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.