Aliko Dangote supports the total abolition of fuel subsidies

Alhaji Aliko Dangote, Chairman of the Dangote Group, owner of the Dangote oil refinery and petrochemicals, has called for the total abolition of fuel subsidies, believing them to be unsustainable.

The federal government had reintroduced subsidies on gasoline, a year after President Bola Tinubu announced in his inaugural speech on May 29, 2023 that "subsidies are over". In an interview with Bloomberg Television from New York, Dangote claimed that the removal of the subsidies would close consumption gaps and save public funds.

"When a product is subsidized, prices are often inflated, and the state ends up paying unjustified amounts. The time has come to abolish these subsidies", he declared. He added that many countries around the world had already put an end to these subsidies, judging them to be unsustainable.

To illustrate his point, he used the example of Saudi Arabia, where the government used to sell oil at very low prices, considering it a gift from God to the citizens. Today, however, Dangote notes that the price of petrol in Nigeria is around 40% lower than in Saudi Arabia, which he says makes no sense. In addition, he pointed out that fuel prices in Nigeria are 60% lower than in neighboring countries, making the situation unsustainable, not least because of porous borders.

Dangote insisted that Nigeria could no longer afford to subsidize gasoline, but stressed that the final decision lay with the federal government. He pointed out that his company, as a private entity, had to be profitable, but that the question of subsidies was a matter of government policy, not his commercial interests.

The Dangote refinery, he added, will provide a better understanding of actual fuel consumption in Nigeria, thanks to tracking devices on trucks, which will ensure greater transparency and could contribute to significant savings for the state.

Last week, the refinery began selling gasoline on the local market in dollars, notably to the Nigerian National Petroleum Company Limited (NNPCL). From October 1, it will start using crude stocks paid for in naira, enabling it to sell locally in the national currency.

At a press conference in Lagos, the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Festus Osifo, urged the government to increase its stake in the Dangote refinery from the current 7% to at least 45%. He also recommended that the government dispose of the majority of its shares in the four national refineries and reduce its stake to 49%, with a view to enabling strategic investors to acquire the majority.

Osifo also called for partnerships between the government and the private sector to create strategic reserves of petroleum products, and argued for 50% of oil revenues to be invested in renewable energies.

Finally, Osifo emphasized the importance of stabilizing the exchange rate to ensure accessible and affordable energy, while calling for a regulatory framework to manage disinvestment in the oil and gas industry, in line with the Petroleum Industry Act (PIA).