Rewane argues that it is unjust for Nigeria to export crude oil without fulfilling the supply needs of Dangote refinery.

Busy Bee
Busy Bee November 28, 2023
Updated 2023/11/28 at 11:25 PM

Renowned economist Bismarck Rewane has expressed his disapproval of Nigeria’s practice of exporting crude oil without ensuring a steady supply to the Dangote refinery. The prominent economist, in a recent statement, criticized the imbalance in the country’s economic priorities.

Rewane highlighted the inconsistency in exporting crude oil, a valuable resource, while failing to adequately supply the Dangote refinery. The Dangote refinery, owned by Africa’s wealthiest man, Aliko Dangote, is a critical asset in Nigeria’s quest for self-sufficiency in the petroleum sector.

The economist emphasized the need for a strategic approach that aligns with national interests, urging the government to prioritize the Dangote refinery’s operational needs over crude oil exports. He argued that such a move would not only boost the nation’s refining capacity but also contribute significantly to economic growth.

This perspective adds to the ongoing discussions surrounding Nigeria’s economic policies and the optimization of its abundant natural resources. Rewane’s commentary sheds light on the need for a coherent strategy that ensures the country maximizes the potential benefits of its oil industry for domestic development and sustainability.

Renowned economist Bismarck Rewane expressed his disapproval of Nigeria’s practice of exporting crude oil through forward contracts without prioritizing the supply to the Dangote refinery. In a comprehensive interview conducted on Tuesday for Channels Television’s Business Morning show, Rewane delved into the intricacies of this economic concern.

During the discussion, Rewane emphasized the incorrectness of the current approach, shedding light on the need for a strategic shift in the nation’s export priorities. He underscored the significance of diverting a portion of the crude oil supply to cater to the demands of the Dangote refinery, a pivotal player in Nigeria’s domestic energy landscape.

In his analysis, Rewane called attention to the potential economic benefits and stability that could be derived from redirecting the crude oil supply chain to support local refineries, particularly the Dangote facility. The seasoned economist urged a reevaluation of existing policies to align with the nation’s economic interests, emphasizing the importance of fostering self-sufficiency and bolstering the domestic energy sector.

Overall, Rewane’s insights during the interview shed light on the complexities of Nigeria’s economic policies and underscored the need for a strategic reorientation to optimize the country’s resources for sustained growth and development.

The economic analysts have highlighted a significant milestone for the Dangote Refinery, emphasizing that with the successful negotiation of its inaugural cargo deal involving approximately six million barrels, the refinery is poised to revolutionize the oil industry’s dynamics in Nigeria

. This groundbreaking development enables the Dangote Refinery to acquire crude locally, undergo the refining process within the borders of Nigeria, and subsequently export the refined petroleum products to various nations within the West African region. The strategic implications of this deal not only showcase the refinery’s capacity for self-sufficiency but also position it as a key player in regional energy trade, fostering economic integration and sustainability.

The imperative for Nigeria to refine its own crude oil rather than exporting it on Forward Contract while relying on imports for its domestic consumption has been underscored by Aliko Dangote, Africa’s wealthiest individual and owner of the Dangote refinery.

Expressing his conviction, Dangote emphasized the illogicality of exporting crude while struggling with inadequate refining capacity to meet local and regional needs. He asserted that the Dangote refinery, a colossal $19 billion to $20 billion investment, is poised to address this paradox by significantly boosting Nigeria’s refining capacity.

Moreover, Dangote revealed plans for the refinery to be listed on the Nigerian Stock Exchange by 2024-2025, a move expected to augment the market capitalization of the exchange by an impressive 60 percent. This strategic decision not only aligns with economic goals but also democratizes ownership by allowing ordinary Nigerians to become stakeholders in this major national asset.

Highlighting the broader impact, the Managing Director of Financial Derivatives Company Limited, further elaborated on the transformative nature of such investments. Drawing parallels with MTN’s shift to public ownership, he noted that the refinery’s contribution extends beyond profit margins, with the Dangote Group already paying substantial annual taxes of over N146 billion and dividends amounting to N357 billion. This, he argued, signifies a departure from a purely capitalistic investment model, heralding a democratization of the shareholder structure.

In a broader context, the move to refine locally not only holds the promise of economic self-sufficiency but also serves as a beacon for other industries. Dangote’s refinery, set to commence operations in December with a daily capacity of 350,000 barrels, stands as a testament to the transformative power of strategic investments in Nigeria’s economic landscape.

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