Aliko Dangote, president of Dangote Group, says the federal government must end fuel subsidies completely now.
Speaking in a 26-minute interview with Bloomberg Television in New York on Monday, Dangote said that subsidy removal will help to determine the actual petrol consumption in Nigeria and cut the government unnecessary expenditure.
Dangote also disclosed ownership of two oil blocks in the upstream sector with an expected production date of next month.
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Africa’s richest man has set up a $20 billion oil refinery in Lekki, Lagos, with 650,000 barrels per day capacity. And he believes that the refinery will solve multiple problems for Nigeria.
“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 he has a choice of selling locally or exporting, being a full-fledged private enterprise.
“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 $20 billion, so definitely we have to make money.”
He said the removal of subsidies is totally dependent on the government, noting that his refinery can only do little in that respect.
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“We cannot change the price, but I think the government will have to give up something for something. So I think at the end of the day, this subsidy will have to go.”
President Bola Tinubu annouced a complete subsidy removal on May 29, 2023. This led the petrol price to jump three times to N600-N650 per litre. But with the forex market float, naira weakened from less than N700/$ to over N1,500, making the petrol price at N600-N650/litre impossible.
The Nigerian National Petroleum Company (NNPC) Limited has raised fuel prices to N950-N1,019 per litre, but there are fears that the price will stay around N1,200/N1,300 per litre.
Dangote said petrol imports have contributed to the naira’s steady fall, which his refinery will help to stabilise.
“Petroleum products consume about 40 per cent of our foreign exchange,” Dangote said. He explained that fuel from his refinery “can actually stabilize the naira.”
