The CBN Governor Godwin Emefiele visited the on going Dangote Refinery Project currently under construction and as Premium Times reported, he not only visited but promised to “assist the Dangote Group to access foreign exchange to facilitate its $14 billion refinery project.” Here is Emefiele on quote
“Your ongoing 14 billion dollar refinery investment will enjoy our support, no doubt. We are doing this to fast-track the importation of equipment you need for a speedy completion of that project and to encourage other Nigerians to follow your lead,”
I have read this quote severally trying to figure out what it actually means? I came up with the following;
CBN Is Playing god- This probably confirms some of the biggest fears skeptics have. The CBN has claimed its demand side management is targeted at making sure only critical sectors of the economy gets dollars. By this, statement Emefiele may just have confirmed that the CBN is hoarding dollars and only selling to people they feel “need” dollars the most. Whilst the intent here may seem logical, it doesn’t go down well with the tenets of free markets. The CBN is basically playing God and deciding which projects to support and what not to support.
Against devaluation – Aliko Dangote has vehemently opposed the devaluation of the naira telling anyone who cares to know that he supports CBN policies. Emefiele’s latest statement now helps put those comments into better perspective. Devaluing the naira will cost Africa’s richest man hundreds of billions of naira in exchange rate differentials and could render the business model not viable or increase the payback period of the business. Refineries operate very low margins and requires eliminating cost inefficiencies, having a steady demand to break-even. Adding tens of billions of dollars in exchange rate cost will probably render this business unprofitable even before it comes on stream.