Business
Dangote: Our Refinery Will Stabilize Naira Against Dollar
Aliko Dangote, President of the Dangote Group, has reaffirmed that his $20 billion refinery located in Lagos will play a pivotal role in stabilizing the Nigerian Naira against the U.S. dollar in the foreign exchange market.
During a 25-minute interview with Bloomberg Television, Africa’s richest man highlighted the impact that the refinery’s operations will have on Nigeria’s economy, particularly in reducing the country’s reliance on imported petroleum products.
Dangote pointed out that approximately 40 percent of Nigeria’s foreign exchange is spent on importing fuel, a significant drain on the nation’s reserves.
However, with the commencement of petrol distribution from the Dangote Refinery on September 15, 2024, the demand for U.S. dollars is expected to drop by the same percentage, alleviating pressure on the Naira.
According to Dangote, the refinery’s output will not only meet domestic fuel needs but also help curtail the excessive demand for foreign currency that has long strained the Naira’s value.
He explained that by reducing the foreign exchange burden associated with fuel imports, the refinery will contribute to stabilizing the Naira.
Dangote emphasized that by eliminating 40 per cent of foreign exchange demand linked to petroleum products, Nigeria will have a much better chance of managing its currency and reducing fluctuations in the exchange rate.
Additionally, even if the government chooses to maintain fuel subsidies, it would have a clearer understanding of the actual costs involved in subsidizing locally refined products.
About the crude-for-Naira deal between the Nigerian government and the Dangote Refinery, Dangote disclosed plans to meet with the presidential committee this week to finalize the arrangement.
He described the deal as mutually beneficial, ensuring that both parties gain from the agreement, while also significantly aiding the country’s economic stability.
Dangote also addressed concerns over the current high cost of petrol produced by his refinery, attributing the prices to the cost of imported crude oil.
However, the Nigerian government has assured that starting in October 2024, the supply of crude to the Dangote Refinery will be transacted in Naira, further reducing the impact of international market fluctuations on fuel prices.
With these developments, Dangote remains optimistic that his refinery will not only ease fuel availability within Nigeria but also bring substantial relief to the nation’s currency, improving overall economic conditions and boosting confidence in the local market.
Concerns have been raised by The Central Bank of Nigeria (CBN) and the Ministry of Finance, concerning the Investment and Securities Bill which was proposed. The bill aims to replace 2007 Act and to update capital market regulations.
The CBN representative, Dr Tukur at the National Assembly hearing, opposed to the granting of the Securities and Exchange Commission over the public companies.
The Finance Minster, Wale Edun also emphasize on the impact of the bill and the provision it will offer the SEC board members. However the SEC Director General defended the bill and stated it has a benefitting role in Nigeria’s capital market globally.
Pastor Enoch Adeboye, the General Overseer of the Redeemed Christian Church of God, recently shared his concerns about a purported conspiracy involving an oil cabal in Nigeria, working in collusion with international oil companies (IOCs) to undermine the operations of private refineries, particularly the Dangote Petroleum Refinery.
Speaking at the November 2024 Abuja Special Holy Ghost service, Adeboye called on Nigerians to pray for divine intervention,
He believes that these unscrupulous oil marketers are intentionally working to create difficulties for the public, especially in light of their efforts to hinder the operations of the Dangote refinery.
Adeboye pointed out that Dangote’s refinery came as a response to the failure of the public refineries and the ongoing struggle Nigeria faces in trying to refine its own crude oil.
Despite being one of the world’s largest oil producers, Nigeria continues to rely heavily on importing refined petrol, a situation that has sparked frustration and concern among citizens.
“Are we under a curse?” Adeboye questioned, highlighting the irony that the country with vast oil reserves struggles to refine its own products.
He further praised Dangote for his determination to help alleviate the suffering of Nigerians.
“He is not my relative, not even from my village, and not a Christian. But as a Nigerian, he saw the suffering of the people and decided to build a refinery that could work,” Adeboye remarked.
In a positive development for Dangote Refinery, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has reached an agreement to buy petrol directly from the refinery, bypassing the usual importation channels.
However, Nigerians are still facing high fuel prices, with petrol being sold for as much as N1060 to N1200 at various NNPC stations and other retail outlets across the country, leaving many questioning when the country will truly see the benefits of its oil wealth.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) recently revealed that Premium Motor Spirit (petrol) will become more affordable for Nigerians, with a planned price reduction of N50 per liter.
This announcement came from IPMAN’s National President, Abubakar Maigandi, during a Tuesday interview with Channels Television.
Maigandi disclosed that the price cut follows a recent agreement between IPMAN and Dangote Refinery, which will now directly supply petrol to IPMAN members at a lower rate.
Under the new agreement, Dangote Refinery will sell petrol to IPMAN members at N940 per liter for depot purchases and N990 per liter for trucks.
With these adjusted rates, independent marketers who have been selling petrol for as high as N1,200 per liter in locations like Maiduguri will now be able to drop their prices to around N1,150 or potentially even lower.
Maigandi mentioned that the adjustment depends on location, as transport and logistics costs can vary, but he expects to see the benefits reach customers soon.
Maigandi also shared some insight into the new purchasing arrangements.
IPMAN members have two main options: they can either transport fuel directly from the Dangote Refinery to their depots or purchase it directly for trucks.
These measures are expected to streamline the distribution process, reducing dependence on the Nigerian National Petroleum Company Limited (NNPCL) as the primary distributor of Dangote’s petrol.
Currently, Nigerians are paying between N1,060 and N1,200 per liter at NNPCL outlets and other stations, so the new pricing arrangement with IPMAN is a welcome move for the average consumer facing high fuel costs.
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