Manufacturers Face Crisis as Diesel Price Soars to N1,300/Litre

In a concerning development for the manufacturing industry in Nigeria, the price of diesel has skyrocketed to N1,275 per litre within Lagos and above N1,300 per litre outside the state. This drastic surge in diesel costs represents a 26 percent increase in less than one week, with the product selling for N1,270 per litre in Kano State and even higher prices outside the city. Just a week ago, on October 23, diesel was available at a comparatively modest N1,030 per litre.

As of Thursday, numerous filling stations in Lagos had adjusted their diesel prices to fall within the range of N1,250 to N1,270 per litre. This significant price hike has raised concerns among manufacturers who are already grappling with challenges like foreign exchange crises, high interest rates, and unreliable power supply. Diesel is a critical energy source for their operations, and the escalating costs may exacerbate their existing issues.

This surge in diesel prices arrives amid rising inflation, which reached an alarming 26.7 percent in October. The increased cost of living is placing immense pressure on many families and households across the country.

Ibrahim Nagode, a bakery owner, lamented the daily fluctuations in diesel prices, saying, “The price keeps increasing on a daily basis. You can buy it in the morning for a certain price and in the evening, you are told that the price has changed.” Another source highlighted the challenges this poses, stating, “We were planning to buy diesel yesterday and we have planned our budget on the rate we bought it the last time, only to be told that the price is now N1,275.”

There are even fears that the price of diesel outside the Kano metropolis has reached an alarming N1,400 per litre. This price increase has a ripple effect on various sectors of the economy.

Ilya Nazifi, the Chief Executive Officer of Golden Rice Mill, noted that as logistics and power costs increase, the cost of production and prices of finished goods will inevitably rise. Transporter Wada Jamilu stated that with the higher diesel prices, a trailer would consume diesel worth N1.5 million for a round trip between Kano and Lagos, leading to necessary fare increases for transportation.

Abdulrasheed Olapade, an oil marketer, explained that diesel prices are influenced by the international market due to deregulation and the fluctuating value of the dollar. He pointed out, “We are in hot soup with the current price of a dollar.”

The high cost of diesel is significantly affecting the National Association of Road Transport Owners (NARTO). Inuwa Abdullahi, a member of NARTO, highlighted the compounded costs of diesel, checkpoints by state and non-state actors, poor road conditions, and expensive spare parts, resulting in skyrocketing expenses for truck trips.

Emmanuel Onuorah, President of the Premium Bread Makers Association of Nigeria, expressed concerns that the surge in diesel prices might force factories to shut down. He explained that this continuous increase in costs forces bakers to keep raising prices on their products to cover expenses, ultimately affecting consumers.

Adams Adebayo, a professor of Entrepreneurship Development and Lagos State chairman of the National Association of Small and Medium Enterprises, warned that the rising diesel costs pose a severe threat to the economy. He emphasized the need for government intervention to stabilize essential commodities’ prices and ensure stable energy supplies for businesses.

The situation has raised urgent calls for government action to address the diesel price crisis and its potential repercussions on the Nigerian economy.