Last week, the Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, during an inspection tour of the US$15bn Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline project that is nearing completion in Lagos state noted that the plant will save the country's foreign exchange as the importation of petroleum products will stop.
He further stated that the facility will sell the refined crude to the Federal Government in Naira. The facility which is expected to produce 650,000 bpd of refined petroleum, is Africa's biggest oil refinery and the world's biggest single-train facility.
Over the years, successive governments have tried to revive the country's ailing refineries with no evident results. Consequently, over 80% of the refined petroleum products consumed in Nigeria are imported. The Federal Government provided fuel subsidy which reduced the pump price of petroleum products until last year, 2020, when the Minister of Petroleum announced the end of the subsidy regime.
However, the recent rise in crude oil prices that has resulted in an increase in the landing cost of petrol to c.N180 per litre which exceeds the current price of between N162-N165 per litre means that the country may have temporarily returned to the subsidy regime. Besides, protracted years of delay and disagreements on the oil and gas reform bill have muted investments in improving the entire value chain of the industry. Currently, the combined capacity utilization of the existing refineries stands at 0.00% due to the ongoing revamping of the state-owned refineries according to available data from the Nigerian National Petroleum Corporation (NNPC).
Dangote's integrated refinery has enormous economic potentials given its capacity to meet local demand and serve the needs of neighbouring countries. At a time when the Federal Government is exploring possible options to alleviate the pressure on foreign exchange reserves, the project will enable the government to conserve the much needed foreign exchange expended on the importation of petroleum products.
Nigeria's daily demand for refined crude oil was estimated to be around 442,000bpd as of 2018, implying that Dangote Refinery alone with its 650,000bpd capacity can more than meet local demand, and earn FX for the country through exports.