Development Economist faults Dangote’s claims on refinery product sales
Contrary to the claims of the Group Executive Director, Strategy, Capital Projects and Portfolio Development, Dangote Industries Limited (DIL), Devakumar Edwin, that the high volume of petroleum products from emerging Dangote refinery, located in Lagos, would transform Nigeria from a petrol import-dependent country to an exporter of refined petroleum products, Development Economist, Dr. Ken Igboanugo has presented a different analogy.
In an interview, he said “Whereas Nigerians are happy that Dangote Refinery will add value to the daily lives of Nigerians, the new refinery may not sell its products beyond prevailing international market prices which technically makes it import within an economy after all.
“What am saying is that beyond all the assurances, no businessman including Dangote, will take because it is an indigenous producer, sell below international market prices.
Continuing, Dr Igboanugo averred that “Every product coming from Dangote refinery will be bought by any interested buyer at the very prevailing international price. The only difference possibly is that the cost of freight may not be there which may not be very significant after all.
“It is very important for Nigerians to bear in mind that Dangote refinery will not sell a litre of fuel anything below the international landing cost because the refinery will only be selling products at international prices.
“This means that the Federal Government subsidy regime will become endless unless the national refineries are fixed and controlled by the government who may wish to sell at a subsidized price which is against the spirit of industry liberalization.
He said Nigerians should not take private investors as the same as government enterprises where prices are fixed for the interest of citizens.
“Private investors are business and return on investment-oriented in the first instance. Take your mind to all the logic given to Nigerians before the completion of backward integration in cement production.
“Nigerians were made to believe under former President Goodluck Jonathan administration that as soon as the country achieves backward integration in local cement production, prices will crash even down to below N1,000. That did not happen as since 2013 when the combined output of domestic output crossed our annual yearly dement, cement prices have remained over and above N2,000 till date. Today, Nigeria does not import cement, but we cannot buy the product with smiles on our faces.
“The same experience is coming on petroleum product even on delivery of Dangote refinery. I stand to be corrected from next year or so when Dangote refinery will begin sales,” the Development Economist averred.
DIL has issued a statement Sunday that its crude oil refinery is expected to produce 65.4 million litres of petrol, diesel, aviation fuel and kerosene daily when it comes on stream, saying it would transform Nigeria from a petrol import-dependent country to an exporter of refined petroleum products.
According to the statement, the company’s plan is to satisfy Nigeria’s demand for petrol, aviation fuel, kerosene and diesel, leaving a surplus for export.
The Group Executive Director, Strategy, Capital Projects and Portfolio Development, DIL, Devakumar Edwin, said the refinery was being designed to accommodate multiple grades of domestic and foreign crude, and process them into high-quality petrol, diesel, kerosene, and aviation fuels that would meet Euro V emissions’ specifications, plus polypropylene.
He said the refinery would also include a crude distillation unit, single-train residual fluid catalytic cracking unit, diesel hydro-treating unit, continuous catalyst regeneration unit, alkylation unit, and a polypropylene unit.
“The project will provide thousands of direct and indirect jobs and add value to Nigeria’s economic development. It will lead to significant skills transfer and technology acquisition opportunities in the country,” Edwin added.