…Say, it’s threatening jobs, food prices

Manufacturers and bakers have raised the alarm over the escalating price of diesel and warned that the cost of the commodity, which has climbed to nearly N2,000 per litre in some parts of Nigeria, is threatening businesses, jobs and household incomes.

They particularly stated that astronomical increase in the price of  diesel was seriously eroding profit margins, raising production and transportation costs.

The manufacturers’ concerns also coming on the backdrop of calls for the need to intensify greater domestic refining and more reliable energy supply to reduce production costs and ease pressure on businesses and consumers.

They therefore warned that the development could further drive-up food prices as businesses struggle to absorb higher energy expenses.

This was as the Crude Oil Refinery Owners Association of Nigeria also called for urgent intervention, stressing that the development was particularly troubling because diesel remained a major energy source for factories, farms, transport companies, telecommunications firms and other businesses.

A statement by Eche Idoko, Publicity Secretary of CORAN stated that sustained increases in diesel prices would further compound the difficulties facing manufacturers operating in Nigeria.

CORAN emphasized that expanding domestic refining was critical to reducing the country’s exposure to imported petroleum products and fluctuations in international markets, stressing that Nigerian modular refineries with an estimated combined installed capacity of about 35,000 barrels per day, could produce between 2.2 million and 2.8 million litres of diesel daily if they operated at full capacity.

The association noted that the Dangote Petroleum Refinery reportedly produced about 19.1 million litres of diesel per day in July, insisting that with both sources operating at their potential, domestic diesel production could rise to between 21 million and 22 million litres daily, compared with reported national consumption of about 14.7 million litres per day in July.

CORAN further said that despite the potential, Nigeria imported about 244.9 million litres of diesel in July, saying that the figures showed that the country needed to urgently address barriers preventing local refineries from operating at full capacity.

It therefore called on the Presidential Committee on Naira-for-Crude to guarantee adequate crude supplies to the Dangote refinery and also extend the naira-for-crude arrangement to modular refineries.

CORAN particularly called on the Federal Government to develop commercially viable crude supply arrangements that would enable domestic refineries to maximise their production capacity.

It stressed that for businesses hitherto grappling with high operating costs, the impact of expensive diesel is immediate.

In his own comment, the President of the Premium Bakers’ Association of Nigeria, Emmanuel Onuorah, said the surge in diesel prices had made it increasingly difficult for manufacturers, particularly bakeries, to remain profitable.

In the words of Onuorah; “The situation is crazy. Diesel which sold for about N800 per litre around the same period last year, now costs between N1,800 and N1,900 depending on the location and source. The increase has effectively pushed one of the major components of production costs up by as much as 150 per cent.

“For us, we don’t even want to look. I don’t even look at the books again. I just produce and sell. I’m not thinking of profitability; I’m thinking of, let us just remain afloat in the bakery,” he said.

Onuorah said any relief from relatively stable flour prices had been wiped out by the rising cost of electricity, frequent power outages, investment in alternative energy sources and diesel.

According to him; “It’s a terrible situation we are finding ourselves in. I don’t even mind. I just pity every manufacturer in Nigeria, no matter what you are producing”.

Onuorah warned that the consequences were not limited to businesses, stressing that rising energy and transportation costs were also putting additional pressure on workers and households.

He further said; “Workers are increasingly spending more of their fixed incomes on transportation while also contending with rising food prices, rent, school fees and other living expenses.

“The cost of fuelling vehicles has risen to the point where money that previously covered a week’s fuel can now buy substantially less. A worker that has a fixed income and needs to go to work, the man wants to buy bread, he wants to buy a meal, he wants to pay school fees, he wants to pay inflated rent. How can that man survive?” he asked.

Onuorah specifically expressed concern that employers facing escalating production costs might have limited capacity to increase workers’ wages, leaving employees squeezed between stagnant incomes and rising living expenses.

According to him; renewed volatility in the global oil market, particularly any disruption arising from tensions in the Middle East, could put additional pressure on energy prices and deepen the challenges confronting Nigerian businesses.