The organised private sector yesterday raised alarm that the current spike in the pump price of diesel to between N520 and N560 per liter would triple the cost of production and accelerate inflationary pressure on the economy.
The massive rise in the price of diesel is causing discomfort for manufacturers and businesses because they now rely heavily on it to power their generators following epileptic public power supply.
President of the Lagos Chamber of Commerce and Industry (LCCI), Michael Olawale-Cole, who spoke to newsmen yesterday on the prevailing high cost of diesel, said the escalation in the price of diesel would be a double jeopardy for manufacturers and portends a hard time that could even threaten their survival and competitiveness.
Olawale-Cole told newsmen that the prevailing prices of diesel, as well as current petrol scarcity “are totally unacceptable,” warning that “if we are not careful the economy and Nigerians will suffer for it.”
He attributed the trend in the domestic price of diesel to the rising price of crude oil in the international market, which is impacting on its landing price in Nigeria.
“The rising price of crude oil is part of it. The current scarcity of petrol is now influencing the diesel market.
“However, the answer to all these problems is to ensure that we are adding value to our crude oil here and stop depending on imported refined products. That is the solution and can be met by government showing commitment to ensure that our existing refineries are maintained and made to work.
“It is agonising that we are producing crude and exporting them abroad for refining and later import them at prices that we cannot afford. Naturally, this is going to affect inflation and add to the suffering of the people”, he said.
A member of the Manufacturers Association of Nigeria (MAN), who spoke anonymously to newsmen yesterday on the prevailing high cost of diesel said: “We will suffer for this as we generate our own power at a very high cost of diesel whose price has climbed from N380 in December 2021 to over N400 in January and is now selling above N500.
“It will triple our cost of production because we use diesel to bring our raw materials to the factories; diesel is also used to power our manufacturing plants. In addition, we use diesel to distribute manufactured goods to all corners of the country.
“So, diesel is very significant to Nigerian manufacturing because there is insufficient supply of electricity to power our plants, which would have made a lot of difference. Moreover, some of us are not getting gas to power their plants due to pipeline vandalism”, he explained.
He also urged the government to fully deregulate the petroleum industry because deregulating the price of diesel while regulating the price of PMS would be counterproductive and would deny the country the investments that would enhance its refining capacity.
According to him, “local refining would not be an option as long as government is still regulating one of the products, which is PMS. Nobody will refine. We either deregulate completely or regulate all.”