By Adeleye Kunle
Dr. Ben Akabueze, Director General of the Budget Office, has stated that the Dangote Refinery’s impact on Nigeria’s downstream oil sector will be minimal, dashed Nigerians’ hopes that the refinery’s expected start-up later this year will result in cheaper fuel supply in the country.
Akabueze stated this yesterday during a virtual intervention at the 2022 Mid-Year Review and Outlook hosted by the Lagos Chamber of Commerce and Industry (LCCI) and sponsored by Coronation Merchant Bank, noting that the refinery is technically not in Nigeria because it is located in a Free Trade Zone.
“When it begins operations, the Dangote Refinery will have little impact on Nigeria’s downstream oil sector,” he says.
“Because the refinery is located in a Free Trade Zone, it is technically not in Nigeria.” As a result, as long as it purchases crude in dollars, the product will most likely be sold at international market prices.”
Dr. Michael Olawale-Cole, President of the LCCI, expressed concerns about contracting output, constrained production, and recession risks for the remainder of the year in his welcome address.
“In the third quarter, many factors will weigh on growth, including the CBN’s rate hike as well as rate hikes by other central banks around the world; rising energy costs, with diesel exceeding N800 per litre, Jet-A1 at N710 per litre, and PMS selling above the government-regulated price of N165/litre,” he said.
“These price levels will continue to exacerbate production costs, potentially leading to restrained manufacturing and job losses.” The deteriorating security situation in many parts of the country will continue to jeopardize agricultural production, value chains in manufacturing, and logistics.
“We anticipate some fiscal constraints as a result of the debt overhang, which is accompanied by a high debt service burden and high subsidy costs.” As we navigate the murky waters of 2022, there is thus increased concern about contracting output, constrained production, and recession risks.”
Mr. Taiwo Oyedele, Fiscal Policy Partner & Africa Tax Leader, PwC, argued in his presentation that the proliferation of taxes amounts to putting a “knee on the neck of Nigerian businesses.”
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