Stop payment of fuel subsidy now — Dangote to FG
..Lifting petrol from Dangote Refinery will moderate FX pressure — Cardoso
…As Okupe disagrees with Dangote on complete subsidy removal
…Petrol price will crash if we lift directly from Dangote Refinery — Oil marketers
By Seun Ibiyemi and Matthew Denis
President and Chief Executive Officer of Dangote Group, Aliko Dangote has called on the federal government to remove fuel subsidies completely.
Speaking during a 26-minute interview with Bloomberg Television in New York, Dangote highlighted the need for Nigeria to end its fuel subsidy system, which he argued is unsustainable for the economy.
According to Dangote, removing subsidies will allow the government to better determine Nigeria’s actual petrol consumption, a critical step in managing the country’s energy resources.
He emphasised that his recently commissioned $20 billion refinery in Lagos, capable of refining 650,000 barrels of crude oil daily, will play a vital role in addressing Nigeria’s fuel supply needs and stabilising the economy.
He said, “Subsidy is a very sensitive issue. Once you are subsidising 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 litres 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.”
Dangote said that during the time NNPC bought from them, the national oil company also imported about 800,000 metric tonnes of petrol into the country.
He clarified that the refinery’s petrol was sold to NNPC Ltd at a price lower than what the national oil company imported.
“What’s going on is not really a disagreement per se. NNPC bought from us this particular one on the 15 of September at the international price. They also bought over 800,000 metric tonnes of gasoline imported.
“The ones they bought from us were actually cheaper than the ones they imported. So when they announced our price, it wasn’t really the real price. What they announced was likely what it cost them including profits, and other things. Meanwhile, they’ve never added profit to their cost before.
“And then, the other one is what they imported but the people don’t know how much they spend for importing. But their own importation was about fifteen to 20 percent more expensive than ours. What they first do is to sell at a basket price. If they want to remove subsidy, they can announce that they’ve removed subsidy. Everybody will adjust,” he said.
…Lifting petrol from Dangote refinery‘ll moderate FX pressure — Cardoso
The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, says lifting of petroleum products from the Dangote Refinery will moderate foreign exchange demand pressures.
Cardoso who said this on Tuesday in Abuja, while presenting a communique from the apex bank’s 297th Monetary Policy Committee meeting, said that it would also moderate transportation cost, thereby easing food prices.
“The committee expressed optimism that the lifting of refined petroleum products from Dangote refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.
“This is also expected to moderate foreign exchange demand for importation of refined petroleum products, with a positive spillover on external reserve and improvement in the overall balance of payment position,” he said.
I disagree with Dangote on complete subsidy removal — Okupe
Meanwhile, Former Presidential spokesperson, Dr Doyin Okupe has disagreed with the President and Chief Executive Officer of Dangote Group, Aliko Dangote over complete subsidy removal on Premium Motor Spirit (PMS).
This is even as Dangote disclosed that the refinery sold petrol to the Nigerian National Petroleum Company (NNPC Ltd) at 20% cheaper than what the state oil company paid for imported product.
Reacting, Okupe said: “With utmost respect, I disagree with Aliko Dangote on his suggestion that the government should completely end subsidy now.
“Petrol is the economic oxygen of Nigerians, whether rich or poor. This is not the situation in other countries of the world.”
The former Director-General, Peter Obi Presidential Campaign, said that with the coming up of local refineries, some level of succour should be given to Nigerians.
According to him, with the allocation of 450,000 barrels a day for local consumption, Nigeria can combine the advantage of local production with local consumption and determine the price to sell crude to local refineries.
“We can use opportunities that these local refineries avail us, ensuring adequate fuel supply with the dedicated or allocated daily crude oil for local consumption, which is outside OPEC quota.
“So, whatever we do with it is our internal affairs, it is a way of providing some level of comfort.
“We can sell this daily crude oil allocation for local consumption cheaply to determine the average pump price of PMS (Premium Motor Spirit) in the country.
“For instance, the price of Nigerian crude per barrel is $77, we can decide to sell to Dangote refinery at $35 or $37 per barrel, thereby having made adjustments of processing fees and profit margin, the pump price of petroleum can actually come down to N500 or N600 per litre.
“This will definitely bring a major relief, comfort and succour to the masses,” he said.
Okupe said that ending importation of petroleum products would reduce the tension and pressure on foreign exchange demand by 40 per cent.
“This will give economic oxygen to Nigerian people, encouraging enterprises and local businesses because we all in Nigeria, rich and poor, depend on petrol as an economic oxygen.
“Every nation has a sector where it stands behind the people,” he added.
Okupe described President Bola Tinubu administration’s bold step on fuel subsidy as excellent and commendable.
He said that the President had done a great job by courageously removing subsidy and eliminating multiple exchange rates.
According to him, the President’s reforms have taken root in the economic system.
“It is something very brave that no other previous administrations have had the courage to go through with it.
“What the President did was like biting the bullets and he has been courageous enough to persevere and persist through it.
“Having done it for more than a year, my feeling and belief is that we have made enough gains, and because these refineries are upstream, we can consolidate on those gains and release the pressure on the masses a little bit.
“Fortune has played in our hands by the coming upstream of the Dangote refinery, Port Harcourt refinery and other refineries that will follow,” he said
…Petrol price will crash if we lift directly from Dangote refinery —Oil
Oil marketers have assured Nigerians that the prices of Premium Motor Spirit (PMS) popularly known as petrol will crash if they are allowed to lift petrol directly from the Dangote Refinery and Petrochemical Plant.
Recall that controversies were stoked recently when the Nigerian National Petroleum Company Ltd (NNPCL) emerged as the sole off taker of the product from the 650k barrel per day refinery despite initial denial.
During a press briefing where the NNPC-Dangote refinery petrol supply deal was announced, Wale Edun, the minister of finance and coordinating minister of the economy disclosed that the Dangote Refinery will only sell to NNPC Ltd.
“From October 1, NNPC Ltd. will commence the supply of about 385,000 bpd of crude oil to the Dangote refinery, to be paid for in naira,” he said.
“PMS will only be sold to NNPC, NNPC will then sell to various marketers for now,” he said.
Reacting to this, the spokesperson for the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike while appearing as a guest on Channels Television’s Morning Brief on Tuesday, said marketers are now in discussion with the refinery for a possible direct lifting of petrol.
He said, “It is just very simple. It shows that the liberalisation of the market is on course, because there is no way Dangote refinery will be producing petrol in Nigeria without considering IPMAN as one of its strategic stakeholders.
“We were even thinking that one of his first points of call was to discuss with IPMAN and not NNPCL, because we can distribute every single drop of products produced by Dangote refinery because we are situated in every nook and cranny of this country. We also possess about 85 per cent of filling stations in Nigeria
“So, it is pertinent that Dangote should discuss this with independent marketers, and I want you to know that immediately after we discuss and commence direct lifting of product from Dangote, the issue of pricing and differential in pricing will be gone. What we are seeing here is price disparity.
“But if IPMAN becomes independent, prices will drop. Because it will give us the opportunity for possible competition because we will no longer be depending on another source to get products.
“Dangote also opened up to IPMAN when he started producing AGO diesel. We entered the market and started buying it, and prices of AGO came down. it was around N1600, now it is between N1000 to N1100.
“This is a deregulated economy, and every stakeholder and player should be given equal opportunity.”
