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PIA, Dangote seen helping Nigeria in 2022

AFRICA A Nigerian economic advocacy group this week effect the removal of petroleum subsidy given
highlighted the activation of the Petroleum the closeness of the timing to the 2023 elections”.
Industry Act (PIA) and the launch of operations In October, Central Bank of Nigeria (CBN)
at the Dangote Refinery as the keys to the coun- Governor Godwin Emefiele said that the Dan-
try’s economic recovery in 2022. gote refinery would save around 30% of its
Presenting its outlook for 2022, the Centre for existing foreign exchange (forex) expenditure
the Promotion of Private Enterprise (CPPE) said that is currently spent on importing petroleum
that insecurity, fiscal and foreign exchange rigid- products.
ity, barriers to trade and electioneering ahead Another nearly 10% could be saved when
of next year’s elections are all likely to com- considering the neighbouring petrochemical
pound the challenges facing Nigeria as it looks plant which is expected to come into operation
to rebound from the coronavirus (COVID-19) soon after the refinery.
pandemic. Emefiele said that of Dangote’s 650,000 bpd
Despite this, “the outlook for the Nigerian capacity, “there is a domestic component that
economy in 2022 is largely positive,” it said, is about 455,000 bpd. Even if the 455,000 bpd is
amid oil price stability, the success of measures to what is sold to Dangote in naira alone, it is going
ease the impact of the pandemic and continued to be major forex saving for Nigeria. Right now,
growth in the service sector. the overall forex we spend on imported items,
Presenting his findings, CPPE CEO Dr the importation of petroleum products con-
Muda Yusuf, who is also director-general of the sumes close to 30%,” including diesel, aviation
Lagos Chamber of Commerce and Industry, fuel, gasoline and other products.
said that the PIA would play an important role. The refinery is expected to begin operations
“We expect to see positive outcomes as investor later this year and will receive 300,000 bpd of
sentiment in the oil and gas sector improves on feedstock from the Nigerian National Petroleum
account of the reforms anchored on the PIA. Corp. (NNPC), which acquired a 20% stake in
This will, however, depend on the political will the unit last year.
deployed to drive the implementation of the pro- It will pay $2.7bn for the shares, valuing the
visions of the Act.” facility at around $13.5bn.
He added that the launch of the 650,000 However, it will pay only around $900mn in
barrel per day (bpd) Dangote facility at Lekki cash for the shareholding, with the same value
near Lagos would “also impact positively on the being provided via crude feedstock discounted
downstream sector of the economy”. by around $2 per barrel and another third will
Yusuf warned, though, that despite the PIA, be paid in profits from the business.
the government may be continue to be burdened NNPC expects to receive $1bn in finance
by subsidies, casting doubts about the govern- from the Cairo-based African Export-Import
ment’s ability “to exercise the political will to Bank (Afreximbank) to fund the acquisition.™

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