IMF sees Dangote Refinery Increase Nigeria’s Trade Balance By $2bn Annually

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The International Monetary Fund has said the crude oil refinery being built by Dangote Industries Limited will improve the trade balance by $2bn per year after coming on stream.

The Washington-based fund noted that Nigeria, despite being a long-time crude oil exporter, continued to import refined oil to meet domestic demand. It said in a report released on Wednesday that the Dangote refinery could transform the country’s petroleum industry, boost growth, turn the country into an exporter of refined products, improve the balance of payments, and transform regional trade patterns.

The IMF said, “With a crude oil production of almost two million barrels per day, Nigeria is Africa’s biggest oil producer and one of the largest oil exporters globally. Yet, only a small fraction of Nigeria’s crude oil production is refined domestically —on average only about 0.08 mbpd have been delivered to local refineries between 2008 and 2017, just a fraction of the theoretical refining capacity of 0.445 mbpd (broadly covering domestic demand) including due to under-investment into the refinery.

“This leaves a substantial opportunity for value added to meet domestic demand for petrol, kerosene, jet fuel, and diesel, and thus to reduce the import bill while diversifying exports.

A new oil refinery constructed by the Dangote Group in Lagos State promises to double Nigeria’s refining capacity and boost activities in the downstream sector.” It said once operational, with a maximum refining capacity of 650,000 bpd , the privately-operated Dangote refinery could meet all domestic demand for liquid products and still have sufficient surplus for exports. The IMF noted that this would translate into reduced imports of refined products by 450,000 bpd and increasing exports of refined products by 200,000 bpd , while decreasing net exports of crude oil to refine oil by 650,000 bpd .

It said, “Under the currently envisaged mix of refined products, this would boost the country’s growth by 0.3 to 0.4 percentage points in 2022, and improve the trade balance by $2bn per year (net after reducing both net crude exports and refined oil imports). “These benefits could materialise as soon as 2020, the current target year to make the refinery operational, but are included from 2022 onwards in staff estimates, thus providing upside potential to current projections. “Additional economic benefits could be significant.

At the current construction stage, the refinery is directly or indirectly employing over 180,000 people, including on-site contractors. Once operational, additional job opportunities would materialise, through indirect employment through retail outlets, filling stations, and in transport.”

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Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

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