Energy analyst and lead technical consultant to the Chamber of Petroleum Consumers (COPEC), Dr Yussif Sulemana says the African Continental Free Trade Area Agreement (AfCFTA) coupled with the establishment of a state-of-the-art refinery by Nigerian businessman Aliko Dangote stand the potential to significantly reducing the cost to refined crude products on the continent.
He stated that “Nigeria is now looking straight, and they say they want to add value to their raw material base which is crude oil and so that is the cue and if they succeed, and we see that it is doable then Ghana just has to make its existing refinery vibrant. If we have a lot of finished products within the market, first of all, cost-wise, it is going to be competitive, and the cost will come down. So I see two things within the AfCFTA. It will break trade barriers, and it will bring about structural transformation in magnanimous proportions in the African continent and that includes intelligence sharing etc.”
AfCFTA commenced on the first of January this year.
With its headquarters situated in the capital Accra, it is an agreement amongst 54 African countries, that seeks to progressively reduce and eventually eliminate customs duties and non-tariff barriers on goods and allow the free provision of services in priority sectors.
Concerning trade in goods, the goal is set for 90% of products at zero duty across the continent.
On the other hand, the Dangote refinery is a 650,000 barrels per day (BPD) integrated refinery and petrochemical project under construction in Lagos, Nigeria. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility, upon completion.
The West African country is, however, dependent on imported refined fuel products due to a lack of domestic refining capacity.
The Dangote refinery will increase Nigeria’s refining capacity two-fold and help meet the increasing domestic fuel demand while generating foreign exchange through exports.
The Dangote refinery is expected to produce 10.4 million tonnes (Mt) of gasoline, 4.6Mt of diesel, and 4Mt of jet fuel among others in a year.
Dr Sulemana believes these two events stand to reduce if not eliminate the cost of importing finished petroleum products from countries outside the Continent.