The price of diesel, otherwise referred to as the Automotive Gas oil has reached N625 per litre in some fuel stations in the country. This unprecedented rise is caused by the ongoing war between Russia and Ukraine as supply chain of the product is been disrupted and the price of the Bret crude soars to as high as $130 per barrel on Monday.
This rising price of the diesel exerts pressure on the economic agents such as the manufacturers, small businesses, transportation, organizations, among others. While these economic agents groan over this rise, the government is powerless as the downstream diesel sector is deregulated.
Unlike the petrol, the diesel is influenced by the pattern of the international price of the crude oil. Hence, the national operations controller of Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi stated that the rise in the diesel price is because of the crude oil price surge.
In the words Femi Egbesola, the President, Association of Small Business Owners of Nigeria, he stated “It is unfortunate that the price of the product keeps increasing and nothing is being done about it. The already high inflation rate in the country means that people have lower disposable income to purchase their needs and when prices keep rising, the masses have a much lower money to spend on products. Hence, we expect to see many people out of jobs this year.”
The Lagos Chamber of Commerce and Industry (LCCI) also stated that it expects the cost of production to triple and continuous inflationary pressures to persist in the economy.
Reviewing some challenges confronting the manufacturers at a Luncheon in Lagos, the president of the Manufacturing Association of Nigeria (MAN), Ahmed Mansur said high costs of energy, logistics and funds were key issues impeding the growth of the manufacturing sector in the country.
The Chief Executive Officer, Nigeria Exchange Ltd stated that bank branches rely on generators using diesel for majority of its operations and the expenses incurred on the purchase of the diesel accounts for about 20-30 percent of its operating expenses.
Also, more than 70 percent of the Nigerian firms power their office spaces using the diesel generators. Although these generators spew pollution, but they remain a reliable source of power for about 85 million people (i.e. nearly 40 percent of the population) who do not have access to grid power.
Therefore, in an interview with a chief operating officer at a Bakery, Abayomi Awe, said “the use of the expensive grid power in baking of bread and other pastries makes it difficult for the expansion of the bakery and this further increase in the diesel price might lead to some of us shutting down.”
However, in an attempt to proffering solutions, the Lagos Chamber of Commerce and Industry (LCCI) mentioned that the country needs to ensure it adds value to the crude oil in the country and stop depending on the imported refined products.
In a review of the National Bureau of Statistics data, it was revealed that the average price of diesel in January 2022 was N303 per litre, a 24 percent rise as compared to N243 per litre diesel sold for in December 2021. Now, the price is as high as N625 per litre as compared to the N540 per litre it sold for last week.
