Manufacturers Brace for Potential Shutdowns, Layoffs as Diesel Price Hits N950 Per Litre
The recent surge in the cost of diesel, reaching between N900 and N950 per litre in numerous states due to the foreign exchange crisis and the implementation of a 7.5% Value Added Tax (VAT) on Automotive Gas Oil (diesel), has raised concerns among manufacturers.
The escalating price of diesel has compelled local manufacturers to express fears over the possible closure of factories and subsequent job losses.
Under the banner of the Natural Oil and Gas Suppliers Association of Nigeria, oil marketers addressed the issue during a press conference in Abuja.
They cited challenges in accessing United States dollars, which hindered their ability to import diesel.
According to Benneth Korie, the National President of NOGASA, prior to the introduction of the 7.5% VAT, diesel cost around N650 per litre.
The Federal Government’s introduction of the 7.5% VAT on diesel, as reported by The Informant247 on June 20, 2023, has created additional financial pressure.
Customs and revenue service officials affirmed that Automotive Gas Oil was not exempted from VAT payment based on the VAT Modification Order 2021.
Korie emphasized the impact of the VAT alongside the scarcity of dollars, driving the price of diesel to nearly N950 per litre.
He urged collective action from bank CEOs, the Central Bank of Nigeria, and others to address the dollar scarcity issue to avert potential economic repercussions.
Korie also advocated for the revival of Nigeria’s refineries, believing that functional refineries could alleviate pressure on imported petroleum products.
He urged President Bola Tinubu to initiate refinery repair efforts, asserting that Nigerian engineers were capable of restoring these facilities.
The state of Nigerian roads, particularly the Port Harcourt-Warri road, was another concern raised by Korie.
He highlighted the plight of approximately 500 stranded tankers due to road conditions, warning that sustained road issues could disrupt the distribution of petroleum products.
In response to the diesel price hike, manufacturers voiced their grievances. Hamma Kwajaffa, the Director-General of the Nigerian Textile Manufacturers Association, revealed that textile manufacturers were considering shutting down due to rising energy costs, specifically diesel expenses.
George Onafowokan, CEO of Coleman Technical Industries Limited, pointed out the ripple effect of increased diesel costs on production expenses and called on the government to address this challenge.
The rising cost of diesel has created a complex scenario for various industries, leaving manufacturers and stakeholders seeking solutions to mitigate the economic impact.
