Exporting crude oil without providing supply to the Dangote refinery is deemed inappropriate for Nigeria, according to Rewane
Eminent economist Bismarck Rewane emphasized the discrepancy in Nigeria’s practice of exporting crude oil through forward contracts while neglecting to fulfill the supply needs of the Dangote refinery.
He articulated this viewpoint during an interview on Tuesday’s Business Morning show on Channels Television.
Rewane’s observation underscores the need for strategic alignment between the nation’s crude oil exports and the operational requirements of vital domestic refineries, such as the Dangote refinery.
The economist highlighted that with the acquisition of its inaugural cargo deal comprising approximately six million barrels, the Dangote Refinery stands poised to procure crude locally, refine it within Nigeria, and subsequently export the refined petroleum products to nations in West Africa.
He expressed the view that it is illogical for Nigeria to engage in the export of crude through Forward Contracts without the capacity to refine its own product for the benefit of its citizens and the wider West and Central African regions.
Moreover, he anticipated that the Dangote Refinery is likely to be listed on the Nigerian Stock Exchange between 2024 and 2025.
This strategic move, involving a substantial investment ranging from $19 billion to $20 billion, would significantly bolster the market capitalization of the Nigerian Stock Market, registering an impressive 60 percent increase.
The development reflects not only economic advancements but also the potential for substantial growth within the Nigerian stock sector.
Furthermore, he emphasized, “The Dangote Group contributes significantly to the national coffers, paying annual taxes exceeding N146 billion and distributing dividends to shareholders amounting to N357 billion.”
The Managing Director of Financial Derivatives Company Limited went on to clarify that this substantial financial contribution is not just a capitalistic investment; rather, it aligns with the democratic principle of involving shareholders, drawing a parallel with the earlier phase when MTN was a privately held company.
This underscores the broader impact of the Dangote Group’s operations on both the economy and the shareholders’ involvement in the business.
The Managing Director of Financial Derivatives Company Limited drew a parallel by stating, “When MTN distributes dividends nowadays, there is widespread joy because its ownership structure has become more inclusive.
It is now perceived as a Nigerian entity, signifying a transformative shift. A similar trend is unfolding for companies, particularly those like Dangote Refinery, which hold dominant positions and leadership roles across various industries.”
It is worth noting that the Dangote Refinery, situated in Lagos and owned by Aliko Dangote, the wealthiest individual in Africa, is scheduled to commence operations in December, targeting a daily processing capacity of 350,000 barrels.
This development is poised to make a substantial impact on the industrial landscape, reflecting the ongoing transformation in the ownership and operation dynamics of key businesses in Nigeria.