Not Just Crude: Aliko Dangote Exposes Forces Behind High Petrol Prices in Nigeria
- Dangote says global crude costs, smuggling and Nigeria’s operating environment keep petrol prices high despite local refining
- High interest rates, inconsistent policies and unreliable electricity threaten Nigeria’s industrialisation and future refinery investments
- Dangote urges productive domestic investment, warning that imports export jobs and deepen poverty while Africa needs larger industrial projects
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigerians hoping that domestic refining would automatically deliver significantly cheaper petrol may have to contend with the realities of the global oil market, according to Aliko Dangote.
The President of Dangote Group has explained why petrol prices remain high despite the commencement of large-scale local refining, identifying crude oil costs, market disruptions, smuggling and Nigeria’s broader operating environment as major factors.
Source: Getty Images
Speaking in an interview with Arise TV, Dangote said his refinery buys crude at prevailing market prices and, in some cases, pays premiums, limiting how far it can cut the price of refined petroleum products.
Dangote explains why petrol prices remain high
Dangote said local refining does not completely shield Nigeria from movements in international crude oil prices because crude remains the refinery’s most important feedstock.
He disclosed that the refinery had purchased crude for as much as $124 per barrel in May, stressing that the company could not absorb rising costs indefinitely.
“We can’t go now and subsidise everything,” he said.
Dangote also argued that petrol prices should be considered within the wider regional market, pointing out that fuel remains considerably more expensive in some neighbouring countries.
According to him, the price gap continues to encourage the smuggling of Nigerian petrol across the borders.
“There is still a lot of smuggling of the same petrol we are producing to our neighbouring countries because those neighbouring countries are about 30 per cent to 50 per cent more expensive than Nigeria,” he said.
Despite the pressures, Dangote assured Nigerians that his refinery would continue supplying the domestic market.
He said the company would work to prevent shortages and long queues while meeting demand “despite all odds.”
High interest rates threaten Nigerian industries
Beyond petrol prices, Dangote raised concerns about Nigeria’s wider industrial environment, particularly the high cost of borrowing, according to a report by Vanguard.
He said interest rates around 30% make it extremely difficult for businesses to finance factories and other long-term productive investments.
“It is very difficult to industrialise with interest rates at 30 per cent. I can’t see the magician who can actually industrialise a country with 30 per cent interest cost,” Dangote said.
He warned that the country could struggle to attract another major refinery investment if conditions in the downstream petroleum sector remained challenging.
Dangote also identified inconsistent government policies and inadequate electricity supply as obstacles confronting manufacturers.
“You cannot manufacture goods with diesel,” he said.
Dangote warns against dependence on imports
The billionaire industrialist urged policymakers to create an environment that encourages productive domestic investment, arguing that factories create employment, generate taxes and strengthen economic activity.
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“If you import, what you are doing is you are importing poverty and exporting jobs that you are supposed to create out of the country,” he said.
Dangote also criticised wealthy Africans who spend heavily on private aircraft and luxury assets without investing in productive businesses.
Source: Getty Images
He said his long-term ambition remains helping to accelerate Africa’s industrialisation and creating large investment opportunities capable of attracting international capital.
According to him, foreign investors are increasingly interested in Africa but need sufficiently large projects in which they can deploy capital.
New petrol prices emerge nationwide
Legit.ng earlier reported that Nigerian households and businesses are facing another squeeze as petrol prices climb toward N1,500 per litre in parts of the country, driven by a renewed surge in global crude oil prices.
The latest increases are filtering through filling stations after crude prices jumped above $100 per barrel, raising production and import costs across the downstream petroleum market.
Source: Legit.ng
