A foreign exchange crisis and a new 7.5% Value Added Tax (VAT) on diesel have driven up fuel prices in Nigeria to around N900 to N950 per liter in many states, according to oil marketers. The situation is raising concerns among local manufacturers, who fear factory closures and layoffs due to increased costs.
Marketers from the Natural Oil and Gas Suppliers Association of Nigeria explained that the shortage of United States dollars is hindering diesel imports. Before the 7.5% VAT was introduced, diesel cost about N650 per liter. The VAT was implemented on June 20, 2023.
The president of NOGASA, Benneth Korie, urged intervention to address the dollar scarcity, suggesting a meeting between banking CEOs and the Central Bank of Nigeria. Korie also called for President Bola Tinubu to revive Nigeria’s refineries to reduce reliance on imports.
Korie emphasized the dire state of Nigerian roads, particularly the Port Harcourt-Warri road, where hundreds of tankers are stranded. He warned that if the roads aren’t fixed, petroleum products might cease to reach various locations across the country.
As a result of rising energy costs, textile manufacturers are considering shutdowns, leading to potential job losses. The Nigerian Textile Manufacturers Association’s Director-General, Hamma Kwajaffa, stressed that increased diesel prices are making business operations unsustainable.
George Onafowokan, CEO of Coleman Technical Industries Limited, highlighted the ripple effect of diesel price hikes on production costs. He called on the government to find lasting solutions to these challenges, not only for individuals but also for the businesses that provide employment opportunities.
In essence, the fuel cost surge is causing a chain reaction across various sectors, with manufacturers, businesses, and the overall economy feeling the strain.