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.
It has been reported that Economic and Financial Crimes Commission (EFCC), prepares to look into the recent crash of the popular investment platform, CBEX.
It can be recalled that investment platform, CBEX, recently crashed and caused worry for many users. The public to social media to lament about the crash of the platform and cries out due to their losses.
Popular Nigerian blogger, Innocent Tino shares that he will partner with EFCC for a joint investigation of the downfall of CBEX. It was also shared that a total of #1.3 trillion funds have been lost due to the crash.
The Crude Oil Refinery Owners Association of Nigeria (CORAN) has shed light on why Nigerians are still paying high prices for petrol, even though global crude oil prices have dropped sharply.
According to CORAN, the main reasons behind the high cost of Premium Motor Spirit (PMS) include the recent halt of the Naira-for-crude arrangement, the activities of profit-driven middlemen, and the rising exchange rate of the dollar.
Speaking on the matter, CORAN’s spokesperson, Eche Idoko, pointed out that these factors have made it difficult for Nigerians to enjoy any real relief at the pump. Crude oil prices recently dropped to around $64 per barrel for Brent and roughly $59.7 for WTI. This decline followed a new round of tariffs and a surprise production cut announcement by OPEC+.
Despite the global price drop, local fuel prices in Nigeria continue to rise. Idoko explained that middlemen are playing a big role in keeping prices up and preventing local refining from thriving. He also mentioned that the cost of importing refined products, logistics, and foreign exchange challenges all add up to push petrol prices even higher.
At the moment, petrol prices in Nigeria range from N900 to N975 per litre depending on the area. This increase came shortly after several major players in the industry, including partners of the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL), raised their pump prices.
MRS filling stations, a partner of Dangote Refinery, have raised petrol prices to N930 per litre in Lagos and N950 per litre in Abuja.
On Saturday, the MRS station along Kubwa Expressway in Abuja was already selling at the new rate, marking an increase of N70 to N80 per litre from the previous prices of N860 and N880.
A motorist in Abuja reacted to the price hike, saying it was expected after Dangote Refinery announced that it had stopped selling petrol in Naira.
The refinery had revealed on March 19 that it would no longer conduct petrol sales in local currency, a move that has now led to adjustments in pump prices across several stations.
Other filling stations in Abuja have also increased their rates. Empire Filling Station in Gwarimpa, for instance, raised its price to N975 per litre from N945.
Meanwhile, the Nigerian National Petroleum Company Limited (NNPC) maintained its pump price at N880 per litre in Abuja as of Saturday evening.
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