Aliko Dangote, President and CEO of Dangote Group, has called on the Federal Government to completely eliminate fuel subsidies, citing the significant financial burden they place on the country. In a 26-minute interview with Bloomberg Television in New York, Dangote emphasized that removing subsidies would help determine Nigeria’s actual fuel consumption and alleviate pressure on the naira.
According to Dangote, “Subsidy is a very sensitive issue. Once you are subsidizing something, people will bloat the price, and the government will end up paying what they are not supposed to be paying.” He added that his refinery will help resolve many issues, including tracking fuel consumption and saving the government money.
Dangote Refinery recently commenced petrol lifting and increased prices to ₦950 per liter in Lagos and above ₦1000 in the north. Dangote confirmed ownership of two oil blocks in the upstream sector, expected to start production next month.
Nigeria’s fuel subsidy removal in May 2023, initiated by President Bola Tinubu, led to a surge in inflation rates to 34% in 2024, which later decreased to 32.15% in August. Food inflation remains high at 40%. The naira has lost approximately 70% of its value against the dollar since the relaxation of currency pegging rules last year.
Dangote highlighted the significance of his refinery in stabilizing the naira, stating, “Petroleum products consume about 40% of our foreign exchange.” He also disclosed a pricing disagreement with the Nigerian National Petroleum Company Limited (NNPC), emphasizing that the NNPC purchased fuel from his refinery at a lower price than imported fuel but announced a uniform price for all products.
Crude oil sales to Dangote Refinery and other local refineries are expected to commence on October 1, 2024. Dangote revealed ongoing discussions to finalize a detailed agreement on crude oil sales, which will help remove 40% pressure on the naira and provide energy security.
