Olufemi Adeyemi
A recent analysis by an economic expert suggests that the potential benefits of the Dangote Refinery to Nigerian citizens may be overshadowed by the concurrent increase in fuel prices.
An economist, Johnson Chukwu, has said that with the
Nigerian National Petroleum Company Limited, NNPCL in debt and unable to pay
for Premium Motor Spirit, PMS, Nigerians may not benefit from the Dangote
Refinery.
He said while acknowledging that Dangote Refinery will save
the country some logistics costs on shipping, insurance, among other expenses,
the current indebtedness of the NNPC could prevent the expected benefits from
getting to Nigerians.
Speaking on Arise Television on Wednesday, the economist
said, “The issue about the NNPC increasing the pump price of fuel on the same
day that Dangote Refinery started the production of petrol should not be
treated as a separate story. First of all you have to realise that they did
mention that the NNPC is owing about $6b.
“How did this debt come about? Because NNPC has been
importing fuel and landing at a cost that is lower than the pump price and
because it hasn’t been able to recover the cost of importing fuel from the pump
price of fuel, it has been accumulating this debt.
“Reports in the media also have it that many oil dealing
companies are reluctant to supply NNPC with refined petroleum products because
they’ve not been able to pay up the existing debts.
“Now NNPC has entered an agreement to offtake Dangote
Refinery products and it also means that NNPC has to pay Dangote Refinery for
any offtake of PMS and that payment must come from somewhere.
“So we’re still dealing with a situation where NNPC is not
able to generate enough revenue from the sale of the refined products it’s
going to buy from Dangote then they’ll start owing Dangote.
“And I don’t think Dangote is in a position to sell on
limitless credit to NNPC . That would somehow put Dangote in jeopardy.
“Like I have always said, it is either the federal
government from the federation account deductions are made as a topline item to
pay for fuel subsidy or somebody has to pay for it.
“It’s either the federal government has to be willing to pay
for the subsidy from the federation account receipt or the NNPC won’t be in the
position to continue to import fuel or to buy fuel from Dangote Refinery. So…,
if NNPC could not pay Dangote for the refined petroleum products, Nigerians
will not get the benefits of Dangote Refinery.”