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Dangote Refinery Will Boost Growth of Downstream Sector in 2022, CPPE, Others Affirm

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The Centre for the Promotion of Private Enterprise (CPPE), an economic advocacy group, has identified Dangote Petroleum Refinery as one of the key expected drivers of growth that would impact positively on the downstream sector of the Nigerian economy in 2022.

Likewise, Financial Derivatives Company Limited, a financial institution, in its recent Economic Report for 2022, expressed a firm belief that Dangote Refinery would boost the growth of the downstream sector of the economy and enhance petroleum products distribution across Africa.

The Managing Director/CEO of Financial Derivatives Company, Bismarck Rewane, however, warned that the refinery, when operational, would not be a final solution to Nigeria’s economic crises. “The coming on stream of Dangote Refinery will no doubt enhance product distribution across Africa. Will Dangote refinery solve Nigeria’s problem? The answer is no. But the company is going to make Nigeria an exporter of refined petroleum products,” he added.

Photos:Kano Roads Deserted As Tricycle Operators Embark On Strike
In a Nigeria Economic Outlook for 2022 released by the CPPE, its Chief Executive Officer, Dr Muda Yusuf said activation of the Petroleum Industry Act (PIA) in 2022 is expected to impact positively on the economic outlook.

“We expect to see positive outcomes as investor sentiments in the oil and gas sector improve on account of the reforms anchored on the PIA. This will however depend on the political will deployed to drive the implementation of the provisions of the Act. It is also expected that the coming on stream of the Dangote refinery in 2022 will also impact positively on the downstream sector of the economy”, he added.

He said the average oil price in 2022 is expected to exceed the budgeted benchmark of sixty-two dollars ($62) per barrel, offering some fiscal headroom. This, he noted, would be powered by higher energy demand driven by the recovery of economic activities globally.

“This trajectory is expected to impact on our foreign reserve and strengthen the capacity of the Central Bank of Nigeria (CBN) to support the foreign exchange market”, Yusuf said. He, however, added that if the Dangote refinery comes on stream in 2022, the fiscal pressure on the economy may abate, but not completely eliminated.

According to the economist, because the service sector is less vulnerable to the structural constraints of the economy, especially the real sector of the economy, it will continue to outpace the real sector in 2022.

He said, “The service sector of the Nigerian economy will continue to outpace the real sector in 2022. In the third quarter of 2021, service sector contribution to GDP was 50 per cent and the growth of the sector was 8.41 per cent. The oil sector contribution to GDP was 7.5 per cent while the non-oil sector contribution was 92.5 per cent. While the industrial sector growth contracted by 1.63 per cent, agriculture grew by 1.2 per cent.”

Yusuf said the Gross Domestic Product (GDP) growth would remain fragile at about three per cent, pointing out that the key expected drivers of growth would be sustained recovery of global oil price.

He said, “We expect that the average oil price in 2022 will exceed the budgeted benchmark of $62 per barrel, offering some fiscal headroom. This would be powered by higher energy demand driven by the recovery of economic activities globally.”

The economist noted that despite the downside risks, the economy would continue to present huge opportunities for investors across all sectors. “This is on account of the resourcefulness of the Nigerian people, especially the entrepreneurs. Other inherent strengths of the Nigerian economy include the market size, the population, and the demographic characteristics”, he added.

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GBB to Train Over 300 Civil Servants on Govmail

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Abuja, Nigeria – Galaxy Backbone (GBB), the nation’s foremost digital infrastructure and services provider, is set to train over 300 civil servants, including Email Administrators and Heads of ICT, on the adoption, management, and administration of Govmail—the secure official email platform for Nigeria’s public sector. The training, which will be conducted in batches throughout the month of March 2025, aims to ensure maximum impact and effective knowledge transfer.

This initiative is in alignment with the Federal Government’s digitalisation agenda, which prioritizes secure, efficient, and technology-driven governance. By equipping civil servants with the necessary expertise to optimize Govmail, the government is ensuring seamless communication across Ministries, Departments, and Agencies (MDAs) while strengthening data security and operational efficiency.

Prof. Ibrahim Adeyanju, the Managing Director/CEO of Galaxy Backbone, reaffirmed the organisation’s commitment to driving Nigeria’s digital transformation through innovative and secure technology solutions. “As the nation’s leading provider of digital infrastructure, GBB is playing a pivotal role in ensuring that government communications are secured, professional, and aligned with global best practices. This training will enhance civil servants’ ability to effectively utilize Govmail in carrying out their official responsibilities,” he stated.

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The training is being conducted in collaboration with the Office of the Head of the Civil Service of the Federation (OHCSF), who has sent out a Circular to all MDAs informing them of this specialized training aimed at providing hands on experience with GOVMAIl features and ensure uniform adoption of and compliance with government approved digital communications standards. This further reinforces the government’s commitment to a digitally-driven public service. It would be recalled that the Head of the Civil Service of the Federation recently described Govmail as a ‘game changer’ for government communication. This underscores the significance of the platform in enhancing inter-agency collaboration, data sovereignty, and information security across all MDAs.
Through this capacity-building initiative, GBB is reinforcing its role as a key enabler of Nigeria’s digital transformation journey, ensuring that public sector professionals are well-equipped to harness the full potential of digital tools in their daily operations.

 

About Galaxy Backbone
Galaxy Backbone Ltd is a digital infrastructure and services company committed to providing secure and efficient digital solutions to support governance, service delivery, and national development for public and private sector organisatuons. GBB plays a critical role in the digitalisation of government processes, ensuring efficiency, security, seamless collaboration across MDAs and providing a platform for enabling digital services across corporate and public organisations.

Signed:
Chidi Okpala
Head, Corporate Communications

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KEDCO Sees Improvement in Financial Performance Following Power Restoration, Appeals for Prompt Payment

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Kano Electricity Distribution Plc. (KEDCO) has reported steady improvements in financial and business performance following the restoration of power supply after a significant blackout during the September-October 2024 billing and collection cycle. This was disclosed in a press statement signed by Sani Bala Sani, Head of Corporate Communication at KEDCO.

According to Sani, the blackout had severely impacted KEDCO and three other distribution companies in the North East and North West regions, with KEDCO being the worst hit. “Recall that KEDCO, alongside three other distribution companies in the North East and North West had significant disruption to power supply in October, with KEDCO being the worst hit,” he stated.

The operations at KEDCO were initially affected on October 13th, 2024, with only 40% of their grid allocation being supplied after the Shiroro-Kaduna 330kV line incident. This situation was exacerbated by a total blackout on October 20th, 2024, during the peak of the revenue collection cycle. “Although the power supply was partially restored to a 40% level on 30th October, we were only availed with up to around 85% supply levels on November 14th and are anxiously awaiting the completion of the Shiroro-Kaduna repairs,” Sani explained.

The blackout resulted in KEDCO’s worst market performance of the year, posing significant financial and economic challenges for both KEDCO and its customers. “Having zero grid supply posed significant financial and economic challenges for KEDCO and its customers, with many customers resorting to costly backup sources or shutting down operations,” Sani noted.

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Despite the challenges, KEDCO has seen improvements in power supply, which now stands at around 85%, leading to significant collections from last month’s arrears. Sani urged customers to cooperate by paying their current bills and outstanding arrears promptly to ensure business sustainability. “Thankfully, with the current power supply at around 85%, we have recorded significant collections from last month’s arrears and are appealing to our customers to continue to cooperate with us on prompt settlement of their current bills and arrears, for business sustainability,” he appealed.

Sani also commended the resilience of KEDCO’s customers and vowed to continue improving the performance in supplying safe and reliable electricity. “We commend the resilience of our customers and vow to continue to improve our performance in supplying them with safe and reliable electricity,” he said. He thanked the Honourable Minister of Power for his timely intervention and the Transmission Company of Nigeria (TCN) for their restoration efforts. “We equally acknowledge TCN’s restoration efforts and appreciate the Federal Government’s commitment to helping improve the redundancy and safety of the National Grid,” he added.

Looking ahead, KEDCO’s core investor and Board remain committed to driving investments and improving performance through embedded generation supply options via the Safe Grid and Utility 2.0 projects. “It remains our core investor and Board’s resolve to continue to drive investments and improved performance through embedded generation supply options in our network via the Safe Grid and Utility 2.0 projects,” Sani stated.

 

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Lubricants and Nigeria’s economy

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By Cosmas Chukwunonso Nwobi

Every engine depends on oil, which serves as the heat transfer medium and lubricant for moving parts. It stops wears and damages from happening because the moving parts won’t be rubbing against one another.

The primary consumers of engine oil in Nigeria are those who own cars, generators, enterprises, tricycles, and motorcycles. Diesel and gasoline engines both utilize various grades of engine oil. Diesel engine oil is used to maintain heavy vehicles (diesel vehicles), small and large generators, as well as passenger vehicles (light vehicles). Petrol engine oil is used to maintain passenger vehicles (light vehicles).

The overall annual requirement for lubricating oils across the globe is projected to be 50 billion liters, or 60 percent automotive and 40percent industrial. However, industrial lubricants account for more than 70% of total global gross revenues and profit margins.

According to projections, Nigeria, with a gross domestic product of N150 billion in 2013 and more than N450.37 billion by the end of Q1 2021, is the third-largest user of lubricating oils in Africa, consuming 700 million liters of the substance per year (or 1 percent of the global demand).

The aggregate profit margins of the blending plants were N45 billion in 2013 and N120 billion in the first quarter of 2021. Their total assets are projected to be worth N20 billion. This indicates that domestic production of lubricating oils meets 75 percent of the country’s total demand, with imports from specialist marketing companies providing the remaining 25percent.

You might also be interested to know that, over the projected period (2021-2026), the market for lubricants in Nigeria is anticipated to develop at a compound annual growth rate (CAGR) of 1.54%, reaching 300,399.52 kilo tons by 2026. which demonstrates that the market for automotive lubricants in Nigeria is anticipated to grow to $683 million by 2023.

This demonstrates that the significance of engine oil cannot be overemphasized and that lubricant production would be a very profitable business endeavor that would considerably boost Nigeria’s economy.

However, this industry was adversely affected by Nigeria’s slowing economic growth. The 2016 recession brought on by the sharp decline in global oil prices was the root cause of the downturn. Oil prices started the year at $36.76 a barrel and reached a high of $54.06 for the year. The lack of foreign exchange had a serious negative impact on the ability of various lubricants manufacturing companies to conduct business and imposed severe costs on key sectors of the country, which further cascaded into all areas of the economy. Given that many players in the industry imported large volumes of base oil and other raw materials needed to blend lubricants at the time, this meant that the shortage of foreign exchange affected all sectors of the economy.

However, the investment landscape is currently changing and Nigeria’s lubricant industry, if properly managed, will surely triple it’s current position in a few years to come. This is due to large oil marketers taking advantage of the lubricants market’s deregulation and lack of significant government intervention.

I commend the effort of the Nigerian Government so far in reducing import charges for Lubricant Blending plants firmly advocate for the need of a driving and I strongly advocate that more can be done in this area since Nigeria’s lubricant business has great prospects for investors. Should we succeed, early investors will also benefit from pioneer status and a five-year tax break.

I firmly believe that better consumer education, cooperation with transportation companies, increased consumer knowledge, and the provision of higher-quality lubricants at lower prices would help Nigeria’s lubricant manufacturers expand and make more money.

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