Fakoyejo OlalekanPresident Muhammadu Buhari will commission Dangote Refinery on 22 May 2023 before the end of his administration and the removal of the fuel subsidy in June.
This was disclosed by Bashir Ahmad, the Special Assistant on Digital Communications to President Buhari, in a tweet on Sunday.
“Efforts by the Federal Government to make Nigeria self-sufficient in local refining of crude oil to save the scarce foreign exchange used in the importation of petroleum products have received a boost as the 650,000 barrels per day Dangote Refinery, the world’s largest single-train refinery, is set for inauguration on May 22nd, 2023, by President Muhammadu Buhari,” Ahmad wrote on Twitter.
There have been several delays to the commencement of Dangote Refinery, which was initially scheduled for completion in 2019.
Financial reasons and the COVID-19 breakout had forced Dangote Group to postpone the inauguration severally, with the refinery facility estimated to gulp $19 billion.
Impact of Dangote Refinery on cost of fuel in Nigeria
The report of the launch of Dangote Refinery comes a month before the Federal Government plans to remove subsidy from fuel in a bid to cut costs.
Nigerian government plans to spend N3.6 trillion to subsidise imported fuel into the country between January to June 2023. In the last six of this year, the government has projected it won’t pay subsidy.
This means Nigerians will pay N8.4 trillion for the supply of over 66 million litres for six months or N46.2 billion daily starting from July, as it has been projected that a litre of fuel will cost N700 after subsidy is removed.
While there are several factors that drive the cost of fuel from the current N189 per litre to about N700, such as Dollar rate, logistics and profits within the country, what takes a large chunk of the cost and also results in subsidy payment is landing cost.
The landing cost is the amount government pays for importing fuel into the country after exporting crude oil to European countries to refine the product.
Prime Business Africa gathered that the landing cost is almost double the fuel price at retail stations. As of February, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, said the landing cost of fuel is N315 per litre.
The government sells the fuel at half the landing cost to oil marketers to keep the pump price low and control the price movement in Nigeria.
But with Dangote Refinery expected to come on stream in the fourth week of May, Nigeria will no longer expend cash on landing costs, as it will no longer depend on the importation of fuel into the country.
This could save the country at least N20.7 billion spent on landing cost, when the N315 per litre cost is pegged to the 66 million fuel consumed by Nigerians daily as of February, considering Dangote Refinery has the capacity to meet Nigeria’s refined requirement.
The commencement of Dangote Refinery will also lead to a drop in the projected price of fuel, which has been estimated around the range of N700 and N1,700 (depending on the availability of foreign exchange in the official and black market) should the subsidy be removed without the country owning a refinery to refine crude oil within the country.
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