Why the Nigerian Government Must Immediately End Fuel Subsidy

Alhaji Aliko Dangote, President and CEO of the Dangote Group, has called on the Federal Government to completely eliminate fuel subsidies.

Billionaire business man speaks on why Nigerian government must end fuel subsidy. Credit: @DangoteGroup Source: X(Twitter)

He stated that doing so would provide a clearer picture of the country's actual gasoline consumption.

Additionally, Dangote announced that his company owns two oil blocks in the upstream sector, with production expected to commence next month.

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He explained that this action would provide a clearer understanding of the country’s actual gasoline consumption.

Dangote stated that his company owns two oil blocks in the upstream sector, with production expected to start next month.

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He mentioned that his $20 billion mega refinery in Lagos could alleviate pressure on the naira by producing fuel, as it has the capacity to refine 650,000 barrels of crude oil daily.

In a 26-minute interview with Bloomberg Television in New York, he argued that now is the ideal time to end fuel subsidies, adding that stopping petrol imports would significantly benefit currency stability.

Here's what Dangote said:

Subsidy is a very sensitive issue. Once you are subsidizing something then people will bloat the price and then the government will end up paying what they are not supposed to be paying. It is the right time to get rid of subsidies.

But this refinery will resolve a lot of issues out there, you know, it will show the real consumption of Nigeria, because, you know, nobody can tell you. Some people say 60 million liters of gasoline per day.

Some say, it’s less. But right now, if you look at it by us producing, everything can be counted. So everything can be accounted for, particularly for most of the trucks or ships that will come to load from us.

We are going to put a tracker on them to be sure they are going to take the oil within Nigeria, and that, I think, can help the government save quite a lot of money. I think it is the right time, you know, to remove the subsidy.

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Concerning the subsidy and how it affects the refinery's success, Dangote mentioned...

We have options. We can produce and export, or we can sell locally. As a large private company, making a profit is essential.We invested $20 billion, so it’s important for us to earn money.
The removal of subsidies is totally dependent on the government, not on us. We cannot change the price, but I think the government will have to give up something for something. So I think at the end of the day, this subsidy will have to go.

When President Bola Tinubu took office in May 2023, he removed the subsidy, exacerbating the cost-of-living crisis and prompting protests.

However, he reinstated it soon after due to rising inflation. In early September, he took further steps to reduce the subsidy by lifting the gasoline price cap, although prices remain below market levels.

Prior to the launch of Dangote’s refinery, Nigeria was fully dependent on imported fuel and has been cautiously working to eliminate costly fuel subsidies, which totaled $10 billion in 2022.

Kindly take out the comment session to let us know what you think about the business man's statement on ending fuel subsidy.