The Management of Dangote Oil Refinery is preparing young Nigerian graduates to take over the management of its 650,000 barrels per day single train refinery when it becomes operational in 2022. Already, the company has trained several Nigerian engineers in some of the world’s biggest refineries in India and other parts of the world to gain first-hand experience on how to manage a refinery of this magnitude. The President of the Dangote Group, Aliko Dangote, who made this disclosure on Saturday during the tour of the Dangote Refinery by the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, affirmed that the country is blessed with great talents that are capable of running a refinery of this size, if given the necessary encouragement.
According to him, the outbreak of Corona Virus in 2020, which forced many expatriates out of the Construction site made it possible for the company to identify great talents that exist within Nigeria. Dangote said “One thing that gladdens my heart is the young Nigerians we have trained to take over the operation of the Dangote Refinery. These young Nigerians are the ones that are going to run the refinery when it becomes operational. We want a situation whereby the operation of the refinery will be the sole responsibility of Nigerian graduates. We can start the process by bringing in team leaders to keep giving them that training they require to run a world class refinery. However, we will ensure that Nigerian engineers, welders and others are the ones running the refinery. We have created that capacity, human capacity, equipment capacity and every other thing to ensure the successful operation of the refinery by Nigerian engineers.”
Speaking also after the tour of the refinery, the CBN Governor, Godwin Emefiele said that arrangement is being made to enable the Dangote Refinery sell refined crude to Nigeria in naira when it commences production. The CBN governor noted that the $15 billion projects being constructed by the Dangote Group would save Nigeria from expending about 41 per cent of its foreign exchange on importation of petroleum products. Emefiele said: ”Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira. “That is the element where foreign exchange saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated. This will make the price of our petroleum products cheaper in naira. “If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.
“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Emefiele said. He expressed optimism that the refinery would be completed by the first quarter of 2022, adding that this would put an end to the issue of petrol subsidy in the country. I am saying that by this time next year, our cost of import of petroleum products for petrochemicals or fertiliser will be saved, which will save Nigeria’s reserve. “It will help us so that we can begin to focus on more important items that we cannot produce in Nigeria today,” Emefiele said. He said the CBN had given a N100 billion intervention to the projects, adding that the apex bank was ready to support Nigerian businesses set up to uplift the country economically. Dangote said that the fertiliser and petrochemicals plants were capable of generating 2.5 billion dollars annually while the refinery would serve Nigeria and other countries across the world. Dangote thanked President Muhammadu Buhari and the CBN governor for their support toward the completion of the projects.
He said “I will like to thank the President personally for helping us and assisting us in making sure that we are now back on track. Prior to the currency devaluations in 2020, some banks barely managed to stay above the regulatory minimum capital adequacy ratio (CAR) of 15% . With the devaluation of the naira, we suspect that the true capital positions of these banks will be further challenged, erasing existing capital buffers. Consequently, we expect banks with shortfalls in their capital positions to retain more of its earnings to shore up their capital and keep themselves within touching distance of the minimum regulatory capital requirement. It is also not unlikely that the apex bank will offer some form of regulatory forbearance to banks that fall short of the minimum regulatory capital.
The new Banking and Other Financial Institutions Act (BOFIA) 2020 could change the competitive environment of the industry going into 2021. Notably, the act broadens CBN’s regulatory oversight function to include fintechs as it prohibits the operations of unlicensed financial institutions. This will very likely result in capped fees for Fintechs and increased operational and regulatory costs. We project that this might increase their cost and stifle their drive in the long to medium term and facilitate a levelling of the playing field for traditional banks and their non-bank competitors.
The new act further stipulates that loans in excess of N3 million without collateral will now require regulatory approval. This will change the dynamics for most SMEs that depend on revenue-based financing, and retail customers that require salary-based consumer loans offered by banks as an additional hurdle has been added to the loan procurement process. Whilst the act seeks to strengthen the financial services sectors and enhance healthy competition amongst players, there are concerns that the powers given to the CBN in the new act could make financial services providers move slowly and adapt with lesser agility. Furthermore, the release of operating guidelines and licensing of payment service banks (PSB) in 2020 is expected to intensify competition in the sector as it gives Telcos an entry into the banking industry. The competitive landscape in 2021 will be shaped by the apex bank’s level of adherence to the new act, the resilience of non-bank competitors and the reaction of traditional banks to the changing landscape.