Africa’s richest person Aliko Dangote says diesel price cut could curb Nigeria’s inflation
Africa’s richest person Aliko Dangote, chairman of Dangote Group, the continent’s most diversified manufacturing and industrial conglomerate, believes a cut in diesel prices can offer relief to Nigeria’s inflationary pressures. The reduction, to N1,200 per liter (roughly $1), could lower transportation and logistics costs, a major contributor to rising consumer goods prices.
Dangote, worth an estimated $15.6 billion, according to Forbes, spoke with journalists after a visit to President Bola Tinubu for Eid al-Fitr. He expressed optimism about Nigeria’s economic progress, highlighting his refinery’s role.
By offering diesel at N1,200 ($1), below the market rate of N1,650 ($1.325), Dangote believes inflation will decrease. Nigeria’s inflation rate remains high at 31.70 percent (February 2024, National Bureau of Statistics), driven by rising food prices and Tinubu’s removal of petrol subsidies in May 2023.
Dangote Optimistic: Economic improvements ahead
“We’re on the right track,” Dangote said. “Nigerians have been patient and I also believe that a lot of goodies will now come through. There’s quite a lot of improvement because if you look at it, one of the major issues that we’ve had was the naira devaluation that has gone very aggressively up to about N1,900. “But right now, we’re back to almost N1,250, N1,300, which is a good reprieve.”
He continued, “Quite a lot of commodities went up. When you go to the market, for example, something that we produce locally like flour, people will charge you more. Why? Because they’re paying very high diesel prices. “Now, in our refinery, we started selling diesel at about N1,200 instead of N1,650 and I’m sure as we go along, things will continue to improve quite a lot. “If you look at it now, when you are buying N1,650 or N1,700 for a liter of diesel, and that one has been cut off by almost two-thirds, you are now paying N1,200 for diesel. “This can help to bring inflation down immediately. And I’m sure when the inflation figures are out for the next month, you’ll see that there’s quite a lot of improvement in the inflation rate.”
Dangote Refinery aims for independence
Dangote’s comments come after his $20.5-billion Dangote Oil Refinery began supplying the local market, marking a milestone in Nigeria’s quest for energy independence. The refinery, with the world’s largest single-train capacity (650,000 barrels per day), aims to address the country’s reliance on imported fuels.
Following the refinery’s launch, Dangote initiated the process of establishing an independent oil trading division, potentially headquartered in London. This move signifies a departure from traditional practices. Dangote aims to streamline crude and product supply chain management for his $20-billion petrochemical complex.
Industry sources report Dangote’s intention to reduce reliance on major trading firms by handling the supply chain internally. “He’s going to try and do it himself,” said a source. The new trading team, reportedly led by former Essar trader Radha Mohan, is presently recruiting additional staff.