The President of Dangote Group, Aliko Dangote, has called on the Federal Government to put a permanent stop to fuel subsidies in the country.
Dangote stated this in a 26-minute interview with Bloomberg Television in New York on Monday, stating that the time is right to end subsidies which have gulped trillions of naira from Nigeria’s economy.
He said the removal would help determine the actual petrol consumption in the country, as he confirmed ownership of two oil blocks in the upstream sector with an expected production date of next month.
Dangote’s statement came after the recent commencement of petrol lifting from the Dangote Refinery, and price increment to ₦950 per litre in Lagos state and its environs, and above ₦1,000 in the Northern part of the country.
“Subsidy is a very sensitive issue. Once you are subsidising something then people will bloat the price and then the government will end up paying what they are not supposed to be paying. It is the right time to get rid of subsidies.
“But this refinery will resolve a lot of issues out there, you know, it will show the real consumption of Nigeria, because, you know, nobody can tell you. Some people say 60 million litres of gasoline per day.
“Some say it’s less. But right now, if you look at it by us producing, everything can be counted. So everything can be accounted for, particularly for most of the trucks or ships that will come to load from us. We are going to put a tracker on them to be sure they are going to take the oil within Nigeria, and that, I think, can help the government save quite a lot of money. I think it is the right time, you know, to remove the subsidy,” Dangote said.
The African richest man reacting on whether or not the federal government retaining fuel subsidy would pan well for his refinery said, “Well, you see, we have a choice of either one. We produce, we export, and when we produce, we sell locally. But we are a big private company. And yes, it’s true, we have to make profit. We build something worth $20bn so definitely we have to make money.
“The removal of subsidies is totally dependent on the government, not on us. We cannot change the price, but I think the government will have to give up something for something. So I think at the end of the day, this subsidy will have to go.”
Nigeria had imported all petrol consumed in the country before the Dangote Refinery came onstream.
President Bola Tinubu removed the subsidy when he took office in May 2023, a move that jerked up the inflation rate to about 34 percent in 2024, before declining to about 32.15 percent in August. Food inflation remains high at about 40 percent.
Another step to ending subsidy was taken in early September when the gasoline cap was eased though the price remains below the market level.
The naira has lost around 70 percent of its value against the dollar since rules that pegged the currency at an artificially high level were relaxed last year.
“Petroleum products consume about 40 percent of our foreign exchange,” Dangote said, adding that fuel from his refinery, which started supplying gasoline on September 15 to the state-owned oil company for domestic sale, “can actually stabilise the naira.”
Dangote also revealed the details of the pricing disagreement that occurred with the Nigerian National Petroleum Company Limited.
He said the NNPC bought its current stock from the refinery at a cheaper price than its imported fuel but gave a uniform price for all products.
“There wasn’t really a disagreement, per se. NNPC bought from us on the 15th of September at the international price, which they also bought, about 800,000 metric tons of gasoline imported. So the one that they bought from us actually is cheaper than the one they are importing.
“And so when they announced our price, the guy, I don’t know whether he was authorised. It wasn’t really the real price. What they have announced is most likely that is what it cost them, including profit and other expenses.
“And then the other one is one that they imported. But the people don’t know how much they spend in terms of imports, but their importation is almost, maybe about 15 percent more expensive than ours, you know.
“So what they are supposed to do is to sell at a basket price, or if they want to remove subsidy, they can announce that they will remove subsidy, which is okay, everybody you know will adjust it.”
LEADERSHIP reports that Dangote disclosed discussions were still ongoing and a detailed agreement will be finalised later this week on the planned crude oil sales anticipated to begin in October.
“We will sell the crude in naira after we have bought in naira. So now we are currently working out with the committee that the exchange rate is going to be priced. It is going to be normal pricing, you know, if crude is at $80, we will pay that price at an agreed exchange rate.
“And then we will also sell in the domestic market. What that will do is that it’s going to remove 40 percent pressure on the naira. So because see, the petroleum products consume about 40 percent of foreign exchange, so you know, and then, you know, it’s like you have 40 percent of demand been taken out so that can actually stabilize the naira and even if they subsidise, they would know what they are paying for.
“The deal is to give the government something that they want. It’s also a win-win situation for all and it would benefit the country.
“Currently, discussions are still ongoing to determine the details of the agreement. They are working out something that I think would be a win-win between us and the NNPCL.
“The agreement is very robust. Well, first of all, we would have energy security where they will give us crude. For example, in October, they’re going to give us 12 million barrels, which is on average, about 390,000 barrels a day, which will sell both gasoline, diesel, and aviation fuel.”
