Nigerian think tanks have said that the much anticipated refinery owned by Africa’s richest man Aliko Dangote will boost growth in the country’s downstream sector in 2022.
Dangote Petroleum Refinery under construction in Lekki Free Zone near Lagos is a 650,000 barrels per day (BPD) integrated refinery.
The refinery, which will commence work early 2022 has seen its cost ballooned to $19bn from the initial estimate of $12bn to $14bn.
The refinery has been delayed for years but with the development, think tanks like the Centre for the Promotion of Private Enterprise (CPPE) see the new refinery as one of the key expected drivers of growth that would impact positively on the downstream sector of the Nigerian economy this year.
Nigeria’s moribund refineries have laid waste for years until the drastic measures taken by the state owned petroleum company, the NNPC to revive the refineries in Portharcourt, Lagos and Warri.
But the founder of CPPE Dr. Muda Yusuf said in CPPE’s 2022 Economic Outlook that the Petroleum Industry Act (PIA) in 2022 is expected to have a positive impact on the economy.
Yusuf said, “We expect to see positive outcomes as investor sentiments in the oil and gas sector improve on account of the reforms anchored on the PIA.
“This will however depend on the political will deployed to drive the implementation of the provisions of the Act. It is also expected that the coming on stream of the Dangote refinery in 2022 will also impact positively on the downstream sector of the economy.”
Global energy demand is projected to be high in 2022 with oil price growing above $100 per barrel.
Yusuf said that if the Dangote refinery comes on stream in 2022, the fiscal pressure on the economy may abate, but the pressure will not be completely eliminated.
He revealed that despite the downside risks, the economy would continue to present huge opportunities for investors across all sectors.
“This is on account of the resourcefulness of the Nigerian people, especially the entrepreneurs. Other inherent strengths of the Nigerian economy include the market size, the population, and the demographic characteristics.
“We expect that the average oil price in 2022 will exceed the budgeted benchmark of $62 per barrel, offering some fiscal headroom. This would be powered by higher energy demand driven by the recovery of economic activities globally.”
The Financial Derivatives Company Limited, a financial institution, in its recent Economic Report for 2022, was also optimistic that the Dangote Refinery would boost the growth of the downstream sector of the economy and enhance petroleum products distribution across Africa.
