Dangote Admits Control Over Oil Blocks Calls On Nigerian Government To Remove Petrol Subsidy Completely.

Aliko Dangote, who heads the Dangote Group, has urged the Nigerian authorities that they should remove the petrol subsidy, noting that this will completely change the market for petrol in Nigeria. Reporting from Bloomberg on September 23, 2024, in a 26-minute video interview, Dangote noted that such a move would also ease some burden off the naira as such pressures have been brought about by the importation of oil and oil products.

It was this week that Africa’s richest man, Dangote, acknowledged the existence of two oil blocks under his company’s control in Nigeria’s upstream sector that will enter the production cycle next month. He further mentioned his newly built 650000 bpd oil refinery, and states that the plant will significantly reduce the country’s over-reliance on imported fuels. As stated by Dangote, this would help not only the value of naira eliminating dolastic disturbance, to assess the true extent of fuel requirement in the country, the estimates at present have been influenced by excess subsidy program.

The billionaire noted that the society has a tendency to overstate prices for the items that have been subsidized leading to unnecessary costs to the government. He was keen to note that the removal of the subsidies would enable Nigeria to adopt a transparent mode in which the actual consumption of petrol would be known hence enhancing budgeting and efficiency in terms of provision of services.

Dangote’s refinery that commenced its production recently in the year 2023, is set to solve most of Nigeria’s problems on fuel. Nonetheless, the project encountered great challenges before it achieved its desired goals. Dangote referred to five years more than expected due to legal factors and issues with communities. There was also $2.4 billion of project running loan however regardless of such issues, Dangote was quite satisfied with the refinery’s achievements and what it may provide for the economy of Nigeria.

Ending Petrol Subsidies to Ease Pressure on the Naira

Dangote has also stated that the complete lifting of petrol subsidies would relieve pressure on the naira. For many years now, Nigeria has relied on fisheries which landed a freight bill of 10 Billion USD in 2022 to analysts. As far as Africa’s largest oil refining force is concerned, Nigeria is able to import less by producing its own fuel by the Dangote Refinery. Due to this, it becomes easier for the country to strengthen its naira as fewer foreign dollars will be needed to purchase oil from other countries for use.

The discussions on the operations of the refinery Dreyer previously mentioned that his company has two main choices with regard to refined materials: export and sell them for domestic usage. Noted exceptions were the home market which he stressed he would rather like to serve but took cognizance that the ultimate aim of the company is making profit. He made it apparent that the control of fuel subsidies is the prerogative of the government only and that the Dangote Refinery proper does not have any ability to control prices of petrol.

Before the establishment of the Dangote Refinery, up until this time, Nigerians had to deal with during the rise in the price of fuel dew to their dependency on imported petroleum products. This is mainly due to fluctuations in the international oil market and foreign exchanges which directly affects the pricing of imported fuels. Although the refinery’s operation will be expected to alleviate such challenges, he pointed out that there is need for government assistance to fully harness the opportunities that come with the refinery.

Issues with NNPC and Pricing Concerned With Disputes

Regarding Dangote’s comments on this issue, he clarified the pricing concern from his refinery to the Nigerian National Petroleum Corporation Limited. As per Dangote, the problem stemmed from the fact that NNPC tended to buy cheap fuel from Dangote Refinery’s imperatives than imported needs, and even so, offered the same price for all fuel relativists in the country. He mentioned that petrol which was produced at Dangote Refineries was significantly cheaper as NNPC nonetheless imported 800,000 metric tons of fuel when petrol was contemplated from soli resources.

-oil marketers propose the Dangote Refinery is even more admissible without the Nigerian government interference in the foreign exchange policies. For example, one marketer claimed that if the exchange rate was made to rigidly remain at N1,000 to $1, the Dangote petrol would be priced at N550 per litre. This was also supported by Eche Idoko the publicity secretary of CORAN who said that Dangote sold petrol to NNPC at a price lower than the price of imported petrol by N300.

Nevertheless, such challenges in regard to pricing as well as the fuel market as a whole do not revive doubts in Dangote as to how the refinery will change the economy of the Nigerian state into which the investments are made. The conversion of 650,000 bpd production capacity which will come from the Dangote Refinery is expected to assist Nigeria shift from being a fuel importer to a major fuel producer which is likely to cut back on the country’s fuel expenses as well stabilize the economy.

In summary, the urge of Dangote that subsidization of petrol should be removed is consistent with his quest of pushing for a transparent and efficient fuel market in the Nigeria. The Dangote Refinery will be able to address these issues, and therefore it will be paving the way to the new prospects of the petroleum industry in Nigeria where the outcomes of the generous dollar-fuelled subsidy will be alleviated imports of goods and foreign exchange pressure on the naira, and resolution of age-old problems of fuel supply.