Aliko Dangote, President of Dangote Industries Limited, has explained that his refinery cannot sell petrol below the prevailing market price amid rising crude oil and transportation costs.
Dangote made the remarks while fielding questions during an interview on Arise Television.
He said the refinery’s most recent price increase came when the market price stood at N1,265 per litre, but petrol importers were unable to sell at the prevailing rate because they would have incurred significant losses.
“The last increase we did, the market was actually at N1,265, but none of the importers were able to sell,” Dangote said.
He explained that the company initially waited for the market price to fall but had to adjust its pricing after the price continued to rise.
According to him, the refinery is also facing higher crude oil costs, noting that the company bought crude in May at $124 per barrel.
“But we can’t go now and subsidise everything,” he said.
Dangote, however, said the company was taking steps to cushion the impact of rising fuel prices by providing free transportation of petrol to various parts of the country.
He said trucks were currently delivering petrol free of charge to locations including Maiduguri, the South-East, South-South and Lagos.
He added that consumers in distant locations such as Maiduguri could save about N70 per litre through the free transportation arrangement.
Dangote also disclosed that the company had invested N1 trillion in 4,000 new 50-litre tankers to facilitate the distribution of petroleum products at no transportation cost to customers.
“We’re going to give N90 billion back to people, which means one point something trillion every year,” he said, adding that the initiative was aimed at cushioning the effect of rising fuel prices.
However, Dangote said the refinery could not sell petrol below the prevailing traded market price because it was not receiving crude at a discounted rate.
“The issue is that can we now go and sell below what the traded market is? No, we can’t do that because we too are not getting that discount,” he said.
He further disclosed that the company was paying significant premiums on crude transportation, citing the cost of moving crude from Focados to Lagos.
According to him, the company once paid about $4 million to transport less than one million barrels of crude on what would ordinarily be a journey of about half a day.
Dangote said the high cost of crude acquisition and transportation was contributing to the pressure on petrol prices.