Osamagbe Imadiyi.
The Federal Government has been urged to fully discontinue fuel subsidies by Alhaji Aliko Dangote, President and CEO of the Dangote Group. He confirmed ownership of two oil blocks in the upstream sector with an anticipated production date of next month, and he said the removal would help ascertain the nation’s actual gasoline consumption.
Dangote further claimed that the naira will be less under pressure due to fuel production from his $20 billion mega refinery in Lagos. The refinery has the capacity to process 650,000 barrels of crude oil per day. In a 26-minute interview on Monday in New York with Bloomberg Television, Dangote stated that the time has come to eliminate fuel subsidies.
He said, “Subsidy is a very sensitive issue. Once you are subsidizing 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 liters of gasoline per day. “Dangote, who recollected the difficulties encountered following the project’s inception in 2013, including a five-year postponement because of problems with the host communities and state government as well as a $2.4 billion running loan, expressed his pride at having accomplished the feat.
Dangote responded, “Well, you see, we have a choice of either one,” when asked if the subsidy would make the refinery profitable. “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”. When he took office in May 2023, President Bola Tinubu eliminated the subsidy, which exacerbated a cost-of-living crisis and provoked protests. However, as inflation increased, he swiftly restored it. Although the price is still below market, an additional step toward its termination was taken in early September with the easing of the gasoline cap.
Nigeria has been making cautious steps to eventually remove the costly fuel subsidies that the country paid $10 billion for in 2022. Prior to Dangote’s refinery coming online, the country was entirely dependent on imported petroleum products. Although he acknowledged that the government made the decision about subsidies, Dangote, who can choose to sell his fuel domestically or export it, added that reducing imports of gasoline would significantly reduce exchange rate pressures.
