Dangote Speaks on Strong Oil Mafia, Subsidy Removal, Buying Arsenal in Latest Interview
Aliko Dangote, the President of the Dangote Group of companies, in his latest interview with Bloomberg Television, touched on several issues—from his mega-refinery, the removal of subsidy in Nigeria, to his now rested intention of buying Arsenal football club.
His 650,000-barrels-per-day mega-refinery, which started delivering the much-anticipated Premium Motor Spirit earlier this month, has been fraught with challenges, many of which the billionaire stated he never anticipated.
“No regret,” Dangote said when asked by Bloomberg presenter Francine Lacqua if he regretted venturing into such a mega-project.
“I think there would have been regrets if we hadn’t succeeded in delivering. But to tell you the truth, it was a monster. Monster in the sense that if I knew how difficult it was to build this kind of edifice, I wouldn’t have started at all.
By the time we realized that it was a very difficult project, we had already started and had no choice but to deliver.”
In the 26-minute interview, here are some of the key issues Dangote touched on regarding his oil enterprise in Nigeria:
Why the Nigerian Government Should Stop Fuel Subsidy
The removal of fuel subsidies was President Bola Tinubu’s first decision when he assumed office in May last year. It was during his inaugural address that the president announced that “subsidy is gone.”
However, with the collapse of the exchange rate, which saw the naira undergo steep depreciation, the government has apparently maintained a form of subsidy by selling imported petrol at a lower cost by subsidizing the dollar.
“I think it is the right time to get rid of subsidy,” Dangote began, hinting that many countries are removing various subsidies.
“Before now, the Saudi Arabian government was selling petrol at a very low price to its citizens. But today, gasoline is about 40 percent cheaper in Nigeria than it is in Saudi Arabia.”
The billionaire, who recently lost his position as Africa’s richest man by data compiled by Bloomberg, said that due to Nigeria’s porous land borders, subsidy payments by the government are not sustainable.
Although Dangote claimed that the removal of the subsidy is dependent on the government, and that his company would not necessarily benefit from it, he maintained that the subsidy has to go.
How Paying Naira for Crude Will Relieve Pressure on Nigeria’s Currency
The importation of refined petroleum products takes a significant chunk of Nigeria’s dollar reserves. According to data from the National Bureau of Statistics (NBS), petrol, diesel, liquefied petroleum gas, and other gaseous hydrocarbons accounted for 31.84 percent of all imports in the first quarter of 2024. Nigeria imported ₦2.6 trillion worth of petrol and ₦1.2 trillion in diesel during this period.
The importation of these products puts a strain on the naira, which has lost significant value this year and now trades at ₦1,597 per dollar, according to CBN data as of September 23.
Dangote’s refinery, which can meet Nigeria’s local energy demands, will allow the dollars used in the importation of refined petroleum products to be redirected to other needed sectors.
Starting from October 1, Nigeria will sell crude to Dangote’s refinery in naira, while the refined products will also be sold in naira.
Selling refined petroleum in naira to Nigeria, Dangote noted, will “remove 40 percent of pressure on the naira.”
“The petroleum products consume about 40 percent of our foreign exchange. So, it’s like having 40 percent of demand (dollar demand) taken out of the market. That can actually stabilize the naira.”
Also Read: Analysis: Five Ways Dangote’s New Petrol Supply Will Benefit Nigerians
The Oil Mafia Is Stronger Than the Oil Cartel
When asked if he was worried about oil majors selling at a cheaper price than his refinery to sabotage him, the business mogul likened the oil mafia to the drug cartel.
“I never knew that the oil industry mafia is stronger than the drug cartel,” he said.
“It’s a big cartel, and they can say, ‘To make sure this refinery doesn’t work, we’ll keep selling cheaper.’ But right now, they wouldn’t be able to sell cheaper because they wouldn’t be able to take local currency.”
He continued by explaining how he has an edge over the ‘big oil cartel.’
“We would take the local currency. We have the refining capacity that is almost twice the consumption of Nigeria.”
It Doesn’t Make Sense Anymore to Buy Arsenal
On a lighter note, Dangote spoke about his long-held ambition of buying Arsenal football club, a dream he hinted at in 2020.
“I think that time has passed. The last time we had this interview, I told you as soon as I finish with the refinery, I am going to try and buy Arsenal,” he told Lacqua.
“But you know, everything has gone up, and the club too is doing very well. Arsenal is doing extremely well right now. Back then, Arsenal wasn’t doing well.
“But what I will do is to continually be the biggest fan of Arsenal. I watch their games anytime they are playing. So, I will remain a major supporter of Arsenal, but I don’t think it makes sense today to buy Arsenal.”
