N200 PETROL PRICE WOULD HAVE MADE DANGOTE REFINERY IMPOSSIBLE — FINANCE MINISTER. (PHOTO).

 N200 Petrol Price Would Have Made Dangote Refinery Impossible — Finance Minister

The Federal Government has said the Dangote Petroleum Refinery would not have been able to commence operations under the previous petrol subsidy regime, arguing that the removal of the subsidy was essential to create a viable market for private refining investment.

Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele made the remarks on Wednesday in Abuja while presenting the government’s report titled “Nigeria’s Reform Scorecard: The Benefits, Costs and Harms Prevented.”

Oyedele acknowledged that the removal of the petrol subsidy and the unification of the foreign exchange market had imposed significant costs on Nigerians. However, he maintained that the reforms had averted a far more severe economic crisis and established the conditions necessary for major investments such as the Dangote refinery to function commercially.

He linked the refinery’s viability directly to the end of the subsidy, stating that the plant could not have operated profitably if petrol had remained at the heavily subsidised price of less than ₦200 per litre.

“Remember, we’re importing refined products. That is to say the Dangote refinery wouldn’t have been able to start because you can’t sell at ₦200 per litre and queue up for the government to pay the balance of over ₦1,000 per litre,” Oyedele said.

He rejected the notion that retaining petrol at around ₦200 per litre would have guaranteed cheap and readily available fuel. Instead, he argued, the country would have faced a situation in which petrol remained officially cheap but increasingly scarce, forcing consumers to turn to the black market at prices of about ₦3,000 per litre.

“What I will say is what the counterfactual shows. On the pre-reform path, petrol would likely be simultaneously unavailable. It would still be ₦185 per litre. It would not be available at the official price and is likely to be trading in the black market for at least ₦3,000 per litre,” he said.

Oyedele explained that under the old system, a local refinery producing petrol at its true cost would have been forced to sell far above the government-controlled pump price while waiting for the government to cover the difference. Such an arrangement would have made it impossible for the Dangote refinery to compete with subsidised imports.

He noted that the subsidy had become unsustainable amid severe fiscal pressure. The government was already spending nearly 100 per cent of its revenue on debt servicing and resorting to money printing. Foreign exchange shortages further complicated the financing of petroleum product imports.

“With the naira simply unavailable at any official rate for most Nigerians and businesses, we were running out of dollars. Our net external reserves were about $3bn, while we were owing over $7bn. That is bankruptcy. And you know we can’t print dollars because we’re not the United States of America,” he said.

Under those conditions, Oyedele added, Nigerians would still have ended up paying more than ₦3,000 per litre amid widespread scarcity, as marketers would have been unable to sustain imports while selling at ₦200 and waiting for government reimbursement of over ₦1,000 per litre.