The Central Bank of Nigeria (CBN) has expressed optimism that the commencement of petroleum products from the Lagos-based Dangote Refinery will have a positive impact on the economy, specifically moderating transportation costs and easing food inflation.
CBN Governor, Olayemi Cardoso while speaking at a press briefing on Tuesday at the end of the 297th meeting of the Monetary Policy Committee (MPC) in Abuja said “the committee expressed optimism that the lifting of refined petroleum products from Dangote Refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.
“This is also expected to moderate foreign exchange demands for importation of refined petroleum products with a positive spillover on external reserve and improvement in the overall balance of payment position,” Cardoso said.
The CBN chief also announced the committee’s decision to further raise the Monetary Policy Rate (MPR) which measures interest rates by 50 basis points from 26.75% to 27.25% to moderate inflation rate which stands at 32.15%.
According to the Consumer Price Index report recently released by the National Bureau of Statistics (NBS), the headline inflation rate eased to 32.15% in August 2024, while food inflation stood at 37.52% in the same month.
The NBS said food inflation rate in August 2024 was 37.52% on a year-on-year basis, which was 8.18% points higher compared to the rate recorded in August 2023 (29.34%).
It said the rise in food inflation on a year-on-year basis was caused by increases in prices of the following items, bread, maize, grains, guinea corn, bread, cereals yam, Irish potatoes, water yam, cassava tuber, palm oil, vegetable oil, among others.
Cardoso said, “On food inflation, the upside risk remains flooding, hike in energy prices, scarcity of PMS, and most importantly, security in farming communities.
“Considering the weight of food in the CPI (consumer price index, which measures inflation) basket, (MPC) members recognise the efforts of the Federal Government in addressing insecurity in the farming community and stressed the need to remain steadfast.
“In addition, the MPC applauded the ongoing efforts of the Federal Government of Nigeria to bridge the supply deficit through duty-free import windows for food commodities.”
The Nigerian National Petroleum Company Limited (NNPCL) began loading the first batch of petrol from the Dangote Refinery mid-September, and said it got petrol at N898 per litre from the private refinery.
Before lifting petrol from the Dangote Refinery, NNPCL retail outlets in Lagos sell petrol for around N855 but said a litre of Dangote petrol would sell for N950 per litre in Lagos and N1,019 in Borno.
However, Dangote Refinery denied selling petrol to the NNPCL at N898. NNPCL insisted that it got petrol from Dangote Refinery at N898 per litre and challenged the latter to release the price it sold petrol. The NNPCL further released a breakdown of pricing it would sell Dangote petrol at its filling stations across the country.
Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has said that it doesn’t make sense for the NNPCL to sell petrol lifted from the Dangote Refinery higher than imported ones.
Last December, Aliko Dangote, Africa’s leading industrialist, commenced operations at his $20bn facility sited in Lagos with 350,000 barrels a day.
The refinery, which was initially bogged by regulatory battles, hopes to achieve its full capacity of 650,000 barrels per day by the end of the year.
The refinery has begun the supply of diesel and aviation fuel to marketers in the country and now petrol.
Nigeria, Africa’s most populous nation, faces energy challenges, with all its state-owned refineries non-operational. The country is heavily reliant on imported refined petroleum products, with the state-run NNPC being the major importer of the essential commodities.
Fuel queues are commonplace in the country. Prices of petrol tripled since the removal of subsidy in May 2023, from around ₦200/litre to over ₦1000/litre, compounding the woes of the citizens who power their vehicles, and generating sets with petrol, no thanks to decades-long epileptic electricity supply.
