Dangote Refinery’s Success Will End Fuel Subsidy, Ex-Minister Tells FG

 

 

A former Minister of Communications, Adebayo Shittu, on Wednesday, urged the Federal Government, relevant ministries, departments and agencies to give total support to the $20bn Dangote Refinery in Lagos, Nigeria.

Shittu, a guest on Channels Television’s Sunrise Daily show, said the success of the 650,000 barrels per day facility will wean Nigeria’s purse off decades-long subsidies on petroleum products.

Nigeria, Africa’s most populous nation, faces energy challenges, with all its state-owned refineries non-operational. The country is heavily reliant on imported refined petroleum products, with the state-run NNPC being the major importer of the essential commodities.

Fuel queues are commonplace in the country. Prices of petrol tripled since the removal of subsidy in May 2023, from around N200/litre to about N700/litre, compounding the woes of the citizens who power their vehicles, and generating sets with petrol, no thanks to decades-long epileptic electricity supply.

Subsidy Back?

With the forex crisis bedevilling the country’s economy, oil marketers blurted that the landing cost per litre of imported petrol has risen above N1,000 but the commodity is being sold for around N700, depending on the part of the country, suggesting that the government covers the price gap.

Last Thursday, labour leader Joe Ajaero said workers settled for N70,000 as the new minimum wage and rejected President Bola Tinubu’s offer to pay workers N250,000 as minimum wage on the condition that he would increase fuel prices, suggesting a return of the subsidy regime.

When asked about the return of the subsidy regime, former minister Shittu said though he does not have all the facts, “but what I do know over the years is that we have been borrowing for subsidy”.

“It’s a very clear thing to understand. If you produce crude oil at say, N100 per litre because you don’t have refining facilities, you take it overseas,” he added.

“You pay in dollars to transport it overseas to refineries there. You pay in dollars to refine there. You pay in dollars to bring it back. Can the cost of that one litre of fuel remain N100 or even N200?

“So, unless we can refine locally. And that is why I am complimenting Dangote and I urge that everybody should give Dangote Refinery all the support so that, for once, we can stop exporting our crude oil for refining to bring it back because it would certainly add to the cost. And if we do not want to add to the cost, then we must subsidise. To subsidise, you have to take loans.”

 

Dangote-FG Saga

Over the weekend, regulatory authorities questioned the quality of petroleum products produced at the Dangote Refinery located at the Lekki Free Trade Zone.

Foremost industrialist and owner of the facility Aliko Dangote insisted that the quality of products at his refinery surpasses the ones imported by marketers.

Dangote said some NNPC personnel and oil traders operate a blending plant in Malta, thereby frustrating local production of petroleum products. NNPC boss Mele Kyari has since denied the allegation.

Last December, Dangote commenced operations at his behemoth facility located in Lagos with 350,000 barrels a day. The refinery hopes to achieve its full capacity of 650,000 barrels per day by the end of the year.

The refinery has begun the supply of diesel and aviation fuel to marketers in the country while petrol supply is expected to commence in August amid regulatory resistance.