Dangote: Petrol sells up to 50% higher in neighbouring countries

PRESIDENT of Dangote Industries Limited, Aliko Dangote, has said the wide difference between petrol in Nigeria and neighbouring countries is encouraging the cross-border smuggling of the product.

Dangote, speaking in an interview with Arise TV on Tuesday, said Nigerians needed to compare domestic petrol prices with those in neighbouring markets before concluding that fuel was excessively expensive in Nigeria.

According to him, petrol in some neighbouring countries is between 30 percent and 50 percent more expensive than in Nigeria.

“I don’t know if you know that there’s 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,” he said.

The price differential, he said, creates an arbitrage opportunity for traders who buy petrol in Nigeria and move it across the border for resale at significantly higher prices.

Dangote cited Niger Republic as an example, saying petrol was selling there at about 20 percent to 25 percent above the Nigerian price at the time of the interview.

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He said the potential return from moving petrol across the border was sufficiently attractive to encourage traders to divert supplies away from the domestic market.

“So what business are you going to do that will make you a 25 percent return?” Dangote asked.

He explained that some traders could declare petrol as being destined for Sokoto but divert the product towards Ilela, a border community, where it could then be sold across the border.

Dangote promises uninterrupted petrol supply

Dangote also assured Nigerians that his refinery would continue supplying the domestic market despite the uncertainty created by the escalating crisis in the Middle East.

He said the refinery would maintain supplies and that Nigerians should not expect shortages or queues arising from its operations.

“We will make sure that Nigeria will be fully delivered. We will deliver to Nigeria. Nigerians don’t need to worry,” he said.

“There will not be any shortage from our own part. There won’t be any shortage. There will not be any queues.”

His assurance comes amid a fresh increase in petrol prices across parts of Nigeria.

Pump prices rose to about N1,380 per litre in Lagos and N1,430 in Abuja on Wednesday, adding to pressure on households and businesses.

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Dangote flags policy uncertainty, electricity crisis

Beyond the petroleum market, Dangote identified inconsistent government policies and inadequate electricity supply as two major obstacles confronting Nigerian businesses.

“The greatest problem, there are two, which are still existing. One is inconsistencies in government policies. The second one is to do with lack of electricity,” he said.

He said the cost of alternative energy sources, particularly diesel, was putting additional pressure on manufacturers and making it increasingly difficult for businesses to remain profitable.

“You cannot manufacture goods with diesel,” Dangote said, pointing to the impact of high energy costs on businesses producing basic goods.

He cited bread production as an example of an activity that has become increasingly difficult under high energy costs.

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Africa’s electricity deficit

Dangote also drew attention to Africa’s wider electricity crisis, saying about 600 million Africans still lack access to electricity.

He argued that the continent could not afford to continue with the scale of its current power deficit, given the implications for industrialisation, investment and economic development.

For Nigerian manufacturers, the electricity problem has a direct cost implication because companies are forced to rely heavily on diesel and other alternative energy sources when grid supply is inadequate.

The combination of fuel costs, energy shortages and policy uncertainty, Dangote said, continues to weigh on the operating environment for businesses in Nigeria.