A former Minister of Communications, Adebayo Shittu, on Wednesday, urged the Federal Government and relevant ministries, departments, and agencies on Wednesday to fully support the $20 billion Dangote Refinery in Lagos, Nigeria.
During his appearance on Channels Television’s Sunrise Daily show, Shittu emphasized that the success of the 650,000 barrels per day facility would help Nigeria eliminate its long-standing petroleum product subsidies.
Nigeria, the most populous nation in Africa, faces significant energy challenges with all its state-owned refineries currently non-operational. The country relies heavily on imported refined petroleum products, with the state-run NNPC being the primary importer.
Fuel queues are a common sight, and petrol prices have tripled since the removal of the subsidy in May 2023, rising from around ₦200 per liter to approximately ₦700 per liter.
This increase has worsened the situation for citizens who depend on petrol to power their vehicles and generators due to decades of unreliable electricity supply.
Subsidy Back?
However, amid the ongoing forex crisis affecting the country’s economy, oil marketers revealed that the imported price per liter of petrol has exceeded ₦1,000. Despite this, petrol is being sold for around ₦700, depending on the region, indicating that the government is likely covering the price gap.
Last Thursday, labor leader Joe Ajaero announced that workers had agreed to a new minimum wage of ₦70,000, rejecting President Bola Tinubu’s offer of ₦250,000 on the condition that fuel prices would be increased. This proposal hinted at a potential return to 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 raised concerns about the quality of petroleum products produced at the Dangote Refinery in the Lekki Free Trade Zone.
Aliko Dangote, the prominent industrialist and owner of the refinery, asserted that the quality of his refinery’s products surpasses those imported by other marketers.
Dangote claimed that some NNPC personnel and oil traders operate a blending plant in Malta, which hinders local production of petroleum products. NNPC boss Mele Kyari has denied these allegations.
In December, Dangote began operations at his massive facility in Lagos, starting with a production capacity of 350,000 barrels per day. The refinery aims to reach its full capacity of 650,000 barrels per day by the end of the year.
The refinery has started supplying diesel and aviation fuel to local marketers, with petrol supply expected to begin in August despite regulatory challenges.