President of Dangote Group, Aliko Dangote, has explained why petrol remains expensive in Nigeria despite the commencement of large-scale domestic refining, saying local production does not completely shield the country from international crude oil prices and other market pressures.
Dangote spoke during an interview with Arise Television on Tuesday, where he explained that his refinery purchases crude oil at prevailing international prices and sometimes pays significant premiums.
According to him, these costs make it difficult for the refinery to sell refined petroleum products below sustainable market prices.
Responding to concerns about petrol prices, Dangote said the cost was relative, noting that the product remained more expensive in some neighbouring countries.
“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 percent to 50 percent more expensive than Nigeria.”
Dangote disclosed that the refinery purchased crude at as much as $124 per barrel in May, stressing that the company could not continue subsidising fuel costs indefinitely.
“We can’t go now and subsidise everything,” he said.
He, however, assured Nigerians that the refinery would continue supplying the domestic market and would work to prevent shortages.
“Nigerians don’t need to worry. There will not be any shortage from our own part. There will not be any queues, and we’ll make sure that we keep satisfying the market despite all odds,” he said.
30% Interest Rate Threatens Industrialisation
Dangote also identified high interest rates as one of the major obstacles to Nigeria’s industrialisation, saying businesses face serious difficulties when borrowing costs rise to around 30 per cent.
“It is very difficult to industrialise with interest rates at 30 percent. I can’t see the magician who can actually industrialise a country with 30 percent interest cost,” he said.
He warned that Nigeria could find it difficult to attract another major refinery investment without policies aimed at protecting domestic industries.
“Under the current things that are going on, especially downstream, I cannot see any new refinery in our lifetime,” Dangote said.
The businessman argued that the government needed to protect productive industries if it expected companies to create jobs, generate tax revenue and contribute to economic growth.
“If you import, what you are doing is that you are importing poverty and exporting jobs that you are supposed to create out of the country,” he said.
Dangote also pointed to inconsistent government policies and inadequate electricity supply as continuing challenges for manufacturers.
“You cannot manufacture goods with diesel,” he said.
Textiles Was My Biggest Mistake — Dangote
Reflecting on his decades in business, Dangote described his investment in the textile industry as the biggest mistake he made in his business career.
“My biggest business mistake was textiles,” he said.
He explained that the business eventually collapsed amid what he described as inadequate policy protection and the dumping of cheaper products by foreign manufacturers.
“We were swamped by Chinese dumping and Indian dumping. So eventually we had to close down,” he said.
According to Dangote, the closure resulted in significant job losses, particularly at Nigerian Textile Mills in Ikeja.
He disclosed that almost 8,000 workers were laid off across the business, including 6,920 employees of Nigerian Textile Mills in Ikeja.
“We laid off a total of almost 8,000 workers — 6,920 workers from Nigerian Textile Mills here in Ikeja alone,” he said.
Dangote said the experience taught him an important lesson about structuring future investments, stressing that businesses should be able to remain viable even when government protection is eventually withdrawn.
Source: Arise Television
