Alhaji Aliko Dangote, the President and Chief Executive of Dangote Group, has urged the Federal Government to fully eliminate fuel subsidies. He argued that the removal would help ascertain the country’s actual petrol consumption. Dangote also confirmed ownership of two oil blocks in the upstream sector, with production expected to commence next month.
He also highlighted that fuel production from his $20 billion mega refinery in Lagos, which has a refining capacity of 650,000 barrels of crude oil daily, will alleviate pressure on the naira. Speaking in a 26-minute interview with Bloomberg Television in New York, Dangote emphasized that now is the opportune time to end fuel subsidies.
He also pointed out that halting petrol imports would significantly ease currency pressures.
The President and Chief Executive of Dangote Group, Alhaji Aliko Dangote, has urged the Federal Government to fully eliminate fuel subsidies. He argued that the removal would help ascertain the country’s actual petrol consumption. Dangote also confirmed ownership of two oil blocks in the upstream sector, with production expected to commence next month.
Dangote highlighted that fuel production from his $20 billion mega refinery in Lagos, which has a refining capacity of 650,000 barrels of crude oil daily, will alleviate pressure on the naira. Speaking in a 26-minute interview with Bloomberg Television in New York, Dangote emphasized that now is the opportune time to end fuel subsidies.
Africa’s wealthiest man also pointed out that halting petrol imports would significantly ease currency pressures.
He 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.”
“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 who 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 $2.4bn, said he is personally proud to achieve the feat.
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.”
President Bola Tinubu removed the subsidy when he took office in May 2023, exacerbating a cost-of-living crisis that sparked protests, but quickly reinstated it as inflation spiked.
Another step to ending it was taken in early September when the gasoline cap was eased — though the price remains below the market level.
Nigeria, until Dangote’s refinery came on stream was fully dependent on imported petroleum products, and has been taking tentative moves to finally end the nation’s pricey fuel subsidies, which in 2022 cost $10bn.
Dangote, who has the option of either exporting his fuel or selling it domestically, said the decision on subsidies was the government’s, but added that ending gasoline imports will have a huge upside in easing currency pressures.
The naira has lost around 70 per cent of its value against the dollar since rules that pegged the currency at an artificially high level were relaxed last year.
But the scarcity of the greenback in the Nigerian foreign exchange market continues to weigh on the naira and is made worse by the need to pay for imported gasoline in dollars.
“Petroleum products consume about 40 per cent of our foreign exchange,” Dangote said, adding that fuel from his refinery, which started supplying gasoline on Sept. 15 to the state-owned oil company for domestic sale, “can actually stabilize the naira.”
Continuing in the interview, the businessman revealed the details of the pricing disagreement that occurred with the Nigerian National Petroleum Company Limited.
He said the national oil company bought its current stock from the refinery at a cheaper price than its imported fuel but gave a uniform price for all products.
“There wasn’t really a disagreement, per se. NNPC bought from us on the 15th of September at the international price, which they also bought, about 800,000 metric tons of gasoline imported. So the one that they bought from us actually is cheaper than the one they are importing.
“And so when they announced our price, the guy, I don’t know whether he was authorized. It wasn’t really the real price. What they have announced is most likely that is what it cost them, including profit and other expenses.
“And then the other one is one that they imported. But the people don’t know how much they spend in terms of imports, but their importation is almost, maybe about 15 per cent more expensive than ours, you know.
“So what they are supposed to do is to sell at a basket price, or if they want to remove subsidy, they can announce that they will remove subsidy, which is okay, everybody you know will adjust it.”
Regarding the anticipated crude oil sales set to commence in October, Dangote mentioned that discussions are ongoing, and a detailed agreement is expected to be finalized this week.
Elaborating on the deal, he explained, “We will sell the crude in naira after purchasing it in naira. We are currently working with the committee to determine the exchange rate for pricing. It will follow standard pricing; for instance, if crude is at $80, we will pay that price at an agreed exchange rate.”
“And then we will also sell in the domestic market. What that will do is that it’s going to remove 40 per cent pressure on the naira. So because, see, the petroleum products consume about 40 per cent of foreign exchange, so you know, and then, you know, it’s like you have 40 per cent of demand been taken out so that can actually stabilize the naira and even if they subsidise, they would know what they are paying for.
“The deal is to give the government something that they want. It’s also a win-win situation for all and it would benefit the country.
“Currently, discussions are still ongoing to determine the details of the agreement. They are working out something that I think would be a win-win between us and the NNPCL.
“The agreement is very robust. Well, first of all, we would have energy security where they will give us crude. For example, in October, they’re going to give us 12 million barrels, which is on average, about 390,000 barrels a day, which will sell both gasoline, diesel, and aviation fuel.”
He also confirmed ownership of two oil blocks in the upstream sector with an expected production date of next month.
Federal Government Allocates Land for Dangote Tankers’ Park
The Federal Government announced plans to provide land for interested parties to construct a large park for tankers transporting petrol and other products from the Dangote refinery.
This decision came after the Minister of Works, Dave Umahi, conducted a routine inspection on Sunday, where he expressed concerns about over 3,000 fuel tankers queuing on the new concrete pavement road.
Umahi noted that despite the concrete construction, the current road was not designed to handle static loads and could deteriorate quickly, similar to the heavily trafficked Apapa road. The minister shared this update with State House Correspondents following Monday’s Federal Executive Council meeting at the Aso Rock Villa, Abuja.
He said, “From my inspection yesterday, we discovered that we had over 3,000 fuel trucks queuing for the Dangote fuel lifting, and they were all parked on the newly constructed road.
“Technically and by design, the roads were never built for static loads. And so it has a lot of effects. So, we will have the same thing we had in Apapa that damaged the entire road until it was constructed on concrete.”
“So what FEC approved today is that the land that we have, the Federal Government land, we should put it for concession so that concessionaires would bid and whoever wins will be able to build a park. The park will be tolled so all those trucks can safely park there. And the pavement of such a park is quite different from the pavement of the road.”
Umahi also announced that the council approved various road projects. He said, “The council approved several road projects. One is a new contract for rehabilitating Maraban-Kankara-Funtua Road in Katsina state. The second is the award of a contract for the construction of a 258km three-lane carriageway, a component of the 1,000 Sokoto-Badagry superhighway section two, phase 2A in the Kebbi Section. It is to be done with continuous reinforced concrete pavement. It excludes all bridges and flyovers.
“The third one is the contract for the construction and dualisation of Afikpo-Uturu-Okiwe in Ebony, Abia, and Imo State, Section Two. The next one is the Bodo-Bonny road in Rivers State under Julius Berger. The Federal Executive Council approved an additional N80bn to complete that project, bringing the total cost to N280bn.
“The next is the third mainland bridge. The third mainland Bridge was executed under emergency work. When you have emergency work, you have to get going, measure the work, and send all your measurements and quotations to the BPP. And that’s what we did. So that has been done, and it’s also extended to Falamo and Queens Drive. It also came with solar-powered light. The essence is that all through the length and breadth of the road, the security agencies will be able to check everything happening within the length and breadth of this bridge. And we give response time to respond to any eventuality for 10 minutes. So the contract covers about four security vans and one-speed boat.”
Other approved contracts include the N158 billion agreement approved for the Lekki Port service lanes by Dangote Industries, which connects Epe to the Shagamu-Benin Expressway.
Additionally, the council has sanctioned the N740.79 billion re-scoping of the Abuja-Kaduna-Zaria-Kano Road, incorporating solar lighting, with a 14-month completion timeline managed by Julius Berger.
