The President of Dangote Group, Aliko Dangote, has endorsed the federal government’s decision to eliminate fuel subsidies. He emphasises that Nigerians will gradually adapt to a fuel pricing system based on market forces. In a recent discussion, Dangote tackled the current pricing differences between his Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL). He pointed out that any confusion between the two sides originated from miscommunication and emphasised that the petrol prices at his refinery were lower than those of the gasoline provided by NNPCL.
Also, Dangote stated that on September 15, the NNPC acquired petrol from his refinery at a lower rate than imported fuel. Despite some misunderstanding concerning the NNPC’s declaration regarding fuel prices, he emphasised that the petrol refined at his facility remains less expensive than the imported alternative, with these foreign fuels priced 15 to 20 percent higher than his refinery could offer. He further emphasised that the latest fuel pricing from NNPCL probably considered elements like profit margins and other expenses, which may not have been adequately conveyed to the public.
Fuel distribution will be monitored to ensure complete transparency.
However, he remarked that the government could sell fuel at a composite price or eliminate the petrol subsidy. If that happens, he believes that people in the country would adjust to the new prices over time, as is common when market adjustments happen. He also elaborated on the issue of fuel subsidies, which has been a sensitive topic in Nigeria for many years. He acknowledged that Subsidies have been problematic, mainly because they allow for inflated numbers, with the government often paying far more than necessary.
He believes that his facility will enhance transparency in Nigeria’s fuel usage, offering a clearer picture of the true volume of petrol utilised across the country. In an effort to further ensure accountability, he explained that his refinery plans to track fuel distribution to ensure that it is being used within the region. This step, he believes, would help the government save money, as it would limit fuel Smuggling and other corrupt practices often associated with subsidy programs. In response to a question about potentially removing fuel subsidies, he expressed confidence that the time was right.
Local fuel prices are approximately 40% cheaper than in Saudi Arabia.
Furthermore, he drew comparisons with other oil-producing nations, such as Saudi Arabia, where citizens once believed that the government should sell petrol at low prices, given their country’s wealth in oil. However, Saudi Arabia has modified its pricing strategies, and Dangote observed that fuel in the country is still about 40 percent less expensive than in Saudi Arabia. In addition, he stated the unsustainable nature of the country’s current subsidy program, where the price of gasoline in the region is 60 percent lower than that in neighbouring countries. This creates an environment for illegal fuel exportation, especially considering Nigeria’s notoriously porous borders.
Moreover, the resulting fuel smuggling costs the government billions in subsidies, a burden that he believes the country cannot afford to carry any longer. He also underscored the importance of addressing these issues for the nation’s long-term economic health. He pointed out that by removing subsidies, the government would free up valuable financial resources and create a more transparent and Sustainable Energy sector. While the decision to remove subsidies has been met with mixed reactions, his viewpoint emphasises the economic necessity of the move.
Related Article: Dangote Refinery Processes 650,000 bpd
Lastly, he remains confident that people in the country will adjust to a new reality where market-driven fuel prices could benefit the nation by reducing government expenditure, ensuring accountability, and supporting long-term economic growth. Likewise, he reiterated that while subsidies might seem beneficial in the short term, their long-term effects can be damaging, as they encourage inefficiency and corruption. He believes that his refinery, through its efficient operations and tracking mechanisms, will play a pivotal role in the national energy industry, promoting transparency and helping the government save money that would otherwise be lost to fuel subsidies.