Growing concerns are mounting within the manufacturing and aviation industries in Nigeria due to the escalating costs of diesel and aviation fuel.
There is a fear that this trend could potentially lead to the collapse of more industries and airlines operating in the country.
The Manufacturers’ Association of Nigeria (MAN) has reported that many factories in various states, including Kano, Ogun, Edo, Delta, Kogi, Lagos, and Kwara, are on the verge of shutting down due to the increasing cost of diesel.
The national body of the association has warned that if the price of diesel rises from the current N1,000 to N1,500, more factories may be forced to close their doors.
Between June and October of this year, both diesel and aviation fuel prices have surged by over 50 percent, causing distress among industry operators.
The primary reasons for these price hikes are linked to challenges in the downstream oil sector, including the scarcity of foreign exchange required for diesel imports and the global increase in crude oil prices.
Speaking on this issue, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, emphasized that the situation is unlikely to improve in the near future.
He attributed the soaring diesel prices to foreign exchange difficulties and rising international crude oil costs.
Oil marketers have suggested that one effective way to address the rising diesel costs is for the government to expedite the repair and operation of the nation’s refineries.
This call has been ongoing, with the government taking measures to reduce diesel prices and alleviate the burden on manufacturers.
Despite the removal of the Value-Added Tax (VAT) on diesel and various efforts to support the manufacturing sector, the price of diesel continues to rise.
The Manufacturers’ Association of Nigeria (MAN) has expressed concerns that if the price reaches N1,500 per litre, more companies may be forced to cease operations.
The lack of consistent and adequate electricity supply from the national grid has exacerbated the situation, forcing companies to rely heavily on expensive diesel-powered generators.
As a response to these challenges, MAN is exploring alternative sources of energy and has initiated discussions with companies like Huawei to develop sustainable energy solutions.
This initiative aims to reduce reliance on the national grid and diesel, both of which are costly and unreliable sources of power.
Manufacturers are grappling with the implications of rising operational and production costs, which, in turn, affect overall expenses and product prices.
The situation is concerning for the industry, and many members are seeking sustainable solutions to mitigate these challenges.
The Chairman of MAN in Ogun State, George Onafowokan, pointed out that increasing diesel prices are resulting in higher operational and production costs, ultimately impacting the prices of goods.
Many members find this situation worrisome, and they are actively seeking solutions.
In Edo and Delta states, the Chairman of MAN, Okwara Udendi, emphasized that the price hikes in diesel and erratic power supply have forced many members to partially shut down their operations in both states, underscoring the severe challenges faced by the manufacturing sector.
The rising costs of diesel and aviation fuel are posing serious threats to these critical sectors, and swift actions are needed to stabilize the situation and prevent further economic consequences.