There is growing apprehension in the manufacturing and aviation sectors that the rising costs of diesel and aviation fuel will lead to the total collapse of more industries and airlines operating in the country.
In Kano, Ogun, Edo, Delta, Kogi, Lagos, and Kwara states, the Manufacturers’ Association of Nigeria told The PUNCH on Wednesday that many factories were closing down because of the rising cost of diesel.
The national body of the association warned that more factories would be shut if the diesel price increased to N1,500 from the current N1,000.
Between June and October this year, the prices of diesel and aviation fuel increased by over 50 percent, heightening concerns among the operators.
The price hikes have been attributed to the challenges in the downstream oil sector, including the scarcity of foreign exchange required by marketers for diesel imports and the rise in global crude oil prices.
Speaking with The PUNCH on Wednesday, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, warned that the dire situation would not improve any time soon.
Chinedu stated, “Diesel is over N1,000 currently, the price is not going down at all, whether VAT (the Value-Added Tax) has been removed or not.
Marketers blame FOREX
“The reason for this is simple: It’s basically because of forex and the rising cost of crude in the international market. So forex, particularly, is a big challenge.”
The oil marketers said one major way to tackle the rising cost of diesel was for the government to fix the nation’s refineries and get them working quickly.
In August, oil marketers said the foreign exchange crisis and the implementation of a 7.5 percent VAT on diesel, pushed up the cost of the commodity to between N900 and N950/litre in many states.
They also pointed out that the development had made local manufacturers raise the alarm that the situation might lead to the closure of some factories and job losses.
Marketers, under the aegis of the Natural Oil and Gas Suppliers Association of Nigeria, explained that their inability to access the United States dollars was impeding their ability to import diesel.
The National President of NOGASA, Benneth Korie, told one of our correspondents in June that the cost of diesel was around N650/litre before the Federal Government imposed a 7.5 percent VAT on the commodity.
On June 20, 2023, reported that the Federal Government had commenced the implementation of the payment of 7.5 percent VAT on diesel.
But after a meeting between the Federal Government and labour leaders on October 1, the Minister of Information and National Orientation, Mohammed Idris, said President Bola Tinubu, had approved the withdrawal of VAT on diesel as part of efforts to assist manufacturers.
