At a visit to the Dangote petrochemical refinery yesterday, Minister of State for Petroleum resources Dr Ibe Kachikwu urged Alhaji Aliko Dangote and his team to expedite action on the refinery, in order to meet its 2019 completion date. The minister also promised that the government would give all the necessary support.
Why the government is keen on its quick completion
The government is presently at a cross road. Though the petroleum subsidy has been removed, pump price is still heavily regulated. The current increase in crude oil prices, foreign exchange depreciation has meant prices should go up. To prevent this, the Nigerian National Petroleum Corproation is presently the sole importer of petroleum products into the country. The NNPC itself is running at a loss. While the government has tried to put existing refineries in working order, they are simply not worth fixing and some experts have suggested they be sold as scrap. The National Assembly and labour unions in the petroleum industry have kicked against a planned concession.
A looming election means prices cant go up
Though the 2019 elections are still one year away, politicians have already begun to make moves. The government can not afford to increase the pump price of petroleum products, nor can it foot a direct subsidy. If the refinery comes on stream by then, it would ensure a stable supply of petroleum products at a reasonable price, providing a key point to campaign with.
The refinery may not be the expected saviour
Siting the refinery at the Lekki Free Trade Zone, means the Dangote group may also have plans to export refined petroleum products. A spike in crude oil prices mean exporting the products may be more profitable than selling within Nigeria, since it would be earning in dollars. The government may also be reluctant to let pump prices rise in an election year. So while the refinery may provide petrol, it may not be cheaper than current prices.