Dangote Refinery won’t significantly affect petroleum prices- Akabueze

Dangote Refinery won’t significantly affect petroleum prices- Akabueze

Dr. Ben Akabueze, Director General of the Budget Office, has stated that the Dangote Refinery’s impact on Nigeria’s downstream oil industry will be minimal, dashigning Nigerians‘ hopes that the refinery’s anticipated start of operations later this year will result in a more affordable fuel supply for the nation.

The refinery is technically not in Nigeria because it is located in a Free Trade Zone, according to Akabueze, who made this statement yesterday during his virtual intervention at the 2022 Mid-Year Review and Outlook hosted by the Lagos Chamber of Commerce and Industry (LCCI) and sponsored by Coronation Merchant Bank.

His words: “Dangote Refinery will have minimal effect on the downstream oil sector in Nigeria when it commences operations.

“The refinery is located in a Free Trade Zone and as such it is technically, not in Nigeria. So, the product is likely going to be sold at international market price as long as it procures crude in dollars.”

Dr. Michael Olawale-Cole, president of the LCCI, voiced concerns about output contraction, production constraints, and recession threats for the remainder of the year in his welcome address.

He stated: “In the third quarter, many factors will weigh on growth such as CBN’s rate hike as well as the rate hikes by other central banks around the world; rising energy costs with diesel above N800/litre, Jet-A1 at N710 per litre, and PMS selling above the government-regulated price of N165/litre.

“These price levels will continue to aggravate production costs which may lead to restrained manufacturing and eventual job losses. The worsening security situation in many parts of the country will continue to threaten agricultural production, manufacturing value chains, and logistics.

“We expect to experience some fiscal constraints because of debt overhang accompanied by a high debt service burden and heavy subsidy costs. There are therefore heightened fears of contracting output, constrained production, and recession risks as we navigate the murky waters of 2022.”

The Fiscal Policy Partner and Africa Tax Leader at PwC, Mr. Taiwo Oyedele, said in his presentation that the proliferation of taxes amounts to placing a “knee on the neck of businesses in Nigeria.”