Africa’s wealthiest man Aliko Dangote has said the Dangote Petroleum Refinery is absorbing substantial fuel distribution costs in an effort to cushion Nigerians from rising petrol prices, including providing free delivery that can save marketers as much as ₦70 per litre in some parts of the country.
Speaking in an exclusive interview with ARISE News Anchor Ojy Okpe, as soaring crude prices caused by the Middle East crisis pushed up fuel costs, Dangote said domestic refining could not completely insulate Nigeria from movements in international oil markets, particularly when the refinery itself was paying higher prices and premiums for crude.
But he said the refinery was attempting to reduce the impact on consumers by absorbing logistics costs that would otherwise be added to the final price of fuel.
“What we are doing to cushion that effect, we’re actually now saying, ‘Okay, fine, you know what? Just pay, we roll out, you collect your product free,’” Dangote said.
He said Dangote trucks were already delivering products across the country at no additional logistics cost to buyers.
“I’m sure if you check Maiduguri, you check South-East, you check South-South, you check Lagos, you see our trucks all over. They are delivering free of charge.”
Dangote said the savings become particularly significant for marketers transporting products over long distances.
“Somebody who is going to Maiduguri, he will save ₦70 per litre,” he said.
The industrialist said the refinery had invested about ₦1 trillion in 4,000 new tankers to support the distribution programme, arguing that the system effectively allows buyers in distant parts of Nigeria to obtain products on the same pricing basis as those closer to the Lagos refinery.
“We’re advertising that, ‘Please come and collect, and we’re going to give you, and we’ll transport at zero cost,’” he said.
“Which means from the refinery, the cost to the refinery in same Apapa is the same with Abeokuta, is the same with Asaba, is the same with everywhere.”
Dangote estimated that when operating at full scale, the logistics support could cost the refinery about ₦90 billion monthly, or more than ₦1 trillion annually.
“At full scale, we’re going to give ₦90 billion a month, which means ₦1 point something trillion every year,” he said. “That’s huge. But we’re trying to do that to see how, in this period, do we cushion the effect.”
Dangote, however, rejected the suggestion that domestic refining meant petrol could be priced independently of international energy markets.
“The issue is that can we now go and sell below what the traded market is? No, we can’t do that, because we’re not getting that discount,” he said.
“Actually, we’re paying heavy premium on crude.”
He said the refinery had delayed increasing its petrol price while watching to see whether international prices would retreat, but eventually had to respond as the market continued to rise.
“We were watching it to see whether it was going to drop, but it wasn’t dropping; it was escalating,” Dangote said.
He also argued that Nigerian petrol remained cheaper than in neighbouring countries, creating an incentive for continued cross-border smuggling.
“Even now at ₦1,350, the price in Niger is 20%, 25% more than Nigeria,” he said.
“What business are you going to do that will make you have instant 25% on return? So it means that, yes, you take the risk to go and take it across the border.”
Dangote said the more serious danger from the Middle East crisis could ultimately be availability rather than price, but gave an assurance that the refinery would prioritise the Nigerian market.
“Nigeria should not worry that there will not be any shortages from our own part,” he said.
“There will not be any shortages, there will not be any queues, and we’ll make sure that we keep supplying the market despite all odds.”
Demola Ojo
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