His advice comes in light of the recent start of petrol distribution from the Dangote Refinery, which has seen prices rise to ₦950 per litre in Lagos and over ₦1000 in northern regions. Aliko Dangote, President and Chief Executive of the Dangote Group, has called on the Federal Government to completely abolish fuel subsidies. In a 26-minute interview with Bloomberg Television in New York on Monday, he stated that now is the right moment to eliminate these subsidies that have drained trillions of naira from the nation’s resources.
According to Dangote, the removal of subsidies would provide a clearer picture of the country’s actual fuel consumption.
His comments follow the recent launch of petrol supplies from the Dangote Refinery and the subsequent price hikes. He emphasized that the refinery’s production would alleviate pressure on the naira and revealed that he owns two oil blocks in the upstream sector, with production expected to begin next month. He remarked, “Subsidy is a very sensitive issue. When something is subsidized, it often leads to inflated prices, causing the government to pay more than necessary. It’s time to eliminate subsidies.”
He continued, “This refinery will address numerous issues and provide accurate consumption data for Nigeria, as current estimates vary widely. For instance, while some claim the country consumes 60 million litres of gasoline daily, others believe it’s less. With our production, we can quantify this accurately. We plan to implement tracking systems on trucks and ships loading from us to ensure the oil stays within Nigeria, which will help the government save significant funds. Now is the right time to remove the subsidy.”
When asked about the impact of retaining the subsidy on his refinery, Dangote explained, “We have the option to produce for local sales or export. As a large private enterprise, profitability is crucial; we’ve invested $20 billion, so making money is essential. However, the decision to remove subsidies rests solely with the government. While we cannot alter prices, the government needs to weigh the benefits and make necessary sacrifices. Ultimately, I believe the subsidy will need to be phased out.”
Prior to the Dangote Refinery’s operations, Nigeria relied entirely on imported petrol. President Bola Tinubu removed the subsidy upon taking office in May 2023, leading to a spike in the inflation rate to around 34% in 2024 before it decreased to approximately 32.15% in August. Food inflation remains high at about 40%, and the naira has depreciated by roughly 70% against the dollar since last year, when currency controls were relaxed.
“Petroleum products account for about 40% of our foreign exchange expenses,” Dangote stated, adding that the fuel from his refinery, which started supplying gasoline to the state-owned oil company on September 15 for domestic distribution, “can stabilize the naira.”
He also elaborated on a pricing dispute with the Nigerian National Petroleum Company Limited, noting that while the NNPC purchased gasoline from his refinery at an international price, it set a uniform price across all products. “There wasn’t really a disagreement,” he clarified. “NNPC bought from us on September 15 at the international price, along with 800,000 metric tons of imported gasoline. Our price was actually lower than their imported fuel. However, the announcement regarding our price did not reflect the actual situation.”
Dangote said ongoing discussions will finalize a detailed agreement for planned crude oil sales expected to begin in October. “We will sell crude in naira after purchasing it in naira. Currently, we’re negotiating an agreed exchange rate for pricing, ensuring normal pricing standards. This approach will significantly reduce the pressure on the naira since petroleum products consume 40% of foreign exchange. By alleviating this demand, we can stabilize the naira and clarify the government’s subsidy payments.”
He added, “The goal is to establish a mutually beneficial arrangement. Discussions are still in progress to finalize the details of this agreement, which promises energy security, with 12 million barrels slated for delivery in October, averaging around 390,000 barrels daily for gasoline, diesel, and aviation fuel.”
