Yemisi Izuora
The Financial Derivatives Company (FDC) Limited think tank, in a just released report has identified Dangote Petroleum Refinery as key to reducing inflation in Nigeria.
In its recently published Lagos Business School (LBS) Executive Breakfast Presentation for July, the think tank noted that Dangote Refinery has become the key mechanism for reducing petrol prices and lowering transport fares.
The report, presented by the Managing Director and Chief Executive Officer of FDC, Bismarck Rewane, added that Dangote’s uniform pricing policy and credit facilities to marketers represent a game changer that will revolutionise Nigeria’s downstream oil sector by cutting logistics costs.
“Dangote’s uniform pricing and credit to marketers is a game changer and a catalyst for more private sector investment. The initiative is set to revolutionize Nigeria’s oil downstream business by cutting logistics costs and by spending over N1.7 trillion annually,” it stated, emphasising that Dangote Refinery’s fuel distribution strategy, which involves deploying 4,000 Compressed Natural Gas (CNG) trucks nationwide, will lower pump prices, curb inflation, and support over 42 million MSMEs (Micro, Small and Medium Enterprises).
“With 4,000 CNG-powered trucks delivering refined products directly to the doorsteps of end-users, the move will lower pump prices, curb inflation, and support over 42 million MSMEs.”
The report stressed that the Nigerian economy is experiencing a classic oil price paradox: when global oil prices rise, the government benefits financially and the naira strengthens, yet there is little advantage for the average person. Conversely, when oil prices fall, consumers rejoice at lower petrol prices while the government suffers financially.
On the international front, the report observed that the global economy has swung from exaggerated fears of market volatility and uncertainty to the irrational exuberance of momentum traders and speculators, who are profiting by exploiting the anxieties of those fixated on maintaining the status quo.