There is growing apprehension in the manufacturing and aviation sectors that the rising costs of diesel and aviation fuel will lead to the total collapse of more industries and airlines operating in the country.
In Kano, Ogun, Edo, Delta, Kogi, Lagos, and Kwara states, the Manufacturers’ Association of Nigeria disclosed this to journalists on Wednesday that many factories were closing down because of rising cost of diesel.
The national body of the association warned that more factories would be shut if the diesel price increased to N1,500 from the current N1,000.
Between June and October this year, the prices of diesel and aviation fuel increased by over 50 percent, heightening concerns among the operators.
The price hikes have been attributed to the challenges in the downstream oil sector, including the scarcity of foreign exchange required by marketers for diesel imports and the rise in global crude oil prices.
Speaking with journalists Wednesday, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, warned that the dire situation would not improve any time soon.
Chinedu stated, “Diesel is over N1,000 currently, the price is not going down at all, whether VAT (the Value-Added Tax) has been removed or not.
“The reason for this is simple: It’s basically because of forex and the rising cost of crude in the international market. So forex, particularly, is a big challenge.”
The oil marketers said one major way to tackle the rising cost of diesel was for the government to fix the nation’s refineries and get them working quickly.
But despite the withdrawal of VAT, the price of the commodity has continued to rise with a member of the National Council of MAN, Mr John Aluya, expressing fear that more companies would be shut if the price increased to N1,500.
The immediate vice-president of Manufacturers Association of Nigeria (MAN), Lagos Zone, said that the situation was worsened by the fact that the national grid was not supplying the required electricity.