The Central Bank of Nigeria has said that it expects the Chairman of Dangote Group, Aliko Dangote to reciprocate the support he received from the government that made it possible to build his 650,000 barrels per day petrochemical refinery.
The Central Bank Governor, Godwin Emefiele disclosed Federal Government’s expectations on Wednesday at the Monetary Policy Committee meeting.
The Governor highlighted two critical areas that the government expects the billionaire’s help which include: the pricing of his refined products and selling foreign exchange to banks at a moderate rate.
Dangote commissioned his mega refinery on Monday in Lagos which is believed to redeem the country from spending billions of dollars annually to import petroleum products.
Nigeria is a net importer of PMS, diesel, and kerosene among others and has spent billions from its earnings to subsidise PMS.
Moreso, the country has suffered severe decline in its daily oil production due to the activities of vandals resulting to FX crunch.
Emefiele said, “Whether we like it or not, we must exit subsidy. Dangote refinery coming at this time gives us the confidence that even if we exit subsidy, the fuel will be available and eventually the interplay of the market will moderate the price to a level that will help the country.
“So, we are expecting that by the time he produces for domestic consumption, the excess will be exported. We should see it conserving up to $10bn in FX that will come into the country.
“Whether it comes into our reserves is not the problem, it is the fact that the dollar is available that will be sold into the market so that customers of banks willing to report will not need to be resorting to the CBN. They can go to their banks and Dangote will sell their banks those dollars and we are going to ensure they are done at a good market rate.
“The Central Bank, the government, the country has helped Dangote to set up that refinery. He is a Nigerian, so Nigerians must benefit from that venture and we are going to continue to engage him and talk to him.”
FX scarcity has weakened the naira to N464.10 against the dollar at the I&E FX Window and N760/USD at the black market.
Currently, the average price of a litre of PMS according to the National Bureau of Statistics was N254.06 in April, indicating an increase of 47.18 per cent rise.
But with the removal of subsidy, it is projected to rise to N750 per litre.
Emefiele said, “For us Dangote Refinery was a history. It is the biggest single train refinery in the world today and Dangote himself has committed that by the end of July, very early in August, they will dispense petrol from that refinery.
“For us, that is the big game changer for Nigeria because people will no longer be importing. Like I said, import bills consist of about $25bn annually you may contest the numbers let’s not forget that some of those things go across borders.
“But by the time that refinery comes on stream, begins to bring out its PMS, diesel and all other products, someone asked, does it mean that price of fuel will come down? I said it cannot come down because it will still be at market rate, however, the price at which it will be dispensed when it comes will be lower than the price it would have been dispensed if we spent dollars to import the products from abroad.
“This is because, it is local, no transportation, storage and all the logistical expenses. We will be lucky to see close to about 20 per cent savings for refining locally rather than importing it from abroad.”