Respite as diesel price drops 11%
Recent agreements between Ukraine and Russia, which will allow Kyiv to resume grain exports via the Black Sea, have also seen a respite in the escalating price of automotive gas oil, AGO also called diesel, in all states. from the country.
The deal will export millions of tonnes of grain, currently trapped in Ukraine by war, as the global shortage of Ukrainian grain since the February 24 Russian invasion has left millions at risk of starvation.
On the other hand, the crisis, which has driven up diesel prices, thus impacting local businesses, is beginning to ease as LEADERSHIP checks reveal a marginal drop in the price of the product.
Our correspondent reports that currently the product is selling for around N713.50 per liter in Lagos. It was sold for N800 a liter between March and April this year, prompting the Manufacturers Association of Nigeria (MAN) to call for urgent federal government intervention to support the production of goods . This indicates an 11% drop in the price of diesel so far.
Although the data available to us shows that the price of diesel is N720 per liter in Port Harcourt, Delta State, a liter sells for N715 and in Calabar the product sells for N725.
A prominent trader who sought anonymity said traders had stepped up imports of the product since an agreement between Russia and Ukraine allowed the export of wheat from the Black Sea.
Our source predicted a further decline in the price following the easing of import restrictions resulting from the war.
At the height of the crisis, MAN denounced the rising cost of diesel in the country and urged the federal government to issue its members licenses to import the product from the Republic of Niger and Chad.
The association had asked the federal government to avoid a total shutdown of production operations. MAN represents over 3,000 manufacturers across 10 sectors, 76 sub-sectors and 16 industrial zones and the sector, which dominates export trade in the West African sub-region, employs over five million workers directly and indirectly, and contributes 8.46% of the country’s gross domestic product (GDP).
The Association noted that the call was relevant in times of crisis to improve the performance of the sector through a pro-manufacturing policy that would encourage scaling up and lower unit costs of production.
MAN listed its challenges to include the high operating costs caused by the twin problems of insufficient electricity supply and the high cost of alternative energy sources and the over 200% increase in the price of diesel was become a major constraint with spiral effects.
“MAN is very concerned about the implications of the over 200% increase in the price of diesel on the Nigerian economy and the manufacturing sector in particular.
“More worrying is the deafening silence of the public sector on the fate of industrialists,” complained its director general, Mr. Segun Ajayi-Kadir.
Ajayi-Kadir urged the government to strengthen the country’s economic absorbers against external shocks to reduce the myriad of challenges that the manufacturing sector was already beguiling.
He said that as the current domestic reserve of manufacturing inputs is depleted, prices of manufactured goods will skyrocket in the face of an acute shortage of supply.
Ajayi-Kadir added that the government should continue to support manufacturing to speed up the recovery process from COVID-19 and previous recessionary episodes.
This, he explained, would avoid a complete shutdown of factories across the country.
He urged the government to issue licenses to manufacturing firms and aviation industry operators to directly import diesel and aviation fuel to avoid the avoidable monumental crippling of manufacturing.
Ajayi-Kadir also called for the removal of VAT on diesel as an instant incentive for immediate price reduction and accelerated action to reactivate or privatize petroleum product refineries in the country.
“The government should urgently address the challenge of repeated national grid collapses that cause severe power shortages, especially for manufacturers,” he said.
Meanwhile, MAN has also called on the Federal Government to issue its members licenses to import diesel from Niger Republic and Chad, Nigeria’s neighboring countries, to avoid the avoidable monumental crippling of manufacturing activities that could result from the total shutdown of production operations.
MAN also instructed the government to develop a response strategy to address the challenges emanating from the armed conflict between Russia and Ukraine.
He said: “In light of the gravity of the precarious situation in which we have found ourselves as a nation and the imminent dangers, the expectations of manufacturers in Nigeria are: that the government urgently authorize manufacturers and independent petroleum product marketing companies to also import AGO (diesel) from the Republic of Niger and Chad by immediately opening border posts in this axis to cushion the effect of the supply shortage caused by the high cost of AGO (Automotive Gas Oil).
The association also called on the government to “issue licenses to manufacturing companies and operators in the aviation industry to directly import diesel and aviation fuel to avoid the avoidable monumental crippling of manufacturing activities resulting from the total cessation of production operations and the movement of people for commercial activities. .”
Ajayi-Kadir noted that Nigerian manufacturers are very concerned about the implications of the more than 200% increase in the price of AGO on the Nigerian economy and the manufacturing sector.
He also instructed the government to “address the challenge of the repeated collapse of the national grid (twice in one week), which is causing a severe shortage of electricity in the country, especially for manufacturers”, adding that the government should “remove VAT on AGO as an instant stimulus for immediate price reduction and accelerated action to reactivate or privatize petroleum product refineries in the country.
Similarly, operators of transport and logistics companies have also cried out at the skyrocketing cost of diesel, saying the surge has significantly affected their operations.
Bus Rapid Transport (BRT) operators in Lagos also shared their pain complaining that the hike had affected their operations.
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Lagos Bus Services Limited (LBSL) Managing Director, Idowu Oguntona, said: “We are currently consulting to see what can be done. The cost of diesel is very high. Our intention and goal is to continue to provide affordable mobility to the people of Lagos. But we are consulting on what can be done from a cost management perspective.
“Obviously, adjusting the tariff is the last resort. Few can absorb this, but we consult to see the best decision we can make for everyone.
Primero Transport Company General Manager Fola Tinubu said the spike affected them negatively. “The price of diesel has increased by more than 200% while there has been no increase in tariffs or help from the government. We are struggling right now,” he said.
Tinubu said the company is currently surviving thanks to the help of its banker and suppliers.
Former President Olusegun Obasanjo complained last month that soaring diesel prices would drive fish farmers out of business.
Obasanjo denounced that the state of the Nigerian economy was affecting the aquaculture sector, adding that fish farmers could “sink”.
Obasanjo, who was speaking at the Southwest Fish Price Control Group convention in Abeokuta, the capital of Ogun state, stressed that the country’s farmers must come together if they are to survive in the economy.
Obasanjo further indicated that fish farmers must come together to avert an impending economic disaster in the agricultural sector.