The Governor of the Central Bank of Nigeria, Godwin Emefiele, has expressed optimism that Dangote Refinery, when fully functional in July, will address the scarcity of foreign exchange in the country.
According to Emefiele, with local refining, about 20 per cent of the total cost of importing petroleum products could be saved.
He, however, reiterated that it was time to exit the fuel subsidy regime.
The CBN governor added that the refinery could also be persuaded to sell foreign exchange earnings to banks at a good rate.
Emefiele stated this while speaking at the end of the 291st Monetary Policy Committee meeting in Abuja. He said the CBN would engage the promoter of the refinery, Aliko Dangote, to ensure that Nigerians benefit from the venture, which the CBN, the Federal Government and also the country helped set up.
Emefiele said, “By the time the Dangote Refinery comes on stream, the price at which it (fuel) will be dispensed will be lower than what it is when we spend dollars to import because there will be no freight cost, no storage and all other logistics expenses.
“So, we will be lucky to be having about 20 per cent savings from refining locally, rather than importing.
“But the important thing is that we have reached a point, whether we like it or not when we must exit subsidy.
“Dangote Refinery coming at this time gives us the confidence that even if we exit subsidy, the products will be available. And eventually, the interplay of market forces will also moderate the prices to a level that will help the country.”
Speaking at the meeting, Emefiele said that the bank expects that by the time Dangote produces for domestic consumption, the excess will be exported according to their agreement.
To this end, Emefiele projects that the country would be able to save “close to about $5 billion to $10 billion in foreign exchange that will come into the country.”
“Whether it comes to our reserves or not is not the point, it is the fact that the dollar is available and it will be sold in the domestic market so that customers of banks who need to import do not necessarily resort to CBN for dollars.
“They can go to their banks and Dangote will sell dollars to their banks and we are going to ensure that it is done at a good market rate,” he added.