Nigerian experts are hopeful that the deals reached last week with Saudi Arabia will boost local oil production and help grow the economy. The agreements, which were made on the sidelines of the first ever Saudi-Africa summit held in Riyadh, included a pledge by Saudi officials to fix Nigeria’s four broken oil refineries, which have been out of commission for years, forcing Africa’s second-largest oil producer to import all of its fuel.
President Bola Tinubu met with Saudi Crown Prince Mohammed Bin Salman as part of his government’s efforts to attract investors, in a bid to reverse Nigeria’s economic slide. The Saudi officials pledged to fix the four refineries located in Rivers, Delta and Kaduna states, and the process is expected to take about two years.
In addition to the refinery repairs, Saudi Arabia also pledged to deposit huge sums of foreign exchange to boost Nigeria’s dwindling reserves, which have been worsened by the government’s floating of the national currency in June in a bid to unify the exchange rate system.
Faith Nwadishi, the executive director of the Center for Transparency Advocacy in Abuja, welcomed the Saudi deal. She said that the success that Saudi Arabia has made with their refineries and natural resources will help Nigeria meet its production quota, and resolve some of the conflicts around the issue of subsidy and non-operationalization of the four refineries.
Since taking office in May, President Tinubu has embarked on bold economic reforms including scrapping of the popular but expensive fuel subsidy, in a bid to decrease debt and attract more investments. Fuel prices since then have soared, lending urgency to the need for domestic fuel production.
Nwadishi said the government first needs to be careful and subject the Saudi agreement to public scrutiny. She said that it is important for the government to make the terms of the agreement available to Nigerians so that they can assess them objectively, and understand what is being given away.
Emmanuel Afimia, founder of Enermics, a Lagos based oil and gas consulting firm, is skeptical about the success of the deal. He said that while the administration is showing a reasonable level of political will to make things happen, he would like to wait until the technical details of the deal come out before making any judgments.
If the refineries functioned, Nigeria could process around 450,000 barrels of crude oil into fuel every day. Nigerian officials say they will finalize the details of the deal with Saudi Arabia within six months. Many will be watching to see if the terms are favorable to Nigeria.
Overall, the agreements between Nigerian authorities and their Saudi Arabian counterparts are seen as a positive step forward for the country. The deals have the potential to boost local oil production, help grow the economy, and provide much needed fuel to the country. It remains to be seen if the terms of the agreement are favorable to Nigeria, and if the refineries will be able to be fixed in the allotted time.
