Petrol Prices could spike to N1,800 as Dangote Suggests Subsidy Removal

Says market-driven prices to escalate beyond N1,800 per litre.

Dangote Petroleum Refinery, sole producer of petrol being offtaken and distributed for Nigerians, has declared that the government should end subsidy, a move that would cause imminent surge in the prices of the product to as high as N1,800 litre.

The Founder of the 650,000 barrels per day capacity refinery, Alhaji Aliko Dangote, who threw his full weight behind subsidy removal just nine days after his facility started production of petrol, said in an interview with Bloomberg that this is the right time for the federal government to stop petrol subsidy.

The product, which sold for N650 per litre at the NNPCL outlets before September 15, skyrocketed to as high as N1,010 per litre in same outlets on the day the private refinery began production. With the call for full subsidy removal, the prices could be as high as N1,800 per litre.

“I think it is the right time to (take away subsidy) because all countries have gotten rid of subsidy,” he said.

Statistics showed that the price of the product would go up to the market price which is higher than the subsidised price any time subsidy is removed, but Dangote maintained that what actually increases a product’s price is the subsidy.

Subsidy, according to him, is a sensitive issue, adding that once a country subsidises the product, people would increase the price.

To Dangote, subsidy would lead to the government “paying what they are not supposed to be paying.”

Dangote said petrol subsidy is not sustainable and the government cannot afford to keep subsidising.

“Our price of gasoline is about 60 percent the price of our neighbouring countrries and we have porous borders, so it is not sustainable. Government cannot afford the amount of subsidies we are paying,” he said.

Speaking further on the viability of petrol subsidy, Dangote said it is the government’s decision to either continue with or halt the payments.

“We have a choice of exporting when we produce and we sell locally. We are a private company and it is true we have to make a profit,” he said.

We built something worth $20 billion, and definitely we have to make money.

“The removal of subsidy is totally dependent on the government, not on us.

“We cannot change the price but I think the government would have to give up something for something.”

Dangote said eventually, the subsidy would have to go.

He said that the petrol sold locally by his refinery will be tracked to ensure the consumption rate is accounted for.

“But this refinery will bring quite a lot of issues out there. It would show the real consumption of Nigeria because nobody can tell. Some people say it is 60 million litres per day, some say it is less,” the billionaire said.

“But right now, by us producing, everything can be counted and accounted for. Most of the trucks or ships that will load from us, we will put a tracker on them to be sure they are going to take the oil within Nigeria and that can help the government to save a lot of money.

“For example, Saudis, the citizens believe that oil is our god-given gift and should not charge us for it. Government was selling it at a very low price. But today, as we speak, gasoline is about 40 percent cheaper in Nigeria than in Saudi Arabia, which I think does not make sense.”

On May 29, 2023, President Bola Tinubu said the petrol subsidy regime was over.

Almost three months later, TheCable reported that Tinubu was considering a “temporary subsidy” on petrol as crude oil prices and foreign exchange rates soared.

However, Ajuri Ngelale, former presidential spokesperson, said there was no reintroduction of subsidy.

Also, on January 3, the Nigerian National Petroleum Company (NNPC) Limited denied the return of the petrol subsidy, saying it had been removed entirely.

However, on April 15, Nasir el-Rufai, former governor of Kaduna state, said the federal government is spending more on petrol subsidy than before.

TheCable also reported on August 19 that Tinubu approved a request by NNPC to utilise the 2023 final dividends due to the federation to pay for the petrol subsidy — but NNPC denied the existence of petrol subsidy, only to admit hours later that the federal government owes it N7.8 trillion for subsidising petrol.

Almost a month later, Tinubu said Nigeria’s daily consumption of petrol reduced to about 30 million litres after subsidy removal.

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