A business analyst, Michael Olajuwon, has called on the Dangote Refinery to prioritize meeting local demands before considering exports. His advice comes after the chairman of Dangote Refinery, Aliko Dangote, stated that at least 40% of the capacity will be available for export once the plant is commissioned fully.
Olajuwon, in an article titled “Subsidy Removal: Better Late than Now,” explained that meeting local demand before any other consideration would alleviate the government’s subsidy payment and guarantee efficient and consistent supply of the product. He further highlighted that the new refinery would eliminate the dollar content of the cost implications in the value chain of oil production, an advantage that would reduce the selling price.
“The refinery, which has an installed capacity of 620,000 barrels of oil daily, will sufficiently cater to the daily consumption of Nigerians, estimated at 428,000 barrels daily. I am not too conceited that our woes are over, knowing fully well that capitalism is about maximizing profit. However, with 20% stake in the project, the government can and should persuade the Dangote group to meet local demand first before any other consideration,” he said.
Olajuwon further advised that the government should extend the same support given to Dangote to other serious investors to enable more refineries to spring up.
Regarding the effect of subsidy payment, Olajuwon described it as a perennial challenge for the Nigerian government, adding that efforts to fight the rot in the oil and gas industry have been met with stiff resistance. Between 2015 and 2019, out of the $70 billion invested in the oil and gas sector in Africa, Nigeria attracted only 4%, despite being the largest oil-producing country on the continent.
“Government should do more to attract more investments into the sector to further boost production. With OPEC falling below its target by 3.6 mbpd, there is a ready market for us if we can bridge the supply gap,” he added.
In conclusion, Olajuwon called for the Dangote refinery to bring reprieve to the country and the continent by fundamentally tackling challenges that were once unassailable.
