Alhaji Aliko Dangote.
When Alhaji Aliko Dangote, Founder of Dangote Refinery, declared that petrol is cheaper in Nigeria than in Saudi Arabia, little did he know he had stirred controversy and disbelief among oil industry statistics pundits.
The billionaire, who said this in an interview with Bloomberg, claimed that the product wass 40% cheaper in Nigeria than in the Kingdom of Saudi Arabia.
A fact-check on this statement by Lagos based online publication, Platform Africa, using data from Saudi Arabia and other reputable global statistics websites and online platforms showed that the claim by the Nigerian oil mogul is not true.
For instance price tracking sites like Statista, and Tradingeconomics showed that petrol was actually more expensive in Nigeria than in Saudi Arabia as of Wednesday, September 25, and the day the billionaire made the statement.
Petrol in Saudi is sold for 2. 33 Saudi Riyal equivalent to 62 cents/litre, Tradingeconimics discovered, while the petrol average price in Nigeria is N1,100/litre that is about 67 cents/litre, using the present exchange rate of Naira to Dollar.
The price of the product per litre in Russia, is 64 cent while it goes for 65 cent in Indonesia.
How 63 cent per litre in Saudi is 40% cheaper compared to 67 cent per litre in Nigeria will be left for Africa’s richest man to explain.
However, based on the verifiable figures by the petrol product price tracking institutions, Dangote is not correct. Petrol is more expensive in Nigeria than in Saudi as of yesterday, Wednesday, September 25, 2024.
Beyond this, an earlier report by Bloomberg showed that contrary to the claim by the billionaire on need for Nigeria to totally end petrol subsidy, Saudi Arabia spends $7,000 per person on energy subsidies, highest in G-20 economies.
The kingdom’s total spending on fuel subsidies soared over the past two years, hitting the highest among the Group of 20 economies on a per capita basis, the Bloomberg report has shown.
This, which came amid the harsh impact of petrol subsidy removal by the Bola Ahmed Tinubu administration, which has cited the unsustainable nature of the decades-long payments, also punctured the claims by Alhaji Dangote that the Nigerian government has to hand over totally from subsidising petrol for its citizens
Nigeria, in 2022, spent about $10 billion for the purpose.
The report published in 2023 indicated that Saudi Arabia spent almost $7,000 per person, equivalent to about 27 per cent of economic output, across both explicit and implicit energy subsidies, a paper published by the International Monetary Fund (IMF) disclosed.
Fossil fuel subsidies soared globally since 2020 to $7 trillion last year as governments took measures to protect consumers and businesses from a spike in prices following Russia’s invasion of Ukraine, said the IMF paper.
Cutting fossil fuel subsidies, it estimated, could help reduce carbon dioxide emissions, deaths from air pollution, and boost government revenues.
Wrote Simon Black, Antung Liu, Ian Parry and Nate Vernon in the IMF working paper: “Fossil fuels in most countries are priced incorrectly. Unfortunately, current prices are routinely set at levels that do not adequately reflect environmental damages and, in some cases, not even supply costs”.
China which spent $2.2 trillion – was the biggest provider of subsidies in absolute terms, followed by the US and Russia, stated the IMF. Saudi Arabia spent a total of $253 billion on subsidies last year, it added.
The IMF has been urging Saudi Arabia to push ahead with measures to cut the government subsidy bill and take steps to protect the welfare of low-income households through increased and targeted social spending. The spending has made Saudi fuel one of the cheapest in the world.
The government, in 2021, set a cap for the domestic cost of gasoline to soften the impact of higher living costs on citizens, just months before prices soared to over $100 a barrel.
In its Article IV Consultation, the IMF said that the kingdom’s work on subsidy reforms was “continuing unabated through planned step price increases that will lead to their elimination by 2030″.
Implicit subsidies, which the IMF defined as undercharging for the environmental cost of fossil fuel burning and lost tax revenue, made up the bulk of the global total. Explicit subsidies, or selling fuels as below supply costs, had a share of just 18 per cent.
