Alhaji Aliko Dangote, President and CEO of Dangote Group, has urged the Federal Government to fully remove fuel subsidies. He emphasized that eliminating subsidies would reveal the true petrol consumption in the country.
Dangote, who owns two oil blocks in the upstream sector with production expected to begin next month, also highlighted that his $20 billion refinery in Lagos, capable of refining 650,000 barrels of crude oil daily, will alleviate pressure on the naira.
In a 26-minute interview with Bloomberg Television on Monday, Dangote stated that now is the right time to end subsidies. He noted that subsidizing fuel allows for inflated pricing, causing the government to overspend.
He further explained that his refinery will provide accurate data on Nigeria’s fuel consumption, helping the government save money by ensuring that fuel is properly accounted for. Dangote mentioned plans to track trucks and ships transporting oil to ensure the product remains in Nigeria.
Reflecting on the challenges faced since the project began in 2013, including a five-year delay and a $2.4 billion loan, Dangote expressed pride in his achievement. Regarding the refinery’s profitability, he said that while it must generate returns on the $20 billion investment, the decision to remove subsidies lies with the government.
President Bola Tinubu initially removed subsidies in May 2023 but reinstated them after inflation spiked, although further steps were taken in September when the gasoline cap was relaxed.
Before the Dangote refinery came online, Nigeria relied heavily on imported petroleum products, spending $10 billion on subsidies in 2022. Dangote emphasized that stopping gasoline imports would ease currency pressure, with the naira losing 70% of its value against the dollar in recent times.
Fuel imports, which account for about 40% of Nigeria’s foreign exchange consumption, further weaken the naira, but local fuel production could help stabilize the currency.
Dangote also addressed a recent pricing issue with the Nigerian National Petroleum Company Limited (NNPC). He explained that while NNPC bought fuel from his refinery at a lower price than its imports, the final retail price did not reflect this. He suggested that NNPC should either sell at a basket price or officially announce the removal of subsidies.
Looking ahead, Dangote disclosed that crude oil sales are set to begin in October, with agreements being finalized. He mentioned plans to buy and sell crude in naira, which could reduce pressure on the naira by removing 40% of the demand for foreign exchange.
Discussions are ongoing with the government and NNPCL to ensure a mutually beneficial agreement. The government has also announced plans to provide land for building a tanker park near the Dangote refinery to manage the high volume of fuel tankers.
Finally, Dangote confirmed the upcoming production from two oil blocks in the upstream sector. Additionally, the Federal Government has begun making arrangements for the infrastructure needed to accommodate the refinery’s growing fuel distribution needs.
