Financial Energy Review
The Manufacturers Association of Nigeria (MAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) have expressed concern as the price of Automotive Gas Oil (AGO), known as diesel hit all time high of N750 per litre.
They expressed displeasure over the rising price of the petroleum Product and have called on the federal government to intervene.
MAN said rising price of the product is already impacting on their cost of production which no doubt increase the prices of manufactured product as a result this will trigger hyper inflation.
IPMAN said marketers are worried because each time they go the depot to load new price of diesel will be given to them. According to them this instability of the price of diesel is eating deep into their volume and margin.
The Chairman of MAN Oyo, Osun, Ekiti and Ondo branches, Lanre Popoola, said in Ibadan Oyo State, over the weekend that it is now difficult for them to run their production facility in full capacity. “It is difficult to run production at this time, as diesel has gone up to N720 and N730 per litre.
“It is getting extremely difficult to produce and I don’t know how we are going to cope because 70 per cent of industries are running on diesel, there is no light.
“There is no power supply, we are having 30 per cent of what it used to be, whereas the disposable income of people is not increasing and the cost of products are going up.
“Even in my factory now, we are only running one shift instead of three shifts of eight hours each.
“Other businesses are also running limited hours on diesel as they cannot afford to use generators all day,” Popoola added.
The chairman noted that, if the situation persisted, it could lead to bigger issues that would further affect the nation’s economy and increase the hardship of Nigerians.
“The worst part is that diesel suppliers cannot agree for organisations to make a flexible payment plan such as instalments, while they deliver the products in trust.
“They cannot again supply you with diesel and allow you to pay in two weeks. It is either you do cash and carry, or pay ahead because they too cannot predict the cost of the product.
“And I don’t blame them, imagine you bought diesel last week at N630 per litre and the next day it is sold for N730 per litre, how will you replace your stock,” he said.
Popoola stated that the way forward was for the government to come in and assist manufacturers, by giving some rebate on diesel, adding that, that was the only lifeline.
“Aside from manufacturers, for transporters that are bringing food from the North or taking products to the East or Lagos, now the cost of their logistics would have doubled by 100 per cent if not 200 per cent.
“May be the government can come in and do a kind of palliative for us, it is either we have light 24 hours per week, to run our factories or do a palliative on diesel.
“But unfortunately, we don’t produce diesel in this country, if the refineries are working, it is a different ball game, the country would have had it better now, if the refineries are working.
“So the more the international prices of Petroleum products go up, the higher the prices of what we are going to get from them,” Popoola said.
Meanwhile, Chinedu Anyaso, Chairman of of IPMAN Enugu, said the hike in the price of diesel will worsen inflation in the country.
Anyaso described the development as unhealthy, saying the hike portended stiffer hardship for Nigerians.
The price of the commodity went up about two weeks ago in Awka and its environs from N400 per litre to N650 per litre.
Diesel is the major source of energy for articulated vehicles, industries and hotels largely due to irregular public power supply.
Anyaso said the price hike of most refined petroleum products may not be unconnected with the rise in price of crude in the international market, arising from the Russian invasion of Ukraine.
He said the instability in prices was not good for IPMAN members and businesses generally.
“We are worried with the rise in the price of diesel and other petroleum products.
“The development is affecting our members because each time we go to depot to load, we see new price.
“It will certainly lead to general inflation because AGO is the major source of fuel for most transporters and manufacturing concerns across the country,” Anyaso said.
He, therefore, charged the Federal Government to take urgent steps to fix the country’s refineries or build new ones to protect citizens from the harsh effects of fluctuating international crude price.
He regretted that the downstream sector relied completely on importation and feared that there would always be supply problems, should the Russia/Ukraine war persist.
He gave assurance that IPMAN would continue to ensure seamless distribution of available products in the South-East at the prevailing market price.
