Dangote To FG: End Fuel Subsidies Now To Stabilize Naira

The President and Chief Executive of Dangote Group, Alhaji Aliko Dangote, has called on the Federal Government to end fuel subsidies completely.

He said the removal would help determine the actual petrol consumption in the country, as he confirmed ownership of two oil blocks in the upstream sector with an expected production date of next month.
But the scarcity of the greenback in the Nigerian foreign exchange market continues to weigh on the naira and is made worse by the need to pay for imported gasoline in dollars.

“Petroleum products consume about 40 per cent of our foreign exchange,” Dangote said, adding that fuel from his refinery, which started supplying gasoline on Sept. 15 to the state-owned oil company for domestic sale, “can actually stabilize the naira.”

Continuing in the interview, the businessman revealed the details of the pricing disagreement that occurred with the Nigerian National Petroleum Company Limited.

He said the national oil company bought its current stock from the refinery at a cheaper price than its imported fuel but gave a uniform price for all products.

“There wasn’t really a disagreement, per se. NNPC bought from us on the 15th of September at the international price, which they also bought, about 800,000 metric tons of gasoline imported. So the one that they bought from us actually is cheaper than the one they are importing.
“And so when they announced our price, the guy, I don’t know whether he was authorized. It wasn’t really the real price. What they have announced is most likely that is what it cost them, including profit and other expenses.

“And then the other one is one that they imported. But the people don’t know how much they spend in terms of imports, but their importation is almost, maybe about 15 per cent more expensive than ours, you know.

“So what they are supposed to do is to sell at a basket price, or if they want to remove subsidy, they can announce that they will remove subsidy, which is okay, everybody you know will adjust it.”

On the planned crude oil sales anticipated to begin in October, Dangote said that discussions are still ongoing and a detailed agreement will be finalised this week.

Revealing details of the deal, he explained, “We will sell the crude in naira after we have bought in naira. So now we are currently working out with the committee that the exchange rate is going to be priced. It is going to be normal pricing, you know, if crude is at $80, we will pay that price at an agreed exchange rate.

“And then we will also sell in the domestic market. What that will do is that it’s going to remove 40 per cent pressure on the naira. So because, see, the petroleum products consume about 40 per cent of foreign exchange, so you know, and then, you know, it’s like you have 40 per cent of demand been taken out so that can actually stabilize the naira and even if they subsidise, they would know what they are paying for.

“The deal is to give the government something that they want. It’s also a win-win situation for all and it would benefit the country.

“Currently, discussions are still ongoing to determine the details of the agreement. They are working out something that I think would be a win-win between us and the NNPCL.

“The agreement is very robust. Well, first of all, we would have energy security where they will give us crude. For example, in October, they’re going to give us 12 million barrels, which is on average, about 390,000 barrels a day, which will sell both gasoline, diesel, and aviation fuel.”

He also confirmed ownership of two oil blocks in the upstream sector with an expected production date of next month.

Dangote tankers’ park
Meanwhile, the Federal Government has said that it is providing land for interested entities to build an expansive park for tankers lifting petrol and other products from the Dangote refinery.

This followed a routine inspection on Sunday by the Minister of Works, Dave Umahi, who raised concerns about over 3,000 fuel tankers queueing up on the new concrete pavement road.

Umahi noted that though the pavement is made of concrete the current road was not designed to handle static load and may soon deteriorate like the ever-busy Apapa road.

This minister revealed this to State House Correspondents after Monday’s Federal Executive Council meeting at the Aso Rock Villa, Abuja.

He said, “From my inspection yesterday, we discovered that we had over 3,000 fuel trucks queuing for the Dangote fuel lifting, and they were all parked on the newly constructed road.

“Technically and by design, the roads were never built for static loads. And so it has a lot of effects. So, we will have the same thing we had in Apapa that damaged the entire road until it was constructed on concrete.”

“So what FEC approved today is that the land that we have, the Federal Government land, we should put it for concession so that concessionaires would bid and whoever wins will be able to build a park. The park will be tolled so all those trucks can safely park there. And the pavement of such a park is quite different from the pavement of the road.”

Umahi also announced that the council approved various road projects. He said, “The council approved several road projects. One is a new contract for rehabilitating Maraban-Kankara-Funtua Road in Katsina state. The second is the award of a contract for the construction of a 258km three-lane carriageway, a component of the 1,000 Sokoto-Badagry superhighway section two, phase 2A in the Kebbi Section. It is to be done with continuous reinforced concrete pavement. It excludes all bridges and flyovers.

“The third one is the contract for the construction and dualisation of Afikpo-Uturu-Okiwe in Ebony, Abia, and Imo State, Section Two. The next one is the Bodo-Bonny road in Rivers State under Julius Berger. The Federal Executive Council approved an additional N80bn to complete that project, bringing the total cost to N280bn.

“The next is the third mainland bridge. The third mainland Bridge was executed under emergency work. When you have emergency work, you have to get going, measure the work, and send all your measurements and quotations to the BPP. And that’s what we did. So that has been done, and it’s also extended to Falamo and Queens Drive. It also came with solar-powered light. The essence is that all through the length and breadth of the road, the security agencies will be able to check everything happening within the length and breadth of this bridge. And we give response time to respond to any eventuality for 10 minutes. So the contract covers about four security vans and one-speed boat.”

Other contracts include the N158bn contract approved for the Lekki Port service lanes by Dangote Industries, linking Epe to Shagamu-Benin Expressway. The council also approved the N740.79bn Abuja-Kaduna-Zaria-Kano Road re-scoped with solar lighting under a 14-month completion by Julius Berger.

Umahi also named about 14 road projects and bridges affected by floods, including Ado-Ekiti-Afe Babalola in Ekiti State and Lafia-Shendam Road in Plateau State.