In a bold proclamation poised to reshape Nigeria’s economic landscape, Central Bank of Nigeria (CBN) Governor Olayemi (Yemi) Cardoso has predicted a significant drop in the pump prices of Premium Motor Spirit (PMS), commonly known as petrol, as government-owned and private refineries prepare to kick-start operations. The announcement was made at the launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report in Lagos on Wednesday, January 24, 2024.
Governor Cardoso’s optimistic remarks follow closely on the heels of the commencement of diesel and aviation fuel production at the Dangote Refinery, with petrol production scheduled to follow suit. The government-owned Port Harcourt refinery is also anticipated to resume production, marking a pivotal moment after the completion of the first phase of rehabilitation in December 2023.
In his address, Governor Cardoso emphasized the potential far-reaching implications of the expected stabilisation or reduction in fuel costs, noting its significance in enhancing overall economic efficiency and resilience across various sectors. The prospect of reduced petroleum products imports is anticipated to contribute to stability in the foreign exchange market, fostering a positive economic outlook for the year.
The CBN governor pledged collaboration with key stakeholders, including the Nigerian National Petroleum Company Limited (NNPCL) and the Ministry of Finance, to ensure that all forex inflows are redirected to the apex bank to bolster reserves accretion. Highlighting the coordinated efforts, Governor Cardoso affirmed, “These efforts will greatly enhance the bank’s FX inflows and contribute to the appreciation of reserves.”
The anticipated stability in the foreign exchange market for 2024 is attributed to the reduction in petroleum products imports and the recent implementation of a market-determined foreign exchange rate policy by the CBN. This reform aims to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage in the forex market.
Governor Cardoso, however, asserted that the current exchange rate, with the naira trading around ₦1,370 to the dollar in the parallel market, is undervalued. In his assessment, he stated, “We believe that the naira is currently undervalued, and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term.”
As Nigeria stands at the threshold of potential economic transformation, Governor Cardoso’s projections signal a positive outlook for consumers, businesses, and the overall economic health of the nation. The impending reduction in petrol prices, coupled with efforts to fortify foreign exchange reserves, sets the stage for a promising chapter in Nigeria’s economic journey, offering a glimpse of stability and resilience in the face of global economic dynamics.
