Oil marketers have sounded the alarm over the impact of the foreign exchange crisis in Nigeria and the recent implementation of a 7.5% Value Added Tax (VAT) on Automotive Gas Oil (diesel). These factors have caused the price of diesel to surge to between N900 and N950 per litre in various states. This development has raised concerns among local manufacturers who fear that it could result in the closure of factories and subsequent job losses.
Representing the Natural Oil and Gas Suppliers Association of Nigeria, the marketers held a press briefing in Abuja to address the situation. They explained that their inability to access US dollars has hindered their ability to import diesel, thereby driving up costs. Prior to the VAT implementation, diesel was priced around N650 per litre.
The situation has worsened due to the scarcity of dollars. The NOGASA President, Benneth Korie, urged government intervention in resolving the dollar shortage issue. Korie also called on President Bola Tinubu to prioritize the revival of Nigeria’s refineries, emphasizing that this would alleviate pressure on dollars by reducing imports of petroleum products.
Korie expressed dismay over the deplorable state of Nigerian roads, citing instances of tankers being stranded due to road conditions. He warned that if the government doesn’t address road infrastructure, the supply of petroleum products could be severely affected.
In response to the escalating costs, manufacturing sectors are considering shutdowns. Hamma Kwajaffa, Director-General of the Nigerian Textile Manufacturers Association, noted that many textile manufacturers are on the verge of closing due to the rising energy costs, which includes diesel expenses. Similarly, George Onafowokan, CEO of Coleman Technical Industries Limited, emphasized that increased diesel costs directly impact production expenses and called on the government to provide lasting solutions.
The mounting challenges faced by businesses, especially manufacturers, due to rising costs and energy prices underscore the urgent need for governmental intervention beyond short-term palliatives. The sustainability of various industries hangs in the balance as they grapple with these economic pressures.