Posted by The true advantage of Dangote Refinery, according to financial expert and professor Kalu Aja, is that the by-products that Nigeria left in “Malta” can now be acquired domestically.
Aja said that, since the advent of Nigeria Liquefied Natural Gas (NLNG), Dangote Refinery has been the most significant development in Nigeria.
Although Dangote Refinery saves the country the transportation costs of bringing crude to Nigeria in dollars, the analyst pointed out in a Wednesday post on his X handle that other expenses such as insurance and interest still persist.
Aja continued by saying that unless the government subsidizes crude oil and the dollar exchange rate, Nigerians should not anticipate a significant decrease in the Premium Motor Spirit (PMS) bill.
A procedure for extracting PMS from crude oil was detailed in the post.
Gather crude oil, move it to the refinery, transform it into petroleum products of solids (PMS) and other byproducts, collect PMS from the refinery, and sell them.
Refining in either Lagos State or Malta follows the same steps (1–5).
I can confirm that Dangote Refinery would save money, but by what means?
“Extraction of crude oil? It doesn’t matter where it’s refined; crude oil is valued in dollars, not Naira. Revenue for Nigeria would be cut if Dangote pays in Naira. The most expensive option is this.
“Refinery to Crude Transport?” Yes, crude oil would be shipped to Lagos instead of “Malta”.
“Got it? either “Malta” or Lagos for the refinery would incur the same price.
“Retrieve the petroleum product storage system from the refinery?” It is from Lagos, not “Malta,” that the transfer is taking place. expense, albeit a reduced one.
“Sector? Market? it becomes more expensive with each iteration.
The transportation expense associated with bringing crude oil from “Malta” to Lagos was formerly paid for in dollars; this is what Dangote Refinery saves.
The cost of insurance, interest, etc., is still borne by Nigeria. Expenses like this are still associated. Another question is if the ships are built or insured locally.
I agree that the Dangote Refinery lowers demand for dollars, but not to the degree that you assert.
This is a net loss of foreign exchange (FX) due to Dangote’s Naira purchase and lower demand for FX, since the payment is made in Naira.
The accompanying byproducts that were left in Malta will now be gathered locally by Dangote, which is the actual value of the Dangote Refinery.
This means that the Dangote Refinery actually brings in more foreign currency for Nigeria because of the byproducts it exports.
“Until the Federation subsidizes crude oil and the $exchange rate, your PMS bill will not substantially drop, even though the Dangote Refinery is the biggest game changer in Nigeria since NLNG.”