“Na lie, work never finish. Nigeria na scam” – Workers at Dangote Refinery.
The removal of subsidy on fuel by the Federal Government has been grudgingly accepted by Nigerians as the right thing to do in the prevailing circumstances. However, subsidy removal is akin to addressing the symptoms of a grave illness that could eventually lead to death. One of the symptoms of malaria is a headache. Treating the headache by assaulting it with painkillers only brings temporary relief. In this instance, the real treatment for the malady that would eventually give Nigerians succour is the revival of existing refineries. Mind you, what people usually see as a refinery is not the entirety of Nigerian refineries. Take the Kaduna refinery for example. It has extensive pipeline networks, delivering crude oil and distributing refined products all over northern Nigeria.
The inauguration of the refinery comes with high expectations in the Nigerian energy sector amid plans by the Nigerian government to remove petrol subsidy in the second half of the year. Subsidy payments steadily rose from N351bn in 2005 to N4.39 trillion in 2022, while N3. 6trn was earmarked to fund fuel subsidy for the first six months in 2023.
The government pins its hopes of ending fuel imports largely on the completion of the Dangote refinery.
In 2021, the federal government gave state oil firm, NNPC Limited, approval to buy a 20 per cent stake valued at $2.76 billion in Dangote Refinery, indicating a significant shift in government attitude.
Why would the government allow such an asset to waste? The refineries can be privatised through public-private-partnership or outright sale. If that is done, we will have a crude oil and refined products process that is substantially based on naira transactions. You cannot carry on business in Nigeria, especially when you are not in a free trade zone and insist on being paid in dollars. The answer lies not in the Dangote refinery, but in bringing the country’s refineries back to life. The Dangote refinery is going to sell petrol to Nigeria in dollars, the same way it would sell to importers from other African countries. The only cost we would be saving is the shipping cost. There would still be pressure on the naira because we would still be using dollars from our earned foreign exchange to pay Dangote refinery.
Built by Africa’s richest man, Aliko Dangote, the massive complex is one of Nigeria’s single largest investments. It has a 435-megawatt power station, deep seaport and fertilizer unit.
The refinery is expected to meet 100 per cent of the Nigerian requirement of all refined products and also have a surplus of each of these products for export. It is designed to process Nigerian crude with the ability to also process other crudes.
The refinery will produce Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene. The management of Dangote refinery says the design complies with the World Bank, US EPA, European emission norms and the Department of Petroleum Resources (DPR) emission/effluent norms.
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