Dangote’s Claim That PMS Is Cheaper In Nigeria Than Saudi Arabia, Faulted
The claim by the founder of Dangote Refinery, Alhaji Aliko Dangote in which he stated that Premium Motor Spirit (PMS) popularly known as petrol is cheaper in Nigeria than in Saudi Arabia, has generated debate and bewilderment among oil industry statistics.
Dangote told Bloomberg in an interview that petrol is 40 percent cheaper in Nigeria than in the Kingdom of Saudi Arabia.
However, a fact-check on Dangote’s statement by a Lagos based online publication, Platform Africa, using data from Saudi Arabia and other reputable global statistic websites and online platforms, clearly indicated that the claim by Dangote was not correct.
For instance, price tracking sites such as statista, and tradingeconomics showed that petrol is actually more expensive in Nigeria than in Saudi Arabia as of Wednesday, September 25, the day Dangote made the statement.
Specifically, PMS in Saudi is sold for 2. 33 Saudi Riyal equivalent to 62 cents/litre according to tradingeconimics while the PMS Average price in Nigeria is N1100/litre that is about 67 cents/litre, using the present exchange rate of Naira to dollar.
Similarly, the price of petrol per litre in Russia is sold for 64 cent while it goes for 65 cent in Indonesia.
It therefore baffles how 63 cent per litre in Saudi is 40% cheaper when compared to the 67 cent per litre in Nigeria except if Dangote the mathematics to Nigerians.
Accordingly, based on the verifiable figures by the petrol product price tracking institutions, Dangote is totally wrong in his assertion as petrol is actually more expensive in Nigeria than in Saudi as at Wednesday, September 25, 2024.
Beyond this, an earlier report by Bloomberg indicated that contrary to claim by Dangote on the 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 came amid the harsh impact of petrol subsidy removal by the President Bola Ahmed Tinubu administration, which has cited the unsustainable nature of the decades-long payments, also punctured the claims by Dangote that the Nigerian government has to hands off totally from subsidising petrol for its citizens
In 2022, Nigeria 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, according to a paper published by the International Monetary Fund (IMF).
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, according to the IMF paper.
It estimated that cutting fossil fuel subsidies could help reduce carbon dioxide emissions, deaths from air pollution, and boost government revenues.
“Fossil fuels in most countries are priced incorrectly,” Simon Black, Antung Liu, Ian Parry and Nate Vernon wrote in the IMF working paper. “Unfortunately, current prices are routinely set at levels that do not adequately reflect environmental damages and, in some cases, not even supply costs,” they added.
China-which spent $2.2 trillion – was the biggest provider of subsidies in absolute terms, followed by the US and Russia, according to 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.
In 2021, the government 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 is “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.
