There is optimism among stakeholders that the much-expected Dangote refinery will alter the narratives in the nation’s downstream sector this year.
The 650,000 barrels per day (BPD) Dangote refinery, Located in the Lekki area of is prepared to be Africa’s largest and is expected to commence operations this year.
The Centre for the Promotion of Private Enterprise (CPPE), an economic advocacy group, identified the Dangote petroleum refinery as one of the key expected drivers of growth that would impact positively on the downstream sector of the Nigerian economy in 2022.
Likewise, Financial Derivatives Company Limited, a financial institution, in its last Economic Report for 2022, indicated a firm belief that Dangote Refinery would boost the growth of the downstream sector of the economy and enhance petroleum products distribution across Africa.
The Managing Director of Financial Derivatives Company, Bismarck Rewane, however, cautioned that the refinery, when functional, would not be an absolute solution to Nigeria’s economic crises.
He added, “The coming on stream of Dangote Refinery will no doubt enhance product distribution across Africa. Will Dangote refinery solve Nigeria’s problem? The answer is no. But the company is going to make Nigeria an exporter of refined petroleum products.”
Mr Bismarck announced that the average oil price in 2022 is expected to exceed the budgeted benchmark of sixty-two dollars ($62) per barrel, offering some fiscal headroom. This, he reported, would be powered by higher energy demand driven by the recovery of economic activities globally.
Yusuf said, “This trajectory is expected to have an influence on our foreign reserve and strengthen the capacity of the Central Bank of Nigeria (CBN) to support the foreign exchange market.”
He added that if the Dangote refinery comes on stream in 2022, the fiscal pressure on the economy may lessen, but not be eradicated.
According to the economist, because the service sector is less exposed to the structural limitations of the economy, especially the real sector of the economy, it will continue to outpace the real sector in 2022.
“The service sector of the Nigerian economy will continue to outpace the real sector in 2022. In the third quarter of 2021, the service sector contribution to GDP was 50 percent and the growth of the sector was 8.41 percent.
The oil sector donation to GDP was 7.5 percent while the non-oil sector contribution was 92.5 percent. While the industrial sector growth contracted by 1.63 percent, agriculture rose by 1.2 percent,” he said.
Yusuf further stated that the Gross Domestic Product (GDP) growth would remain fragile at about three percent, pinpointing that the key expected drivers of growth would be sustained return of global oil price.
