The Centre for the Promotion of Private Enterprise (CPPE) has raised alarm over the decision by Dangote Refinery to sell its petroleum products in dollars, warning that the move could have far-reaching consequences for Nigeria’s economy. The refinery, which began operations earlier this year amid high expectations of reducing the country’s dependence on imported fuel, announced on Wednesday that it would price its products in the US currency. This decision has drawn sharp criticism from economic experts and stakeholders, who fear it could lead to a significant hike in the price of Premium Motor Spirit (PMS), commonly known as petrol, and further weaken the already struggling naira.
The CPPE, a leading advocacy group for private sector development, described the refinery’s decision as “counterproductive” and “detrimental to the Nigerian economy.” In a statement released on Thursday, the group warned that pricing petroleum products in dollars would exacerbate the economic challenges facing ordinary Nigerians, particularly the rising cost of living and the depreciation of the local currency.
Nigeria, Africa’s largest economy, has been grappling with a severe foreign exchange crisis, with the naira losing significant value against the dollar in recent months. The Central Bank of Nigeria (CBN) has implemented various measures to stabilize the currency, including tightening monetary policy and restricting access to foreign exchange for certain imports. However, these efforts have yielded limited results, as the country continues to face a shortage of dollars due to declining oil revenues and rising import bills.
The Dangote Refinery, a $19 billion project spearheaded by Africa’s richest man, Aliko Dangote, was expected to be a game-changer for Nigeria’s economy. By producing refined petroleum products locally, the refinery was supposed to reduce the country’s reliance on imported fuel, save billions of dollars in foreign exchange, and create thousands of jobs. However, the decision to sell its products in dollars has cast doubt on these expectations and raised concerns about the refinery’s impact on the economy.
One of the most immediate consequences of the refinery’s dollar pricing policy is the potential increase in the price of petrol. Nigeria currently subsidizes the cost of petrol to keep prices affordable for consumers. However, with the Dangote Refinery selling its products in dollars, the cost of purchasing fuel from the refinery will rise, putting additional pressure on the government’s subsidy budget.
The CPPE warned that if the government is unable to absorb the increased costs, the burden will inevitably be passed on to consumers in the form of higher fuel prices. “This decision will lead to a hike in the price of PMS, which will have a ripple effect on the cost of transportation, goods, and services. It will further exacerbate the already high inflation rate and worsen the economic hardship faced by Nigerians,” the group stated.
The potential increase in fuel prices comes at a time when Nigerians are already struggling with the rising cost of living. Inflation has soared to double digits, driven by higher food and energy prices, while unemployment and poverty rates remain stubbornly high. A further increase in fuel prices could push millions of Nigerians deeper into poverty and spark social unrest.
Another major concern raised by the CPPE is the impact of the refinery’s dollar pricing policy on the naira. By demanding payment in dollars, the refinery will increase the demand for the US currency, putting additional pressure on the naira and leading to further depreciation.
The naira has already lost significant value against the dollar in recent months, trading at record lows on both the official and parallel markets. A further depreciation of the currency would make imports more expensive, increase the cost of servicing Nigeria’s foreign debt, and erode the purchasing power of consumers.
The CPPE called on the federal government to intervene and ensure that the Dangote Refinery sells its products in naira. “The government must prioritize the interests of the Nigerian people and ensure that the refinery operates in a manner that supports the local economy. Selling petroleum products in dollars is not in the national interest and will only worsen the economic crisis,” the group stated.
The Dangote Refinery was hailed as a symbol of Nigeria’s potential for economic transformation and self-sufficiency. With a capacity to process 650,000 barrels of crude oil per day, the refinery was expected to meet Nigeria’s domestic fuel demand and even export surplus products to other African countries.
However, the decision to sell its products in dollars has raised questions about the refinery’s commitment to supporting the local economy. Critics argue that the move prioritizes profit over national development and undermines the refinery’s potential to contribute to Nigeria’s economic growth.
“The refinery was supposed to be a catalyst for economic transformation, but this decision is a step in the wrong direction. It is disappointing to see a Nigerian company adopting policies that are detrimental to the country’s economic interests,” said an economic analyst who spoke on condition of anonymity.
In light of the potential consequences of the refinery’s dollar pricing policy, there have been growing calls for the federal government to intervene and ensure that the refinery operates in a manner that aligns with national interests. Some stakeholders have suggested that the government should mandate the refinery to sell its products in naira or provide incentives to encourage the use of the local currency.
Others have called for a broader review of Nigeria’s energy policy to address the underlying issues that have made the country reliant on imported fuel. “The government must take a holistic approach to addressing the challenges in the energy sector. This includes investing in local refining capacity, improving infrastructure, and creating an enabling environment for private sector participation,” said a representative of the CPPE.
The Dangote Refinery’s decision to sell its petroleum products in dollars has sparked fears of higher fuel prices and further depreciation of the naira, raising concerns about its impact on Nigeria’s economy. While the refinery was expected to be a game-changer for the country, its dollar pricing policy has cast doubt on its ability to deliver on its promises and support national development.
As the federal government grapples with the economic challenges facing the country, it must take decisive action to ensure that the refinery operates in a manner that benefits the Nigerian people. The stakes are high, and the decisions made in the coming weeks and months will have far-reaching implications for the country’s economic future. For now, the CPPE’s warning serves as a stark reminder of the need to prioritize national interests over profit and to work towards building an economy that works for all Nigerians.
