Diesel price hits N950/litre, manufacturers fear shutdowns, job losses

Oil marketers claimed on Monday that the recent imposition of a 7.5% value-added tax on automotive petrol oil, often known as diesel, and the ongoing foreign exchange crisis in Nigeria had increased the price of the commodity to between N900 and N950/litre in numerous states.

Local firms have responded to the development by warning that it could result in the closure of some factories and the loss of jobs.

The marketers claimed that their difficulty to obtain US dollars was preventing them from importing diesel during a press briefing held in Abuja under the auspices of the Natural Oil and Gas Suppliers Association of Nigeria.

Before the Federal Government imposed a 7.5% VAT on the good, the price of diesel was approximately N650 per litre, according to Benneth Korie, National President of NOGASA.

The PUNCH announced on June 20, 2023, that the Federal Government had started implementing the payment of the 7.5% VAT on diesel.

This had been confirmed in Abuja by representatives of the Federal Inland Revenue Service and the Nigerian Customs Service, who also emphasised that the VAT Modification Order 2021 did not exclude AGO from paying VAT.

The NOGASA president stated, “Diesel price is now approaching N900 to N950/litre depending on where you are buying it from.” during the press conference on Monday. Diesel was roughly N650/litre before the FIRS implemented VAT on it.

“The lack of cash is another factor contributing to this price hike. In this dollar scenario, the government must step in. To handle this dollar issue, a meeting of all bank CEOs, the Central Bank of Nigeria, and others is required. If it continues on its current course, it will ruin a lot of things for us.

Additionally, Korie urged President Bola Tinubu to restart Nigeria’s refineries. He claimed that once Nigeria’s refineries begin to produce refined goods, the pressure from marketers and other importers on dollars will diminish.

Our refineries can be repaired by humans since they were constructed by humans. Instead of relying on imports, I think Nigerian engineers can fix these refineries. This cannot continue.

“By importing petroleum goods and other commodities, we are placing strain on the nation’s few currency. However, once our refineries are operational, this pressure will significantly decrease. Our refineries need to be fixed, the government must, he said.

The NOGASA president also lamented the poor condition of Nigeria’s highways. Citing the Port Harcourt-Warri road as an example, he emphasised that 500 tankers were currently stuck there because of the road’s appalling condition.

“Our tankers have been on that road for the past two weeks; you can’t cross it.” Our trucks are stuck on the Warri-Abuja highway for two weeks, our drivers are abducted and killed, and other people suffer as a result of our poor roads.

Roads are blocked on several of them. Petroleum goods will no longer be transported to Abuja and other locations around the nation if the government does not fix the roads, according to Korie.

Manufacturers regret the increase

Hamma Kwajaffa, the director general of the Nigerian Textile Manufacturers Association, responded to the development by saying that numerous textile producers were considering closing down their businesses due to growing costs, which were mostly brought on by skyrocketing energy prices.

According to the DG, textile companies could not afford to purchase fuel at the anticipated price of _.

Many are considering closing for the time being, he said. That kind of sum is beyond our means. Today we have fewer than 24 textiles, and those who are working are thinking about quitting. They’ve been forced up against the wall. These companies are not charities. They need to turn a profit.

In a similar vein, George Onafowokan, the chief executive officer of Coleman Technical Industries Limited, stated that rising diesel prices suggested rising manufacturing costs for the business.

He pleaded with the administration to come up with long-term fixes for the rising expense of diesel.

“Everyone’s costs increase whenever the price of diesel increases,” remarked Onafowokan. If diesel sells for N950, everyone’s logistics expenses will increase, as well as their electricity bills.

We’re all facing a crisis. The government needs to improve not only in providing palliatives to the people, but also for the businesses that are employing them, notably manufacturers, as the majority of businesses in Nigeria, especially manufacturers, are experiencing daily hits.