Alhaji Aliko Dangote, President and CEO of the Dangote Group, has urged the Federal Government to completely eliminate fuel subsidies.
In a recent interview with Bloomberg Television in New York, Dangote confirmed ownership of two oil blocks in the upstream sector, with production expected to start next month. He emphasized that removing fuel subsidies would help reveal Nigeria’s actual gasoline consumption.
Dangote also highlighted that producing fuel domestically at his $20 billion refinery in Lagos would ease pressure on the naira. The refinery, which can process 650,000 barrels of crude oil per day, is expected to play a significant role in stabilizing the economy.
Speaking on Monday during the 26-minute interview, Africa’s richest man stated that now is the ideal time to end fuel subsidies, noting that subsidizing fuel allows for price inflation, ultimately leading the government to overpay. “Subsidy is a very sensitive issue,” Dangote said. “It’s the right time to get rid of subsidies.”
He further explained that his refinery will address many issues by providing an accurate measure of Nigeria’s fuel consumption, which is currently estimated at 60 million litres per day. By tracking fuel shipments from the refinery, Dangote believes the government could save substantial funds and prevent inflated figures.
Reflecting on the challenges faced since the refinery’s launch in 2013, which was delayed by five years due to state government and community issues, Dangote expressed pride in achieving the milestone despite a $2.4 billion loan.
When asked about the impact of subsidy removal on the refinery’s viability, Dangote said his company, as a private enterprise, must generate profit from the $20 billion investment. He reiterated that the decision to remove subsidies ultimately rests with the government, but he believes that the subsidies will have to be phased out.
President Bola Tinubu initially scrapped the fuel subsidy upon taking office in May 2023, which intensified a cost-of-living crisis and led to protests. However, the subsidy was briefly reinstated as inflation surged. In early September, the government made another move towards ending subsidies by easing the gasoline price cap, though the price remains below market value.
Before Dangote’s refinery became operational, Nigeria relied entirely on imported petroleum products, with the fuel subsidy costing $10 billion in 2022. The country is now gradually moving towards ending this costly subsidy system.