The Central Bank of Nigeria (CBN) has expressed optimism that the lifting of petroleum products from the Lagos-based Dangote Refinery will help reduce transportation costs and ease food inflation. CBN Governor Olayemi Cardoso highlighted this after the 297th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.
Cardoso emphasized that the supply of refined petroleum from Dangote Refinery would lower the demand for imported fuels, thereby positively impacting foreign exchange reserves and the overall balance of payments. “This is expected to moderate transportation costs and reduce food price pressures in the short to medium term,” he added.
During the meeting, the MPC decided to raise the Monetary Policy Rate (MPR) by 50 basis points to 27.25%, up from 26.75%, as part of efforts to curb inflation, which currently stands at 32.15%. The latest Consumer Price Index report by the National Bureau of Statistics (NBS) also showed that food inflation reached 37.52% in August 2024, driven by increases in the prices of bread, maize, yam, and other staples.
Cardoso acknowledged the risks to food inflation, including flooding, rising energy prices, and insecurity in farming regions. He applauded the government’s efforts to address insecurity and provide duty-free import windows for food commodities to bridge supply gaps.
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As of mid-September, the Nigerian National Petroleum Company Limited (NNPCL) began receiving petrol from Dangote Refinery, although pricing disputes have emerged between the two entities. NNPCL claims it obtained petrol at ₦898 per litre from the refinery, though Dangote denied this pricing, with NNPCL calling for Dangote to disclose its actual rates. Despite the dispute, NNPCL sells Dangote-sourced petrol at ₦950 per litre in Lagos and ₦1,019 per litre in Borno.
The $20 billion Dangote Refinery, operational since December 2023, aims to reach full capacity of 650,000 barrels per day by the end of the year. The facility, which initially faced regulatory hurdles, is now supplying diesel, aviation fuel, and petrol to the Nigerian market.