July 15, 2022

Dangote Refinery’ll have minimal impact on fuel price — Akabueze

Dangote urges private sector players to commit 1% of all profits to fund health

By Yinka Kolawole

The Director General, Budget Office, Dr. Ben Akabueze, has said that the effect of the Dangote Refinery on the downstream oil sector in Nigeria will be minimal, dashing the hope of Nigerians that the expected commencement of operations of the refinery later this year will ensure cheaper fuel supply in the country.

Akabueze stated this, yesterday, in his virtual intervention at the 2022 Mid-Year Review and Outlook organised by the Lagos Chamber of Commerce and Industry (LCCI), sponsored by Coronation Merchant Bank, noting that the refinery is technically not in Nigeria being located in a Free Trade Zone

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.”

In his welcome address, President, LCCI, Dr. Michael Olawale-Cole, expressed fears of contracting output, constrained production, and recession risks in the course of the rest of the year.

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.”

In his presentation, Mr. Taiwo Oyedele, Fiscal Policy Partner & Africa Tax Leader, PwC, argued that proliferation of taxes amount to putting “knee on the neck of businesses in Nigeria”.