The President and Chief Executive of Dangote Group, Alhaji Aliko Dangote has urged the Nigerian government to completely eliminate fuel subsidies.
He argues that doing so would clarify the country’s actual petrol consumption figures.
Dangote confirmed his ownership of two oil blocks in the upstream sector, with production set to commence next month.
He emphasized that the anticipated output from his $20 billion mega refinery in Lagos, capable of refining 650,000 barrels of crude oil daily, will alleviate pressure on the naira.
Dangote disclosed this in a 26-minute interview with Bloomberg Television in New York, on Monday.
The business tycoon emphasized that now is the optimal time for Nigeria to end fuel subsidies, reiterating the potential benefits of this move for the country’s economy.
The billionaire also highlighted that phasing out petrol imports could significantly ease currency pressures, presenting a substantial economic advantage for Nigeria.
He said, “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.”
Reflecting on the challenges faced since launching the project in 2013, Dangote noted a five-year delay caused by issues with state governments and host communities, as well as a $2.4 billion loan.
Despite these hurdles, he expressed personal pride in achieving this milestone.
When asked about the impact of subsidies on the refinery’s viability, he 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 a 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.”
Recall President Bola Tinubu during his inaugural speech in may 2023, announced the removal of petrol subsidy, exacerbating a cost-of-living crisis that sparked protests, but quickly reinstated it as inflation spiked.
Until the launch of Dangote’s refinery, Nigeria was entirely reliant on imported petroleum products. The country has recently begun making cautious efforts to eliminate its costly fuel subsidies, which amounted to $10 billion in 2022.
