Aliko Dangote, President of Dangote Industries Limited, has explained why petrol remains expensive in Nigeria despite the operation of his $20 billion refinery in Lagos.
Dangote attributed part of the situation to the continued smuggling of petrol from Nigeria into neighbouring countries, where he said the product sells at significantly higher prices.
According to him, the difference between domestic prices and those in neighbouring markets makes it attractive for traders to move petrol across the borders and sell it for higher returns.
He made the disclosure during an interview aired by Arise TV on Tuesday while speaking about the rising cost of petrol, the supply of petroleum products and the possible impact of the ongoing crisis in the Middle East.
Dangote said Nigerians should not determine whether petrol is expensive without comparing its price with what consumers pay in countries around Nigeria.
“You know, expensive is relative. In the sense that today, maybe, you know, a lot of them, there’s ignorance also. What they need to do is ask, what is the neighbour’s price?”
He said the price difference between Nigeria and neighbouring countries remained one of the reasons Nigerian petrol continues to find its way across the borders.
“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.”
Dangote claimed that petrol prices in some neighbouring countries were between 30 and 50 per cent higher than in Nigeria.
“Because those neighbouring countries are about 30 to 50 per cent more expensive than Nigeria. So, it’s not actually like for like.”
The businessman explained that the situation creates an opportunity for people involved in the illegal movement of petroleum products.
Where petrol can be bought at a lower price in Nigeria and sold at a substantially higher price across the border, traders can make significant returns without producing the product themselves.
Dangote specifically mentioned Niger Republic as an example.
He said petrol sold in Nigeria at N1,350 per litre could command a price that was between 20 and 25 per cent higher in Niger.
“And people can now go and ask, okay, fine, what is the price of, even now at N1,350? Okay, the price in Niger is 20 to 25 per cent more than Nigeria,” he said.
He questioned the attractiveness of such a business opportunity when compared with ordinary commercial activities.
“So, what business are you going to do that will make you have an instant 25 per cent return?” he asked.
According to Dangote, the price gap could encourage some traders to divert petrol originally meant for the Nigerian market to border communities.
He gave an example of how such diversion could allegedly take place.
“So, it means that, yes, you take the [petrol], you go and take it across the border. You pretend you are taking it to Sokoto, you go and just take it to Ilela, and you sell.
“Actually, they don’t have.”
The Dangote Petroleum Refinery recently increased its petrol gantry price from N1,265 to N1,350 per litre. Following the adjustment, pump prices rose further at some filling stations in different parts of the country.
The latest increase has renewed questions over the expected impact of domestic refining on petrol prices.
