Aliko Dangote Says It’s Time for Nigeria to Stop Its Fuel Subsidy

Aliko Dangote, the richest person in Africa, recently stated that Nigeria should end its fuel subsidy now that his new refinery has started making gasoline. He believes this can help Nigeria’s weak currency.

In an interview with Bloomberg Television in New York, Dangote said, “Subsidy is a very sensitive issue. When you subsidize something, people raise the price, and then the government ends up paying more than they should. It’s the right time to get rid of subsidies.”

Nigeria is the biggest oil producer in Africa but has to import fuel because its four state-owned refineries are old and don’t work well.

This has forced the government to pay a lot of money for many years to keep fuel prices low for its people.

When President Bola Tinubu took office in May 2023, he stopped the fuel subsidy. This made living costs go up even more and caused big protests across the country.

Because prices went up so much, the government had to bring the subsidy back for a while. But in early September, they tried again to remove it by allowing fuel prices to rise, although they are still not as high as they should be based on the market.

The government thinks the cost of the subsidy could reach N5.4 trillion by the end of 2024.

The new Dangote Refinery could help stop these costly subsidies. It has started to reduce Nigeria’s need to buy fuel from other countries.

Dangote explained that the government decides on subsidies, but not having to import fuel could really help the Nigerian currency.

Despite changes meant to improve Nigeria’s economy, the naira has fallen about 70% against the US dollar. It is now one of the weakest currencies in the world, trading at over 1,500 naira per dollar.

A shortage of dollars makes it even harder to keep the naira stable, especially since Nigeria needs to use dollars to buy fuel from other countries.

Dangote added, “Petroleum products take up about 40% of our foreign exchange. The gasoline from my refinery, which started going to the state-owned oil company for local use on September 15, can actually help stabilize the naira.”.