The gigantic oil refinery being built in Lagos by Africa’s richest man Aliko Dangote will save Nigeria from the shame of having to import refined petroleum products but it could also be a possible trigger for the floatation of the naira, Godwin Emefiele, governor of the Central Bank of Nigeria said in Washington on Friday.
Speaking on the sidelines of the World Bank/IMF meetings in the US capital, the Emefiele enumerated the litany of gains from the refinery which is expected to cut Nigeria’s import bill by about 40 per cent when it begins operation before the end of 2022.
According to Emefiele, “by that time, you will see what we would be doing when people talk about floating the naira, and then let’s see how the currency will depreciate.”
Emefiele said the country currently spends about 40 percent of its dollar earnings on the importation of petroleum products, putting pressure on the local currency.
“By the time the Dangote Refinery begins operation, it would be a major FX saving source for Nigeria,” he said.
“Right now, the overall forex we spend on imported items, the importation of petroleum products consumes close to 30 percent (by the time you add diesel, aviation fuel, petrol and the rest of that).
“The Dangote Refinery has the capacity to produce 650,000 barrels per day. There is a domestic component that is about 455,000 barrels. Even if the 455,000 is what is sold to Dangote in naira alone, it is going to be major forex saving for Nigeria.
“If you look at the cost of freight alone, it is a major saving for Nigeria. That is because if we have to go to Europe or other parts of the world to bring in petroleum products where we pay heavily in freight and in stocking those products in the high sea before we offload them, Nigerians would benefit a lot from the Dangote Refinery.
“That project is one of Nigeria’s backward integration programmes, and we are very proud of it.”
The apex bank governor adds that the petrochemical unit of the Dangote Refinery would save the about five 5 percent of Nigeria’s current import bill from the polyethene and polypropylene granules that it will be making plus another two percent from fertiliser.
The petrochemical plant will be producing 900,000 tonnes of polyethene and polypropylene granules to meet Nigeria’s annual consumption of less than 200,000 with significant room for export.
“What does that mean?” he asked. “It is going to save five per cent of our imports. If you save five percent of your imports and another 30 per cent on petroleum products and then on the fertiliser where we would save about two percent of our imports, we are moving close to saving 40 percent of the country’s imports.
The refinery is a 650,000 barrels per day integrated refinery project under construction in the Lekki Free Zone, Lagos. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility, upon completion