- He, however, stated that there are other ways Nigeria can benefit immensely and generate foreign exchange from Dangote refinery.
Kalu Aja, a financial analyst and public affairs analyst, has cleared some misconceptions about the Dangote refinery and it benefits to Nigeria.
After months of back-and-forths and public spats with the authorities, the refinery is now expected to start distributing refined petroleum products across the country.
This development has brought respite to many Nigerians who believe that, with the refinery coming on board, the availability of the product is now guaranteed and issues of fuel scarcity will now be a thing of the past and also that the sale of locally refined petrol will bring about a slash in the price of the product.
Speaking on the development, Kalu Aja stressed that Dangote refinery will not engender a reduction in price of petrol.
He, however, stated that there are other ways Nigeria can benefit immensely and generate foreign exchange from Dangote refinery.
He stated that the real benefit the Refinery brings is that associated by-products Nigeria left in ‘Malta’ will now be captured locally.
Aja described Dangote Refinery as the biggest game changer in Nigeria since the emergence of Nigeria Liquefied Natural Gas, NLNG.
In a post on his X handle on Wednesday, the financial expert clarified that while Dangote Refinery saves the country the transportation associated cost previously paid in dollars to bring crude to Nigeria, insurance, interest and other costs still remain.
Speaking further, Aja said Nigerians shouldn’t expect the Premium Motor Spirit, PMS, bill to substantially drop unless the government subsidizes crude oil and dollar exchange rate.
The post read: “The Process of getting PMS from Crude.
“Extract crude oil, Transport crude oil to refinery, Refine to PMS and others byproducts, Take PMS from refinery, and Market.
“Step 1 to 5 are same if the refinery is in Lagos State or Malta.
“Dangote Refinery will save $ cash , yes but where?
“Crude oil extraction? No, same cost wherever its refined, crude oil is priced in $ not Naira. If Dangote pays Naira, Nigeria loses $ revenue. This is the highest cost.
“Take Crude to Refinery? Yes, Instead of taking crude to “Malta”, it will be taken to Lagos.
“Refine? same cost, if refinery is in Lagos or “Malta”.
“Take PMS from refinery? Yes instead of transferring from “Malta”, its from Lagos. still a cost, but lower.
“Market? no same cost where ever its refined.
“Thus what Dangote Refinery saves is the Transportation associated cost, previously paid in $ to bring crude from “Malta” to Lagos.
“Nigeria still pays for insurance, interest etc. These are still related costs. Or are the ships insured locally or produced locally?
“When you say Dangote Refinery reduces $ demand, i agree but not to the extent you claim. Remember Dangote is paying in Naira meaning its a net off of FX loss from Naira purchase and lower demand for FX.
“The real benefit Dangote Refinery brings is that those associated byproducts that we left in ‘Malta” will now be captured by Dangote locally. Thus Nigeria will earn MORE by exporting those byproducts, so net net, the Dangote Refinery earns Nigeria more FX.
“The Dangote Refinery is the biggest game changer in Nigeria since NLNG, but your PMS bill will not substantially drop, unless the Federation subsidizes crude oil and $ exchange rate.”
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