Alhaji Aliko Dangote, President and Chief Executive of Dangote Group, has urged the Nigerian Federal Government to fully remove fuel subsidies.
This is according to a 26-minute interview he had with Bloomberg Television in New York on Monday.
During the interview, Dangote emphasized that eliminating subsidies would provide clarity on the country’s actual petrol consumption while easing fiscal pressures on the government.
He added that that ending petrol imports will have a huge upside in easing currency pressures.
The richest man in Africa said, “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.”
Dangote to track oil trucks
The business mogul further explained that the operations of his Lagos-based refinery would bring transparency to the sector by accurately tracking the country’s fuel consumption.
Dangote said: “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 owns two oil blocks
On plans to invest in the upstream segment to avoid being held hostage by oil producers, Dangote stated that although he has two oil blocks that will begin production this October, he doesn’t intend to invest heavily in that segment.
He said: “Well, our upstream, you know, is not big. We have two oil blocks which we have and we are starting production this October.”
Dangote recalled the challenges faced after the project’s launch in 2013, experiencing a five-year delay due to issues with state government and host communities and a running loan of $2.4 billion.
On whether the subsidy will make the refinery viable, Dangote said, “Well, you see, we have a choice of either one. 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.
“The removal of subsidies is totally dependent on the government, not on us. 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.”
What you should know
Nairametrics earlier reported that the Federal government said fuel subsidy is projected to gulp about N5.4 trillion in 2024 as against the N3.6 trillion budgeted for the same intervention in 2023.
In an earlier statement, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the fuel subsidy removal is an ongoing process that depends on a combination of factors.
Edun said the government is working to ensure a complete elimination of fuel subsidy in the country’s economy, adding that the policy direction of the government now focuses more on Compressed Natural Gas (CNG) to power energy in the country.
The removal of fuel subsidy has been a contentious issue for some months as crude oil prices increase and the exchange rate continues to depreciate, leading critics to suggest partial subsidy remains despite talk of a removal.
Several observers maintain that the federal government has restarted the subsidy on petrol since its removal on May 29, 2023.
For instance, the former governor of Kaduna State, Nasir El Rufai, said the federal government is spending more on petrol subsidy than before.
