In a concerning turn of events, oil marketers have disclosed that a combination of foreign exchange crisis and the recent imposition of a 7.5% Value Added Tax (VAT) on Automotive Gas Oil (diesel) has led to a substantial increase in diesel prices across many states in Nigeria.
The cost of the commodity now ranges between N900 and N950 per litre, leaving manufacturers in a state of distress as they grapple with the impending threat of factory closures and job losses.
Representatives from the Natural Oil and Gas Suppliers Association of Nigeria voiced their concerns during a press briefing held in Abuja. They pointed out that their inability to secure access to US dollars was impeding their capacity to import diesel. Prior to the implementation of the VAT, diesel cost around N650 per litre.
Benneth Korie, the National President of NOGASA, highlighted the critical role of the government in resolving the crisis. He urged for urgent intervention to address the scarcity of dollars and emphasized the potential for far-reaching economic repercussions if left unchecked. Korie also advocated for the reactivation of Nigeria’s refineries as a long-term solution to reduce reliance on imported petroleum products.
The escalating diesel prices are adversely impacting various industries, with textile manufacturers at the forefront of the crisis. Hamma Kwajaffa, the Director-General of the Nigerian Textile Manufacturers Association, revealed that rising energy costs, including diesel prices, were driving several textile manufacturers to contemplate shutting down their operations. The steep increase in costs is making it increasingly difficult for manufacturers to sustain their businesses.
The Chief Executive Officer of Coleman Technical Industries Limited, George Onafowokan, emphasized the widespread impact of the diesel price hike on businesses. He stressed that the elevated costs would have a ripple effect on logistics, power, and overall production expenses. Onafowokan called on the government to seek lasting solutions to the relentless surge in diesel costs, which is causing considerable distress to manufacturers and businesses across the country.
As the situation continues to unfold, industry stakeholders are urging the government to take decisive actions to mitigate the crisis, lest it leads to further economic upheaval and jeopardizes the livelihoods of countless individuals dependent on the affected industries.
