Petrol Prices Expected to Rise to N1,800 Following Push for Full Subsidy Removal

Nigerians may soon face an increase in petrol prices, with projections indicating a potential hike to N1,800 per litre.

This development follows the call by Alhaji Aliko Dangote for the federal government to end petrol subsidy, just nine days after his 650,000 barrels per day capacity refinery began producing petrol.

In a recent interview with Bloomberg, Dangote said that removing the subsidy is essential, citing that all countries have eliminated subsidies.

He argued that subsidies actually drive up prices, as people take advantage of the subsidized rates. Dangote also highlighted the unsustainable nature of petrol subsidies, pointing out that Nigeria’s gasoline prices are about 60% lower than those in neighbouring countries.

“Our price of gasoline is about 60 percent the price of our neighbouring countrries and we have porous borders, so it is not sustainable. Government cannot afford the amount of subsidies we are paying,” he said.

He added, “But this refinery will bring quite a lot of issues out there. It would show the real consumption of Nigeria because nobody can tell. Some people say it is 60 million litres per day, some say it is less,” the billionaire said.

“But right now, by us producing, everything can be counted and accounted for. Most of the trucks or ships that will load from us, we will put a tracker on them to be sure they are going to take the oil within Nigeria and that can help the government to save a lot of money.

“For example, Saudis, the citizens believe that oil is our god-given gift and should not charge us for it. Government was selling it at a very low price. But today, as we speak, gasoline is about 40 percent cheaper in Nigeria than in Saudi Arabia, which I think does not make sense.”

Fuel subsidies were initially introduced in Nigeria in the 1970s to alleviate the impact of rising global oil prices. However, over time, the subsidies became a significant financial burden on the government, with Nigeria spending over N13 trillion on fuel subsidies between 2005 and 2021.

Previous attempts to remove or reform fuel subsidies have been met with resistance. In 2012, the government’s attempt to remove subsidies led to widespread protests. However, in 2023, President Bola Tinubu announced the end of the petrol subsidy regime, but subsequent reports suggested that the government was considering reintroducing temporary subsidies.