By Fawaz Adebisi
Oil marketers have revealed that the recent addition of a 7.5% Value Added Tax on Automotive Gas Oil (diesel) and the ongoing foreign exchange crisis in Nigeria have surged diesel prices to around N900 to N950 per liter in various regions.
Local manufacturers are therefore alarmed, fearing potential factory closures and job losses as a result of the escalating situation.
Speaking on behalf of the Natural Oil and Gas Suppliers Association of Nigeria, the marketers shared during a press conference in Abuja that their inability to access US dollars is hindering diesel imports.
Benneth Korie, President of NOGASA, explained that the price of diesel was about N650 per liter prior to the introduction of the 7.5% VAT by the government.
As of June 20, 2023, the Federal Government commenced the implementation of the 7.5% VAT on diesel, confirmed by officials of the Nigeria Customs Service and Federal Inland Revenue Service.
Addressing the press, Korie emphasized, “Diesel prices are now nearing N900 to N950 per liter depending on the location of purchase, up from around N650 per liter before the introduction of VAT.
He stressed that this price hike is exacerbated by the scarcity of dollars, as it’s crucial for the government to address this dollar scarcity to prevent further adverse effects.”
Korie also called upon President Bola Tinubu to revive Nigeria’s refineries, believing that operational refineries would ease pressure on dollars by reducing the need for petroleum product imports.
“The state of our roads is also a concern. For instance, the Port Harcourt-Warri road has around 500 trapped tankers due to its poor condition. If these issues aren’t addressed, petroleum product supply to various locations could be disrupted,” Korie added.
In response to the situation, Hamma Kwajaffa, Director-General of the Nigerian Textile Manufacturers Association, revealed that rising energy costs, including diesel, are forcing textile manufacturers to consider shutting down operations due to financial challenges.
George Onafowokan, CEO of Coleman Technical Industries Limited, expressed concern about increased diesel costs raising production expenses.
He therefore urged the government to find solutions to the ongoing diesel cost fluctuations.
Onafowokan stated, “Rising diesel prices lead to increased costs for everyone, affecting logistics and power expenses.
“The government must provide support not just to the general public, but also to the businesses providing employment, especially manufacturers.”
