Diesel Price Soars to N950/litre, Triggering Concerns of Shutdowns and Job Losses

Oil marketers have raised an alarm over the skyrocketing cost of diesel in Nigeria, revealing that a combination of foreign exchange challenges and the recent implementation of a 7.5% Value Added Tax (VAT) on Automotive Gas Oil (diesel) has propelled prices to between N900 and N950 per litre across many states. This surge in prices has ignited fears among local manufacturers who warn that it could potentially force factories to shut down and lead to significant job losses.

Representing the concerns of the oil and gas industry, the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) held a press briefing in Abuja to address the issue. The association highlighted that the inability to access US dollars was hampering their ability to import diesel, resulting in the price surge. Prior to the implementation of the VAT, the cost of diesel was around N650 per litre.

The 7.5% VAT on diesel was instituted by the Federal Government on June 20, 2023, as reported by The PUNCH. The Nigeria Customs Service and Federal Inland Revenue Service confirmed that Automotive Gas Oil was not exempt from the VAT based on the VAT Modification Order 2021.

During the press briefing, NOGASA’s President, Benneth Korie, expressed deep concern over the escalating diesel prices and the scarcity of US dollars. He emphasized the need for intervention from banking CEOs, the Central Bank of Nigeria, and other stakeholders to address the foreign exchange crisis. Korie stressed that if left unchecked, this situation could have severe repercussions for various sectors.

Korie also called upon President Bola Tinubu to take action and revive Nigeria’s refineries. He asserted that having functional refineries would significantly reduce the pressure on dollars due to importation, benefiting the economy as a whole.

The NOGASA president further lamented the dire state of Nigerian roads, exemplified by the Port Harcourt-Warri road, where around 500 tankers were trapped due to the road’s deplorable condition. Korie warned that if these road issues persist, it could disrupt the supply of petroleum products to various regions.

Manufacturers Weigh In

In response to the escalating diesel costs, representatives from the manufacturing sector conveyed their concerns. Hamma Kwajaffa, the Director-General of the Nigerian Textile Manufacturers Association, revealed that several textile manufacturers were considering shutting down operations due to rising costs triggered by surging energy expenses.

Additionally, George Onafowokan, CEO of Coleman Technical Industries Limited, emphasized that the increased diesel costs would inevitably lead to elevated production expenses for his company. He urged the government to implement lasting solutions to address the consistent surge in diesel prices, as the impact reverberates throughout various industries.

As the nation grapples with the economic implications of these heightened diesel prices, both industry leaders and the government are compelled to find effective strategies to manage these challenges and mitigate the potential adverse effects on businesses and livelihoods.