Dangote refinery’ll fetch $6bn forex yearly —CBN

... As FG plans to raise N1trn from plugging revenue loopholes

The Central Bank of Nigeria has expressed its readiness to support the refinery, fertiliser and petrochemical complex being built by Dangote Industries Limited in Lagos by providing foreign exchange for the importation of equipment.

The central bank said the project, when completed, would fetch the country about $6bn in foreign exchange yearly through the export of products from the plants.

The refinery, which has crude processing capacity of 650,000 barrels per day, is expected to come on stream by mid-2018, with major products such as petrol, high speed diesel and Jet A1, while the fertiliser plant is expected to start production next year.

Most of the refinery process units have been designed by M/S UOP as a managing licensor, while the balance process units are being designed by M/S Jacobs, Dupont/MECS, Ineos and Air Liquide, the company said.

The Governor, CBN, Mr. Godwin Emefiele, who spoke during a tour of the project site on Sunday, said, “About two and a half to three years ago, Alhaji Aliko Dangote actually came to the banks. At that time, I was an operator, and he said he wanted to go into fertiliser, petrochemical as well as refinery business.

“We started with the fertiliser side of it; but today, these three projects are costing them about $14bn (N2.8tn), out of which he is contributing 50 per cent. I have come here to see so that I can also tell Nigerians that we need to give support to people like Aliko Dangote for what they are doing for Nigeria. This is a time when we are talking about diversifying our economy away from oil.”

Noting that the plants would produce ammonia, urea, propylene, polypropylene and other petroleum products, Emefiele said, “These are products that we today import into the country. If we calculate how much the country spends on the importation of these products into Nigeria, consuming foreign exchange, this stands at close to 35 to 40 per cent of our import needs.

“We expect that by the time these projects are completed, they will not only meet our domestic needs, Dangote will be exporting these products to the point where he will be selling foreign exchange to Nigerians and the Central Bank of Nigeria to the tune of almost about $6bn a year.

“That is the kind of projects that we think we should support, and we think we need to encourage more Nigerians to begin to think like Aliko Dangote. If you have somebody who has contemplated a project of $14bn and he is contributing 50 per cent as equity into that project, we have to give him foreign exchange to import the equipment. We need to support companies like this.”

Emefiele said before he became the CBN governor, Dangote had come with a bill of almost $4bn for the importation of the equipment.

According to him, the CBN told Dangote to commit to the importation of the equipment and that the bank would stagger the repayment and offer its support by providing foreign exchange.

He added, “And that is what we are doing and that is the kind of support we can give to people like this who are contemplating moving Nigeria away from an importer of all these products to an exporter.

“Indeed, we are not even selling $4bn to Aliko Dangote. If he needs naira, we will give him naira at concessionary rates. If he needs dollar to import the equipment, we will do so because he doesn’t need raw materials by the time the projects come on stream.”

In the meantime, with concerns over 2016 deficit funding, the Federal Government is looking at raising over N1 trillion from plugging revenue loopholes as pressures mount against the revenue estimates in the 2016 budget.

This will be coming in addition to plans to raise N350 billion from recoveries of stolen funds in the on-going anti-graft war.

The 2016 budget financing plan, according a Finance ministry source, envisages significant revenue from blocking leakages expected to yield over N1.0 trillion during the 2016 fiscal year.

The Nigeria Customs Service, NCS; Nigerian National Petroleum Corporation, NNPC and the Nigerian Ports Authority, NPA, are the main targets for this revenue source.

The breakdown of the revenue side of the budget with the ministry shows several unconventional sources of funding for the budget.

Key among them includes a revenue optimising measure expected to be complemented by initiatives meant to reduce wastage of public funds such as the recently established Efficiency Unit meant to identify and eliminate wasteful spending, duplication and other inefficiencies across Ministries, Departments and Agencies (MDAs).

Other waste reduction initiatives include engagement of costing experts to scrutinize the 2016 budget proposals with a view to further improving efficiency. Also, government intends to extend the Integrated Personnel Payroll Information System (IPPIS) to all MDAs in order to maintain a lean payroll.

With a projected revenue of N3.86 trillion in the face of dwindling crude oil receipts, government estimates that oil revenues contribute N820 billion of the total revenue; non-oil revenues, comprising Company Income Tax (CIT), Value Added Tax (VAT), Customs and Excise duties, and Federation Account levies, are expected to contribute N1.45 trillion while independent revenues are expected to contribute N1.51 trillion through the enforcement of the Fiscal Responsibility Act, 2007 and public expenditure reforms in all MDAs.

In addition, the government intends to significantly improve the collection and remittance of independent revenues from government agencies with the full implementation of the Treasury Single Account (TSA).

A Finance ministry source, who said the budget breakdown would answer all the posers raised by critics of the budget, explained that the delay in putting the budget together was as a result of the difficulties in balancing Nigerian’s expectations with realities on ground.

One of the key posers the budget elicited was the revenue shortfalls against increased expenditure where the budget envisaged to fund the deficit with about N1.8 trillion borrowing whereas the entire estimated revenue based on oil price of USD38 per barrel appears unrealistic, as oil prices have since crashed below the benchmark.

The crash has already made both the size of the budget deficit and the matching funding also unrealistic while creating additional deficit and funding gaps, while price recovery on sustained basis is not expected soon, according to international energy experts.

The finance ministry source also indicated that only N67 billion increase in tax revenue is expected as the government is not going to increase tax, but will expand the tax net.

The budgetary provisions for anti-corruption war, according to some analysts, however, appear inconsistent with the hard line position of President Muhammadu Buhari as only a marginal 3.1 per cent increase was effected in their budget while many of them had their allocations significantly slashed, thus strengthening the concern of those routing for plea bargaining option.

Only four of the total nine federal agencies involved in anti-corruption activities got increased budget.

One of them with major increase in its budget was Fiscal Responsibility Commission, FRC, at N494 million, about 47 per cent increase from N336.8 million it received in last year’s budget.

Other major increases were for Bureau of Public Procurement, BPP, and Nigeria Extractive Industries Transparency Initiatives, NEITI, which had a 40 per cent increases each receiving N1.4 billion against 2015 amount of N1.0 billion.

Punch with additional report from Vanguard