Victor EzejaChairman of Dangote Group, Alhaji Aliko Dangote, has expressed optimism that a significant reduction in the price of Automotive Gasoline Oil (AGO) also known as diesel, will lead to help bring down Nigeria’s inflation rate and also stabilise the economy.
Prime Business Africa reports that the commencement of the supply of diesel from Dangote Refinery to the market has led to a reduction of the price of the commodity from ₦1,700 to about ₦1,200.
The $19 billion facility has begun to supply diesel and aviation fuel to domestic marketers in the country, a move many believe will reduce inflation as well as Nigeria’s dependence on imported petroleum products which is responsible for the high prices in the first place.
Dangote noted that drop in price will significantly lead to a drop in the prices of things in the market because of its use in generating energy and transportation which businesses depend on.
The billionaire entrepreneur, who spoke when he paid Eid-el-Fitr homage to President Bola Tinubu in Lagos on Wednesday, observed that there have been positive signs of recovery in the country’s economy in recent times following the appreciation of the naira in the foreign exchange market in recent weeks from a high of ₦1,900 to about ₦1,200.
While noting that Nigerians have been patient and enduring the difficult times, he expressed the belief that more good days are coming their way with the ongoing economic reforms in the country.
He said: “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. 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 litre of diesel, and that one has been cut off by almost two-thirds, you are now paying N1,200 for diesel.”
Continuing, he said: “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.”
Experts believe that the effect of the decrease in the price of diesel and the drop in the exchange rate on the inflation rate would not come instantly.
READ ALSO: Report Predicts Nigeria’s Headline Inflation To Hit 32% In March As Petrol Subsidy Removal Impact Lingers
Nigeria’s inflation rate according to data released by the National Bureau of Statistics (NBS) shows that it stood at 31.70 per cent as of February 2024.
There are predictions that the inflation rate will further increase to about 32 per cent in March as the impact of petrol subsidy removal still lingers.
According to the CBN’s deputy governor of the Economic Policy Directorate, Muhammad Sani Abdullahi, key drivers of inflation in Nigeria include high energy costs, the effect of exchange rate fluctuations, and security challenges.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
