ON Monday, the moment Nigerians haD eagerly anticipated eventually dawned. President Muhammadu Buhari commissioned the Dangote refinery– a project many had christened the ‘game changer’ not only for Nigeria but the entire AfricaN region. The project, which is projected to be the largest single-train refinery in the world, is situated in the Ibeju-Lekki Free Zone in Lagos, and IS projected to process 650,000 barrels of crude oil daily. Should this number be right, this will mean Nigeria may no longer have the need to import petroleum products into the country. This is great news and explains the hopes that Nigerians had in the project when it was first announced in 2013. Anyone who is familiar with Nigeria will not find it hard to understand the expectations of Nigerians. Although Nigeria is rich in oil, citizens have not actually enjoyed the benefit of the immense wealth that comes with it. If it is not fuel scarcity, it is the corruption-tainted fuel subsidy regime that drains any benefit that should derive to citizens from the oil wealth. These unpalatable experiences are what many Nigerians envisaged will give way with the actualisation of the Dangote refinery. This much was hinted by the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, at the inauguration of the refinery on Monday.
According to Emefiele, Nigeria may save up to N35 trillion in fiscal expenditure over the next five years due to the operation of the Dangote refinery. The number one banker of the country explained that refinery operation will put an end to the importation of petroleum products into the country, and in the process, save Nigeria huge amount of money that goes into servicing subsidy. “Thankfully, the Dangote Refinery and Petrochemicals could spare Nigeria about N5trn to N7trn annually in fiscal expenditure of the federal government over the years,” Emefiele pointed out. This is huge, especially given the monumental poverty and infrastructural decay that is bedeviling Nigeria. Since 2005 when subsidy found its way into Nigeria’s fiscal expenditure, it has grown from N351bn to a staggering N4.39 trillion in the 2022 fiscal year. Between when it started and now, Nigeria has spent in excess of N20 trillion on subsiding petroleum products. This makes no sense, especially for a country that has nearly half of its population in abject poverty.
During the 2022 PHC Summit, the National Primary Healthcare Development Agency (NPHDA) noted that about six out of 10 Nigerians lack access to quality primary healthcare services and this is responsible for the worsening disease outbreaks and out-of-pocket expenditures. Out-of-school children in Nigeria remain embarrassingly high as at least 20 million children of school age are reportedly outside classrooms. In February 2022, public universities in Nigeria were shutdown and left millions of students across the country out of class as lecturers protest the poor conditions of facilities. The money that has gone into servicing subsidy are more than enough to enrol Nigerians on a comprehensive healthcare plan and many other interventions that could positively impact millions of Nigerians. It cannot be overstated that subsidy is a monster that has eaten up Nigeria’s wealth for too long, and the thought that the Dangote refinery may likely free up the resources that goes into it for more direct impacts is enticing. But that was not all because, according to Emefiele, the Dangote refinery has the prospect of generating up to 12,000 MW of electricity for the country. “I am also proud to state that the project will generate up to 12,000 MW of electricity,” Emefiele had noted at the inauguration.
If this turns out to be true, then the Dangote refinery may go on to be the break that Nigeria has so long anticipated. Even though Nigeria is rich in hydrocarbon, energy poverty is an issue that has stunted growth and limited the potentials of the country. Just like the uncertainty with petroleum products, power failure is a major occurrence in Nigeria, forcing businesses out of the country, and for those who remain, jacking up their operation costs, which is eventually transferred to poor citizens. With sustained supply of petroleum products and improved electricity, Nigeria will no doubt be able to make deserved progress, which will in turn, bear positively in the lives of the citizenry. But there is one fear and that arises from the presentation of the Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company (NNPC), Mr Mele Kyari, at the inauguration of the plant, that contrary to expectations, the Dangote refinery cannot compensate for subsidies.
While Kyari recognised the capacity of the Dangote refinery to provide domestic security of supply of petroleum products in Nigeria, he, however, watered down the expectations raised by the CBN Governor that it would make the payment of subsidies go away. Kyari pointed out that the “differentials that domestic refining would provide is insignificant and cannot compensate for the subsidies. For very long, government and experts have attributed the rise in subsidy payments to the importation of petroleum products, and so the expectations was that having the Dangote refinery, which promises to meet 100 percent of local demands, will change the narrative. This is not to say the Dangote refinery will just crash the pump price of fuel as many had anticipated but to say it provides ‘insignificant’ differential that can drastically weigh on subsidies does not really add up. The CBN Governor observed that if we continue to rely on petroleum imports, Nigeria could expend as much as $30bn by 2027, noting that “these figures suggest that the refinery could engender foreign exchange savings, to to the country, of between $25bn and $30bn annually.” In short, the Dangote refinery should significantly cut down the country’s spending on subsidies, which will in turn provide the necessary resources to focus on meaningful interventions in health, education and the fight against poverty. That is what a lot of Nigerians waged their hopes on, and I hope the wait is worth it in the end.,
