ABUJA- Oil marketers have revealed that the foreign exchange crisis in Nigeria, coupled with the implementation of a 7.5% Value Added Tax (VAT) on Automotive Gas Oil (diesel), has driven up the cost of diesel to around N900 to N950 per liter in many states. This price surge has raised concerns among local manufacturers about potential factory closures and job losses. The Natural Oil and Gas Suppliers Association of Nigeria called for urgent intervention to address the situation.
According to PUNCH Newspaper, Benneth Korie, the National President of NOGASA, explained that before the introduction of the VAT, the cost of diesel was around N650 per liter.
The VAT on diesel was introduced on June 20, 2023. Korie emphasized that the scarcity of US dollars is also contributing to the increase in diesel prices. He called for collaboration among government institutions, including bank CEOs and the Central Bank of Nigeria, to address the dollar scarcity issue.
Korie also appealed to President Bola Tinubu to focus on revitalizing Nigeria’s refineries. He argued that when the refineries are operational, the pressure on dollars caused by imports of petroleum products would decrease significantly.
Furthermore, Korie expressed concerns about the state of Nigerian roads, citing the Port Harcourt-Warri Road as an example. He noted that about 500 tankers were stranded on the road due to its poor condition, leading to disruptions in the transportation of petroleum products.
In response to the diesel price hike, manufacturers in various sectors, including textiles, are grappling with rising costs. Hamma Kwajaffa, the Director-General of the Nigerian Textile Manufacturers Association, stated that many textile manufacturers are considering shutting down due to the escalating energy costs. He emphasized that the increased diesel costs are not sustainable for their operations.
George Onafowokan, the Chief Executive Officer of Coleman Technical Industries Limited, highlighted that the rising diesel prices translate into higher production costs for his company. He urged the government to find solutions to the ongoing increase in diesel costs, as it impacts businesses and the overall economy.