The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, asserts that the production of petroleum products by the Dangote Refinery strengthens the naira and boosts Nigeria’s economic stability.
During a virtual stakeholder session with tax consultants and chief financial officers (CFOs) on the proposed tax reform bills, Oyedele highlights the refinery’s critical role in reducing Nigeria’s reliance on imported refined petroleum products. The bills are currently under review by the National Assembly.
Economic Growth Indicators Amid Reforms
Oyedele notes that the ongoing tax reforms coincide with positive economic developments, including increased crude oil production, which now reaches approximately 1.8 million barrels per day. He emphasizes that the commencement of local refining by the Dangote Refinery marks a pivotal moment for Nigeria’s energy sector.
He assures stakeholders that the refinery produces sufficient petroleum products to meet local demand, with surplus output available for export. “This development not only ensures product availability but also supports the naira by reducing foreign exchange pressures,” he explains.
Addressing Economic Challenges
Oyedele also highlights the repayment of Ways and Means—funds borrowed by the government through money printing—as a step toward stabilizing the economy. He warns against the practice of excessive money printing, stating that it disproportionately impacts the poor by devaluing the currency and driving inflation.
“When the government prints money without a corresponding increase in economic output, it acts as an indirect tax on citizens, eroding the value of their savings. This approach creates a potential crisis, particularly for vulnerable populations,” he says.
He urges Nigerians to embrace tax reforms as a means of ensuring sustainable economic growth. While acknowledging challenges such as exchange rate instability, high inflation, and the cost of doing business, he points to improvements in capital inflows, market performance, and international ratings as signs of progress.
Dangote Refinery’s Strategic Role
The Dangote Refinery, Africa’s largest single-train refinery, commences petrol production in September and currently operates at a capacity of 420,000 barrels per day. It plans to reach full operational capacity by mid-2025. The facility also produces jet fuel and naphtha, reducing Nigeria’s reliance on fuel imports while increasing local and regional supply.
The refinery starts selling petrol to local marketers and the Nigerian National Petroleum Company Limited (NNPCL), significantly cutting fuel importation costs. Aliko Dangote, the refinery’s owner, previously describes the reliance on imported fuel as an “absurd reality” for Africa’s largest oil producer.
Legal Developments
In another development, Dangote Refinery files a case at the Federal High Court in Abuja to challenge import licenses granted to NNPCL and other companies, arguing that such licenses undermine local refining efforts. The refinery has, however, announced plans to withdraw the case by January 2025.
Oyedele’s remarks underline the refinery’s potential to transform Nigeria’s energy landscape while contributing to broader economic stability and growth.
