June Marks the End of Fuel Imports for Nigeria
Nigeria is on the verge of a significant economic shift as the Dangote Petroleum Refinery gears up to start supplying premium motor spirit (PMS) next month. This development, promised by Aliko Dangote, Chairman of the Dangote Group, is expected to drastically reduce the country’s hefty ₦6.2 trillion annual fuel import bill.
Speaking at the Africa CEO Forum in Kigali, Rwanda, Dangote assured that Nigeria would soon stop importing petrol entirely. “By sometime in June, Nigeria shouldn’t import a single drop of gasoline,” he stated confidently.
Economic Impact and Cost Savings
Currently, Nigeria’s petrol imports are about one billion liters monthly, costing approximately ₦520 billion each month due to an average pump price of ₦670 per liter and a landing cost of ₦520 per liter. The elimination of fuel imports is expected to save substantial amounts in shipping and associated costs, which significantly burden the nation’s economy.
The Dangote Refinery, a $20 billion project, has the capacity to meet not just Nigeria’s, but West Africa’s petrol and diesel needs, as well as the continent’s aviation fuel requirements. “We have enough gasoline for West Africa, diesel for Central Africa, and aviation fuel for the entire continent,” Dangote highlighted.
Strengthening the Naira
With reduced demand for foreign exchange due to the halting of fuel imports, the Nigerian economy is anticipated to strengthen. A source at the Central Bank of Nigeria (CBN) noted that the expected decrease in forex demand will lead to a stronger Naira. “As the dollar demand reduces, the Naira will rebound, benefiting the economy,” the source commented.
Industry Reactions and Future Prospects
Dr. Muda Yusuf, Director-General of the Centre for the Promotion of Public Enterprise, emphasized that the Dangote Refinery’s local refining would significantly impact the foreign exchange market and domestic energy costs. “About 30% of Nigeria’s import bill is on petroleum products,” Yusuf noted. The commencement of petrol production locally is expected to alleviate pressure on the forex market and reduce import bills.
However, Yusuf cautioned that the positive impact on forex would depend on how much crude oil the refinery could source locally. If crude imports are necessary, the anticipated benefits might be lessened.
Fuel Marketers’ Plans
Fuel marketers, under the Independent Petroleum Marketers Association of Nigeria (IPMAN), are eager to negotiate with Dangote for potential price cuts through bulk purchases. National Vice President of IPMAN, Hammed Fashola, revealed that the association had already requested a meeting with Dangote to discuss possible discounts.
“We are just like a ready-made market for Dangote. It is advantageous for him to include us in his plans,” Fashola said, expressing optimism about reaching a favorable agreement before the refinery starts supplying PMS.
Conclusion
The commencement of fuel supply from the Dangote Refinery is poised to transform Nigeria’s fuel import landscape, promising economic relief and a stronger Naira. This pivotal moment is eagerly awaited by both the government and citizens, hopeful for the positive changes ahead.