“It’s Time for FG to Remove Petrol Subsidy” – Aliko Dangote

Aliko Dangote, founder of the Dangote Petroleum Refinery, has called on the Nigerian federal government to remove the petrol subsidy, stating that the time is right for such a move. During an interview with Bloomberg TV on Monday, Dangote emphasized that many nations have already eliminated fuel subsidies and urged Nigeria to follow suit.

“I believe this is the right time to remove the subsidy because all countries have already done so,” Dangote said. He acknowledged the sensitivity surrounding the issue, explaining that government subsidies often lead to price inflation, which increases costs unnecessarily. “The government ends up paying for what it shouldn’t be paying for,” he added.

Tracking Local Petrol Sales

Dangote also announced plans to monitor the petrol sold locally through his refinery to ensure accurate consumption data. He pointed out that the current estimates of Nigeria’s daily fuel consumption vary significantly, with figures ranging from 60 million litres to less. “Once we start producing, everything can be accurately tracked,” Dangote explained, noting that trackers will be installed on trucks and ships to ensure that petrol is delivered within Nigeria.

He stressed that proper tracking could save the government significant sums by eliminating inefficiencies and fraudulent practices. Dangote highlighted the situation in Saudi Arabia as an example, where gasoline prices are now higher than in Nigeria, despite the public perception that oil should be cheap.

Subsidy Not Sustainable

Dangote made it clear that the current petrol subsidy is unsustainable, citing Nigeria’s lower gasoline prices compared to neighboring countries. “Our fuel prices are about 60 percent of what is charged in neighbouring nations, and with our porous borders, this is not sustainable,” he said, adding that the government simply cannot afford to continue funding the subsidy at its current levels.

While Dangote acknowledged that the final decision on removing the subsidy lies with the government, he underscored that as a private company, Dangote Refinery must operate profitably. “We have invested $20 billion, and naturally, we need to make money,” he said.

Petrol Subsidy in Focus

Dangote’s comments come at a time when the federal government is grappling with the petrol subsidy issue. In May 2023, President Bola Tinubu declared the end of the subsidy regime, but subsequent reports indicated that a temporary subsidy might be considered due to rising crude oil prices and fluctuating exchange rates.

Despite repeated denials from government officials, confusion has persisted about the status of the subsidy. In August 2023, it was reported that Tinubu approved the use of NNPC’s dividends to cover petrol subsidy payments, though NNPC initially denied the existence of a subsidy before admitting that the federal government owed it N7.8 trillion for subsidising petrol.

Most recently, President Tinubu stated that daily petrol consumption in Nigeria has dropped to 30 million litres following the removal of the subsidy.