The Director General, Budget Office, Dr. Ben Akabueze, has said that the effect of the Dangote Refinery on the downstream oil sector in Nigeria will be minimal, dashing the hope of Nigerians that the expected commencement of operations of the refinery later this year will ensure cheaper fuel supply in the country.
Akabueze stated this, yesterday, in his virtual intervention
at the 2022 Mid-Year Review and Outlook organised by the Lagos Chamber of
Commerce and Industry (LCCI), sponsored by Coronation Merchant Bank, noting
that the refinery is technically not in Nigeria being located in a Free Trade
Zone.
His words: “Dangote Refinery will have minimal effect on the
downstream oil sector in Nigeria when it commences operations.
“The refinery is located in a Free Trade Zone and as such it
is technically, not in Nigeria. So, the product is likely going to be sold at
international market price as long as it procures crude in dollars.”
In his welcome address, President, LCCI, Dr. Michael
Olawale-Cole, expressed fears of contracting output, constrained production,
and recession risks in the course of the rest of the year.
He stated: “In the third quarter, many factors will weigh on
growth such as CBN’s rate hike as well as the rate hikes by other central banks
around the world; rising energy costs with diesel above N800/litre, Jet-A1 at
N710 per litre, and PMS selling above the government-regulated price of
N165/litre.
“These price levels will continue to aggravate production
costs which may lead to restrained manufacturing and eventual job losses. The
worsening security situation in many parts of the country will continue to
threaten agricultural production, manufacturing value chains, and logistics.
“We expect to experience some fiscal constraints because of
debt overhang accompanied by a high debt service burden and heavy subsidy
costs. There are therefore heightened fears of contracting output, constrained
production, and recession risks as we navigate the murky waters of 2022.”
In his presentation, Mr. Taiwo Oyedele, Fiscal Policy
Partner & Africa Tax Leader, PwC, argued that proliferation of taxes amount
to putting “knee on the neck of businesses in Nigeria”.
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