How N2000/L diesel price affects us – Manufacturers

Manufacturers, bakers, and economic experts have expressed concern over the escalating diesel price, which has reached approximately N2,000 per litre in certain regions of Nigeria. This surge in diesel costs is putting strain on businesses, employees, and consumers, potentially exacerbating production expenses, food inflation, and Nigeria's cost of living crisis.

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has called for urgent government intervention, emphasizing that diesel is a vital energy source for factories, farms, transportation firms, telecommunications companies, and other enterprises.

Idoko, CORAN's Publicity Secretary, stated that if the diesel price remains high, it would lead to increased production and transportation expenses, further burdening manufacturers already grappling with a challenging business environment. He proposed strengthening domestic refining capacity and ensuring that Nigerian refineries have sufficient access to crude oil as a potential solution.

CORAN emphasized that the Dangote Petroleum Refinery and modular refineries should not be seen as competitors, as both are valuable local assets capable of reducing Nigeria's reliance on imported petroleum products.

Nigeria's modular refineries have an estimated installed capacity of around 35,000 barrels per day. If they operate at full capacity, they could collectively produce between 2.2 million and 2.8 million litres of diesel daily, depending on their configurations and product yields. The Dangote refinery reportedly produced approximately 19.1 million litres of diesel in July alone.

Combined with the output from modular refineries, domestic diesel production could reach between 21 million and 22 million litres per day, despite the nation's reported diesel consumption of about 14.7 million litres daily in July. Notably, Nigeria still imported about 244.9 million litres of diesel during the same month.

The immediate impact of expensive diesel is already being felt by manufacturers. Engr. Emmanuel Onuorah, President of the Premium Bakers' Association of Nigeria, described the situation as extremely difficult for businesses, particularly those that heavily rely on diesel for their operations. Onuorah noted that diesel prices have substantially increased, making it challenging for businesses to determine profitability.

He also mentioned that the baking industry has been somewhat shielded due to flour millers not increasing their prices significantly and, in some cases, even reducing them. However, Onuorah emphasized that those gains have been negated by the rising cost of electricity, power outages, alternative energy investments, and diesel price hikes.

He expressed pity for all manufacturers across Nigeria, regardless of their industry, due to the mounting challenges.