Dangote Urges Immediate End To Petrol Subsidy
Alhaji Aliko Dangote, the President and CEO of Dangote Group, has urged the Federal Government to completely eliminate fuel subsidies. Speaking during a 26-minute interview with Bloomberg Television in New York, Dangote emphasized that removing subsidies would not only streamline the actual petrol consumption in Nigeria but also save the government significant funds.
He noted that the production from his newly constructed $20 billion mega refinery in Lagos, which has a capacity to refine 650,000 barrels of crude oil daily, would play a crucial role in stabilizing the naira and easing pressure on the Nigerian economy. Dangote expressed his belief that subsidies allow for price manipulation and result in the government paying excessive amounts.
The business magnate also confirmed that his company owns two oil blocks in the upstream sector, with production slated to begin next month. He stressed that once the refinery is operational, Nigeria would be able to properly account for fuel consumption and reduce the overestimation of daily petrol usage.
Dangote discussed the challenges faced in completing the project, which started in 2013 and experienced a five-year delay due to disputes with state governments and host communities. He proudly reflected on the accomplishment despite the hurdles, including a $2.4 billion loan.
On the refinery’s viability after subsidy removal, Dangote clarified that while his company must generate profits, it is up to the government to decide the future of subsidies. He pointed out that Nigeria, prior to the launch of his refinery, was fully dependent on imported petroleum products, which strained the naira due to the foreign exchange required to purchase gasoline. He argued that domestic production would ease this burden, stabilizing the currency.
As of mid-September, the refinery began supplying gasoline to the Nigerian National Petroleum Company Limited (NNPCL). Dangote revealed that despite earlier reports of a pricing disagreement, the NNPCL had purchased fuel from his refinery at a lower price than imported gasoline.
Dangote also spoke about his ongoing discussions with the government regarding crude oil sales, set to begin in October. He mentioned that the crude would be sold domestically in naira, helping to alleviate up to 40% of the pressure on the naira by reducing the demand for foreign exchange used to pay for imported petroleum products.
In a separate development, the Federal Government announced plans to provide land for building a park to accommodate the fuel tankers lifting products from the Dangote refinery. This decision followed concerns raised by the Minister of Works, Dave Umahi, about the damage static tanker loads could cause to newly constructed roads near the refinery.
This push to end subsidies comes after President Bola Tinubu’s initial removal of fuel subsidies in May 2023, a decision that was later reversed due to a spike in inflation and public protests. However, with ongoing adjustments, including easing the gasoline price cap in September, Nigeria is making gradual moves toward phasing out the costly subsidy, which in 2022 amounted to $10 billion.
