the country’s foreign exchange goes into fuel importation.
“We must find a solution to our forex problem. Nigeria does not need to import fuel. We should free our scarce forex for other sectors of the economy. I am aware that the bulk of our forex goes to the importation of refined oil products.” Lokpbiri stated, expressing optimism that home-based refineries would put an end to fuel importation.
